Our take...
Licensing full-feature movie content for mobile is on the rise. Last March mobile TV operator MediaFLO launched a movie channel in partnership with Sony Pictures. It's not the first time Motorola is trying to push the adoption of movies on mobile handsets. In June 2007, the manufacturer launched the Z8 with "The Bourne Identity" included in the handset's memory card. Other handset providers such as Nokia and Sony Ericsson already have content distribution portals in place and will follow closely how Motorola's service is progressing. Since movies require bigger files to offer satisfactory viewing conditions, sideloading is the favoured delivery method, thus bypassing the operator for a potentially lucrative distribution opportunity.

By offering a sideloading movie service Motorola has adopted broadly the same content model as Apple: using movies to bolster its device proposition. Screen Digest believes that this device centric approach (delivering content to iPods, the iPhone and Apple TV) has given Apple a ~90 per cent share of the UK download to own movie market. In the context of online movie delivery, therefore, Mortorola's service should not be seen as anything new, except that content is restricted for use on mobile handsets.

The consumer behaviour in the space is well established: users choose devices (both mobile phones and portable media players) because they are attractive and subsequently buy content for that device. There is some anecdotal evidence which suggests that a well positioned digital content store can have a halo effect on the portable devices it serves, but this is a minor motivation to purchase in comparison to appealing device design.

This suggests that without sufficiently attractive hardware designs the current generation of Motorola's movie service is unlikely to create a halo effect that will which makes their devices appear appreciably more appealing to consumers, not least because:
1) Chaining content to mobile devices is likely to prove to be unpopular with consumers, in particular technically-savvy early adopters
2) When compared to other online services Motorola's library is limited (40 movies compared to over one thousand on Lovefilm's digital store).
3) Despite the restrictive usage conditions and lower quality file, movies are not significantly cheaper than iTunes - Apple sells library titles from all major Studios for £6.99 which can be viewed on the PC and on Apple's range of portable devices.

Consequently Screen Digest believes that it is unlikely the move will have a significant effect on Motorola's device sales and that movie purchases will be low, at least in the short term. Moreover, high wholesale prices will ensure that the service will fail to provide the company with a source of incremental revenue, and may well be a break even or loss leading proposition.