eMarketer assesses the current state of mobile video entertainment and the logistics of advertising in this medium.

A telecommunications company and several cable companies announce a joint venture that will "accelerate the convergence of video entertainment, wireline and wireless data and communications products and services." Big media companies make bold investments in programming. Marketers test the waters, hoping to reach a coveted demographic that is turning away from network TV in droves. And a few key companies control the gateway.

Is it 1996, or 2006? Ten years ago, it was the internet that threw the telecom, media and marketing worlds into chaos. Starting this year, it will be the mobile phone.

The announcements have come at a dizzying pace over the past few months. Sprint Nextel teamed up with several cable companies in a wide-ranging deal that will result in co-branded phones allowing consumers to download entertainment programs to their mobile phone and even remotely program their home digital video recorder. Users of Apple's video iPod can download episodes of ABC shows and trailers from Disney movies. Verizon and Qualcomm are teaming up to deliver live broadcast TV to mobile phones. And in a trifecta of TV-mobile phone-recording industry integration, a new song by the band Coldplay rang as a ringtone on a "CSI: New York" character's phone in November, followed by an on-air CBS promotion allowing viewers to download the same tone to their own phones. "Watching video on cell phones could eventually easily surpass [demand for games, ringtones and wallpapers], to reach 100% of the population," said Cingular's Rob Hyatt, executive director of mobile content, in Businessweek in October 2005.

Marketers, meanwhile, are eyeing the territory closely. Some have already tested the waters with promotional music videos, sponsored ringtones and song downloads. But mobile video advertising could potentially be even bigger. If online video advertising is ramping up fast, as eMarketer's recent report on the topic notes, then mobile video advertising will follow closely on its heels. "If I had to make one prediction I would say that's going to explode, [it's] mobile media," said Charles Rutman, North America chief executive of media buying agency MPG, at Reuters' November 2005 advertising summit.
However, there is a long list of challenges that will make mobile entertainment a difficult market to crack:

Bandwidth issues. The so-called 3G, or third-generation, mobile technology and its "broadband" bandwidth, still lags in most of the United States. Sprint and Verizon are the only two carriers to offer 3G phones. Speed is key for most mobile music and video applications. The more bandwidth, the more time -- and money -- people will spend with media on their phones. If this sounds suspiciously like a page from the broadband internet playbook, you're right.

Competing technologies. Mobile video today is an alphabet soup of technologies, and wireless operators have yet to agree on a standard. That means content must be customized for each wireless network and consumers will, for the near term, select carriers based on the media content they offer.

Is it live or is it Memorex? Do consumers want live TV broadcasts from networks they trust or do they want to download content in snippets? Do they want commercial-free radio or the ability to download and store thousands of songs? Wireless operators are, for the moment, planning to offer it all.

Who controls the gateway? Today, wireless operators control the "deck," the menu screen we all see on our mobile phone. But as more media companies develop mobile strategies, the deck suddenly becomes a big problem. Already, menu space is at a premium and jockeying for position is routine. But eMarketer expects that wireless operators will eventually be forced to give up control of the deck, allowing consumers to search for mobile content the same way they search for information on the internet today.

Apple's iPod. With so many of its music players in the shirt pockets of America, can any mobile phone hope to mimic the success? And with the launch of the video iPod, where will media providers gravitate?

Consumer ambivalence. The United States has long lagged other countries in mobile data usage, partially due to the lack of 3G technology and a siloed approach to applications. Text messaging has been the biggest success, followed by ringtones, but most consumer surveys indicate there is little interest right now in watching TV on a mobile phone.