Thinking About MobiTV's $100 million

There was a bit of buzz a couple of days ago about MobiTV raising another $30 million in capital, adding to it’s already whopping $70 million from previous financings. That’s a lot of money for a startup that lets some people watch a few TV shows on their cell phones. It’s effectively a cable television service that only does business with people who have 2 inch TVs, and journalists like Mathew Ingram are openly questioning why MobiTV needs this money.

But there may be more to it than that. The entire TV world is being turned upside down. And I’m wondering if MobiTV has a major announcement to make in the near future.

YouTube set a price point for a service allowing consumers to watch TV clips online. Most popular TV shows are now available for legal download at iTunes, and Apples’ upcoming iTV device will allow consumers to watch those shows on their normal televisions. A ton of startups are trying to conquer online TV by starting niche. The networks all have their own online products. Even the online TV guide space is hot, and investments are pouring in.

I think the real win isn’t to distribute TV over mobile devices – that’s a niche service that isn’t likely to morph into a massive consumer market. But giving people TV over the Internet generally, where they can consume it on a normal television, a PC and/or a mobile device? That’s a killer product. We’re tracking two startups, The Venice Project and TIOTI, who are addressing this. But no one besides MobiTV has an existing, battle-tested platform, with distibution deals and relationships already in place. That is a large competitive advantage.

MobiTV has a little know product that allows users to watch TV on computer without a tuner (or “cheating” via slingbox or Orb). You can watch 24 channels on a PC, but only if you are accessing the Internet from an AT&T Wi-Fi hot spot. Thats a product of little use. But if MobiTV can negotiate with the cable companies and networks to expand the service and let people watch those shows from any broadband connection, they have a disruptive product on their hands.

So what’s the $100 million for? Maybe its to pay off the people who need to be paid off. They have a big valuation now, and giving stock away is an option. This is how Netflix was able to create a new type of movie rental market (by giving studios stock), and YouTube did something similar. If the incuments see the writing on the wall, knowing their days are numbered, they’ll take the profitable route to inevitability.