Shares of Thwapr Inc. (OTCBB: THWI) have jumped more than 40% on Wednesday, hitting a high of 0.1350 following Tuesday’s close of 0.0935, with trading volume shooting passed the 2.2 million mark by mid-afternoon. Triggering the positive activity has been an aggressive promotional campaign informing investors about the recent advancements by the company how they relate to the continued emergence of mobilizing and monetizing branded video content. The question is, can THWI establish itself as the premiere vehicle for marketers to distribute video content?
At present most video marketing involves third-party sites like YouTube where the marketer has limited control of their content. Videos on these sites can carry advertising that is in direct competition with the actual subject, essentially defeating the purpose of the message. THWI has developed a service that eliminates this clash, enabling a marketer’s video content to be viewed and shared without the interference of outside advertisers.
Working in similar fashion to other “share” buttons like Facebook and Twitter, THWI has created a platform in which a marketer’s video content can be “shared” without directing viewers to a third-party site that negates their intent. Making this platform all the more valuable is its focus on mobile devices and its ability to avoid the need for an app or download. With a Thwapr “share” button a viewer can simply type in a mobile phone number and have that content sent directly to that phone.
The impact this could have for marketers is significant as Bruce Goldstein, CEO of THWI, stated it would enable them to “brand their content, wrap it in advertising or sponsorships and engage their audience without losing control in a third-party environment.”
Separating themselves from other mobile video delivery solutions such as MMS, THWI’s Share to Phone platform is capable of sending up to 60 minutes of video content directly to mobile devices, far exceeding the traditional couple of minutes that other solutions offer. As pointed out in their press release distributed on Wednesday this platform is “ideal for longer format content owners such as television shows, news outlets, viral marketers, and sports organizations that want to reach a mobile fan or viewer base via SMS subscriptions or from Web-based video directly to a phone.”
Adding further value to marketers, THWI “supports the ability to deliver videos of 60 minutes in length to a majority of smartphones and feature phones using the Android, iPhone iOS, RIM, Symbian, WebOS, Windows 7/Mobile, and other proprietary Operating Systems. This includes devices manufactured by Samsung, LG, Motorola, HTC, Sony-Ericsson, RIM, Palm, Nokia, etc.”
Of course there is the small problem of generating revenue, something that has escaped THWI to this point. The company has said they “plan to derive revenues from banner and video advertising on our mobile and desktop websites and from mobile media messaging fees from brand sponsors and to sell premium services to users and brands via subscriptions and other fees,” yet the money isn’t exactly rolling in right now.
In their last filing detailing the results of the three-month period ending June 30, 2011 THWI addressed this issue saying “we do not anticipate generating any meaningful revenues until such time that a significant number of users and brands have signed up for and are using our service. While during the remainder of 2011, we expect to continue to enhance our service offering with an emphasis on allowing brands and content providers to use Thwapr to promulgate rich media to their customers, beginning in the third fiscal quarter of 2011 we plan to actively market and sale our product offering to our target market in order to generate meaningful revenues.”
Unfortunately there has been no information regarding that third quarter so investors are led to assume that the number of users and brands signing up for and using the service are not that high. To say that these numbers need to be strong is an understatement given the current financial situation that THWI finds itself. In the most recently reported three-month period they reported a net loss of $1,349,535 and this is coming off their previous quarter ending March 31, 2011 in which they reported a net loss of $2,409,394. Sales during those two periods would be considered less than impressive by any standards, $5,700 and $508, respectively.
As of June 30, 2011 the company had cash and cash equivalents of $18,585 while holding current liabilities of $1,447,198. Since inception through June 30, 2011 THWI has an accumulated deficit, excluding non-cash charges, of $6,544,658.
Capitalizing on the explosive growth of mobile devices and the need for more effective video content delivery platforms for marketers, THWI certainly has potential but they will also face significant competition. It is imperative that they find a way to establish themselves as a leader in this arena and possibly become an attractive target for acquisition or they could quickly become overrun by dveleopers with deeper pockets.