6 Questions: mSpot CEO Daren Tsui6 Aug, 2010 By: Erik Gruenwedel
Upstart media aggregator mSpot.com is carving a niche distributing Hollywood studio movie streams to third-party media devices, including via apps for the Apple iPad and iPhone.
The apps allow users to stream titles on a transactional basis (from $2.99 to $3.99) from Universal Studios Home Entertainment, Walt Disney Studios Home Entertainment, Lionsgate, Paramount Home Entertainment and Warner Bros. Digital Distribution, among others.
Users can also browse selections on their mobile devices, play and pause a title, access chapter features and watch movies on the computer. mSpot also launched a cloud-based music service enabling users to upload and manage music to either an Android phone or Windows/Mac computer.
Home Media Magazine caught up with CEO Daren Tsui to find out if consumers really want to watch feature-length films on mobile devices such a smartphone or tablet computer.
Doesn’t the average consumer prefer to watch a movie on an iPad versus a smartphone? Doesn’t screen size still matter?
Tsui: Consumers naturally prefer to watch movies on the best device available at the time of viewing. If they are at home, that would most likely be their 42-inch LCD flat-screen. If they only have their iPad and smartphone available (assuming iPad has network connectivity), then they most likely will pick the iPad. But if they are traveling and only have their smartphone, then there’s only one choice. The key for mSpot is we aim to bridge all media-capable devices.
Your offering of new-release titles for streaming exposes the Achilles heel of Netflix’s service, namely the dearth of timely content. How do you get access to fresher material than Netflix has?
Tsui: We have a different business arrangement with the studios than Netflix. We paid the studios on a per-rental/view basis for streaming. In return for this revenue-share agreement, the studios grant us rights to stream movies soon after theatrical release.
The $2.99 price is about 25% less than comparable cable VOD. Is the race to the bottom in terms of pricing a good thing for industry margins? In other words, is it possible to put the lid on the $1 DVD rental?
Tsui: There is a floor for us before the retail price becomes unprofitable. Unfortunately, most of us in the industry are reacting to the iTunes’ pricing model, which is on par with mSpot’s. This is no different than what iTunes has done to pricing of MP3 music files.
Which is more enticing to consumers: transactional VOD or monthly subscriptions?
Tsui: It’s difficult to generalize because some users may only watch one movie per month. In that case, a la carte (or transactional) is more economical. For users who watch many movies per month and don’t want to worry about each rental, the subscription model (Netflix) is more appealing. But again, Netflix has the issue regarding streaming of new releases.
We are currently experimenting with a hybrid model — monthly subscription but not unlimited rentals. The point is to offer consumers the ability to stream any title they want (new and old) but still get the value/discount consumers typically enjoy in a subscription service.
Why is changing the user interface so important considering Netflix has spent considerable resources establishing its interface?
Tsui: Apple has proven how important user interface, ease-of-use and form factor in products. For Netflix to do well in mobile, it needs to consider how to achieve the best possible experience on each given device. Netflix has done a great job on the PC Web regarding user experience. But we’ve seen this mistake made many times before where an established company tries to branch out to new media (in this case mobile) and has not considered the attributes and constraints that make the new media different.
How does streaming contend with 1080p resolution found on Blu-ray Disc? It is quite a comedown watching the same movie streamed in lower resolution than Blu-ray. How do you deal with that?
Tsui: Today, you can’t deal with the [picture resolution] quality difference. Streaming is about convenience, portability and mobility. But in the not-too-distant future, we will have ubiquitous broadband speed that can support high-resolution streaming. Comcast currently offers 50Mbps download and Clear (4G) offers a 3Mbps to 6Mbps download. I believe quality will not be an issue for long.