While the percentage of U.S. mobile subscribers who watch video on their cell
phones is still low, that’s not stopping some ambitious entrepreneurs and
movie studios from offering up long-form content in the form of movies.

Before you say, “Who’s going to watch a movie on a cell phone?,” consider what CEO Daren Tsui and his colleagues at mSpot are witnessing: Total movie sales grew 300% from a year ago. They’re quietly chuckling as skeptics question the viability of watching movies on cell phones. “We are very, very encouraged,” Tsui said. “We’re very excited in terms of traffic.”

Tsui: Total movie sales grew 300% over a year ago

mSpot’s movie viewership might be getting a boost with the wider deployment of EV-DO Rev. A and the introduction of devices such as the Apple iPhone and Samsung Instinct that drive awareness of what people can do with their phones. (mSpot works with Sprint in the United States and Bell Mobility in Canada.) But it also might be the exception rather than the rule. Only 0.4% of mobile subscribers watched full-length TV or movies in May, according to comScore M:Metrics.

NOW PLAYING
Still, some carriers are offering full-length movies, whether it’s to offer something for that segment willing or aware enough to watch or to entice customers to use data services. “What we have found is that data usage leads to more data usage,” said Sprint spokesman Aaron Radelet. Sprint doesn’t release usage figures, but it has been offering movies since 2006. Its “pay-per-view” service streams full-length movies, including hits such as “I Am Legend” and older favorites like “Ghostbusters.” Movies are available from Buena Vista VOD, Disney, Lionsgate, Paramount, Sony Pictures Home Entertainment and Warner Bros.

Sprint Movies features many of the same conveniences as a DVD player, Radelet added. A customer can watch a movie in its entirety all at once, or, more likely, it can be divided into chapters and watched over time. Customers can play, pause and skip forward or backward, and they can resume a movie at the same point it was last shut down. Sprint Movies cost between $3.99 and $5.99 each, and customers can view a movie for unlimited times within a set period, which varies between 24 hours and one week depending on the title.

Barzilay: A segment of customers indicated they were willing to watch movies on mobile.

MediaFLO USA, which supplies services for AT&T and Verizon Wireless, conducted extensive consumer testing before selecting its channel line-up, and a certain percentage of consumers said they were willing to watch movies on mobile phones, said Jonathan Barzilay, senior vice president of programming and advertising at MediaFLO. Today, AT&T offers an ad-supported movie channel from Sony, called Pix, via MediaFLO.

SMALLER BITES
By most accounts, viewing movies on mobile phones hasn’t taken off in a big way, but movie studios are using the mobile medium to plug upcoming movies. Major summer releases such as “The Dark Knight,” “Mamma Mia!” and “Hancock” all released mobile content, including music, graphics and games, on Thumbplay. “I expect the trend of marketing films through mobile to continue to escalate; it is becoming as standard a marketing practice as social networking sites,” said Thumbplay CEO and Founder Are Traasdahl.

If consumers are offered the chance to see the top 10 car chase scenes of all time, they might watch it and decide to rent a favorite old movie again, said John Barrett, director of research at Parks Associates. “You have these ways to drive revenues and sidestep the high requirements of getting someone to watch the full two hours,” he said.

While growing, the market for selling movies through portable devices and cell phones is not yet ripe, said Parks Associates in a white paper titled “How Hollywood Can Out-Apple Apple.” Business and technical obstacles have not yet been overcome and consumers show a low interest in buying and viewing. But mobile content can be used as a marketing tool for traditional consumption channels.

That’s precisely what Lionsgate appears to be doing. Even though it does offer some movies via the mobile channel, Lionsgate is more focused on using short-form content to drive revenue to other content, according to Curt Marvis, president of digital media at Lionsgate. “We certainly think the small format screen is an important one,” he said, but full-length movies are not a top priority in the overall digital evolution. It’s still early days and the delivery methods through the carrier channels need to improve, he said.

Even if only a small percentage of people are watching full-length movies in chunks of time, it drives up the average viewing time, noted Mark Hyland, vice president of marketing at QuickPlay Media, which helps facilitate video viewing on mobile phones, including through a deal with HBO and Bell Mobility. If mobile TV and video offerings are offered in only 3- or 4-minute clips, then by necessity, that will drive the average viewing time. But longer-form content allows that time to increase.

One of the things that makes longer-form content work is functionality that allows the user to easily pause and resume, so subscribers can take phone calls or do other tasks when they need to and come back to the content, Hyland said. “It’s still a phone and I think that’s still the primary use for many people,” he said. It would be ideal as well to be able to download a movie and watch it on a plane, but that’s not do-able today on most cell phones. With Sprint’s service, for example, the video is streaming, so it is not possible to watch it on a plane that is in-flight.

TV listing for PacketVideo.

MIXED REVIEWS
Even long-time industry veterans aren’t yet sold on full-length movies. Handango offers thousands of applications for smartphones, but it doesn’t offer movies. CEO Bill Stone said people want to snack on their mobile phones, not consume “full course meals.” It’s too much trouble to find full-length movies versus short-form video on a cell phone. “The effort is greater than the content itself,” he said. That said, with smartphones and iPhones, where customers are in control of side-loading content, “you are starting to see more people want to watch movies on things like airplanes, where the content is preloaded into a simple UI … and just launch the content, stop, pause, etc. based upon what you want to do,” he said.

Detailed TV listing for NBC’s The Office via PacketVideo.

Thumbplay, which bills itself as the No. 1 mobile entertainment service in the United States, doesn’t currently offer full-length movies, although Traasdahl doesn’t rule that out for the future. Its fastest-growing business segments today are videos and games. But today, U.S. viewers are more interested in short-form content, such as show recaps or non-narrative content. While there is some question about whether or not the market is truly adopting it, there is an argument to be made that live streaming TV (such as MobiTV or MediaFLO) has a reasonably sized mobile audience, he added.

While carriers presumably don’t want to cannibalize popular services like text messaging – if a subscriber is watching a movie, he or she likely isn’t going to text at the same time unless it’s easy to do – they also may want to offer a variety of services to meet the desires of those segments that will use them. That includes full-length movies.

PacketVideo started developing its video technology back in 1998. “I always believed that people will use it for so many purposes and they will watch movies and they will watch video clips and they will have rich experiences,” said Osama Alshaykh, chief technology officer at PacketVideo.

Watching full-length movies on a cell phone isn’t for everybody, but for those who do subscribe, they’re in for a couple perks over the more traditional methods of renting movies: no driving back to the rental store and no late fees.