The Fox Mobile Group is part of News Corporation, one of the largest media companies in the world. News Corp owns such well know assets as 20th Century Fox film, FOX TV broadcasting, National Geographic cable channel, part of B Sky B and Sky Italia, newspapers such as The Times and The Sun in the UK, The Wall Street Journal, and social networking site MySpace.

With such a wealth and diversity of media assets, understanding how to monetize them in new channels such as mobile is very important. In this interview, we talk with Mauro Montanaro, CEO of Fox Mobile Group about branded content, mobile advertising, and how Fox is setup to take advantage of this emerging distribution channel.

The Fox Mobile Group

Fox Mobile Group (FMG) was formed from the combination of various Fox activities plus the operations of Jamba (also known as Jamster), the large, German based D2C supplier of mobile content that Fox acquired in late 2008.

Today, Fox Mobile Group consists of two divisions:

• Fox Mobile Studios is the production arm of FMG, with studios in LA and Berlin. The studios produce original content for mobile, as well as reformatting existing content to fit the mobile channel.
• Fox Mobile Distribution is the unit focused on global mobile content distribution, with Jamba still a key brand name. This is one of the largest mobile content distributors in the world, with direct to consumer operations in over 30 markets and over 120 operator billing agreements to handle payments. 20% of their distribution revenue comes from Fox content, the other 80% from content sourced outside of Fox.

(note: Fox Mobile Entertainment which is responsible for licensing Fox’s TV and film media assets to outside mobile companies is part of the Fox Filmed Entertainment group).

Mauro points out that FMG is really in a unique position.

“We are unique among mobile content competitors because we are part of a major media company. And we are unique among media companies, as we are the only one with extensive end-to-end mobile arm – the others do mostly licensing.”

“As a company, we want to be right in the middle of the mobile and content industries, and to bring the two worlds together. We need to really understand the end-to-end dynamics of digital distribution to avoid the fate of, for example, the record companies.”

Working From The Inside

Although FMG sells much more then just Fox material, they have “priority access” to the creative work of the studios, and are starting to work from the inside to revolutionize the way content is created.

Mauro explains, “Our LA studio now works with almost every TV and movie production at Fox so that mobile aspect of content is embedded before the final output – we are part of the roadmap for content for movies. And we have people working both with creative and theatrical marketing, which is very important.”

As an example of the benefits of this approach, Mauro talked about a Fox film ‘Ice Age 3“.

The film is scheduled for release in July of 2009, and work on the mobile aspects started in August of 2008. As a result, the mobile assets were essentially all complete in early 2009.

“This is a big advantage because we can be marketing mobile content at same time as the major film marketing machine is working. It is so much better and more valuable compared to simply getting a license for the movie just before it comes out.”

Approaching Mobile Advertising Through Content

Regarding mobile advertising, Mauro believes that it will become big business one day, but feels it is still very small today. And due to the current economic crisis, its timing may have been pushed back 18 to 24 months.

He explains that the planning of a mobile production actually follows the TV approach – you need to decide if it will be ad-funded, or product placement funded, or if it will be sold to a special distribution network. And at the moment, Fox relies very little on mobile advertising revenue stream.

“We are not going to be adding banners to our sites. However, if we add the mobile advertising element to the content we sell, then I think we have an angle. So we are going to approach mobile advertising through content.”

There are two ad-based models that Fox are pursuing which are related to content, in-game advertising and sponsored made-for-mobile content.

In-Game Advertising

Later this year, Fox Mobile will be launching an in-game advertising business. It will be a selection of free games which will be ad supported.

Mauro elaborated on their strategy, “We are looking at all approaches: pre-roll, post-roll, in-game, etc. It will depend a lot on the advertiser.”

“The model I like the most is where the advertiser is also your distributor. For example, a McDonalds or a Coke has the retail volumes so that they can effectively advertise the game. This might be, for example, by putting a short code on their product. By doing this, they already become your marketing platform.”

Mauro believes that this business will be running on a break-even basis within 12 months of launch.

Sponsored Made-for-Mobile

Up until now, most mobile content produced from other media has involved primarily modifying the size and cutting the length of the asset to make it work well on mobile. There are not many cases where the script has been impacted as well, but Fox is planning on changing this.

“Many mobisodes have been primarily highlights or trailers. Fox Mobile wants to make true made for mobile TV shows,” says Mauro.

He continued, “In a studio like Fox you have blockbuster films and you have serialized TV shows. But you also have an enormous production of experimental movies, videos, shorts for web that we are also channeling into production.”

The idea is that because these are made specifically for mobile, sponsors can be identified early on to fund the production, and the sponsorship can be incorporated into the actual script.

A “Faux” Reality Show

Although he could not reveal too many details, as an example Mauro was willing to share some information about a made-for-mobile TV series that Fox will be launching soon.

It is a “faux reality show”, in other words, it looks like a reality show but its not. It will have ten 3-minute episodes, and will feature popular comedians from shows like Saturday Night Life and Comedy Central.

The series will be available to viewers free of charge, with Fox providing distribution through Jamba in 34 markets as well as through deals with other key players such as Nokia.

Mauro explained the funding for the series, “We planned on having one sponsor per episode, but actually we found one company that wanted to sponsor all of season one. And now we are actually negotiating their option on season 2, so we’ve been very pleasantly surprised by how this has gone.”

The sponsor’s product will be part of the show, in fact the show will sometimes make fun of the product. But, says Mauro, “viewers won’t really know if the brand is sponsoring the show, they won’t know if it is truly a reality show and if the show is really making fund of the product. This ambivalence appealed to the brand’s marketing department.”

A key point that Mauro stressed is that this series been written by a professional TV scriptwriter, so it’s not a homemade YouTube type of creation. On the other hand, it’s not as expensive as a full TV production like “24“. The intent is to occupy the space in between – professionally produced but not so expensive that it’s hard to make a return. This combination should make it attractive to viewers, but still keep it within the price range of sponsors.

Mauro is very enthusiastic about this form of sponsor funded mobile content, and he concluded, “This is only the first production, we have several more that we are working on now. Some are our original ideas, and some are from other parts of Fox. We are now working out how best to package these for sponsors.”

“Hopefully this will spur a new industry which is made for mobile TV shows.”