Sometimes the best solutions are hard to believe. Sometimes they’re so improbable that you only come back to them after trying seemingly everything else! In the media industry, we can see that playing out right before our eyes, to the tune of hundreds of millions, if not billions of dollars.
In this case, Apple was the one writing the checks. After years of speculation that the tech giant would dive into television with a subscription TV service, the company abruptly changed course, canning those plans in favor of creating a guide to existing content on the web.
Failing to execute the tried-and-true strategy employed by cable and satellite providers, Apple has determined that the best strategy to attack the TV market isn’t the obvious one of licensing content, but rather aggregating it, a strategy employed by none of the big TV or tech companies, but pioneered by an Orlando-based startup founded by one of the fathers of streaming media.
A Step Ahead
For today’s generation, thinking of the concept of television may just as often bring Netflix or YouTube to mind, as the traditional living room set and the familiar networks that their parents have enjoyed for decades.
This is an idea that can be traced back to William Mobley and his old company, MegaMedia Networks, which pioneered streaming television by creating the first no-download, on-page web videos. These weren’t early cat videos, but rather Hollywood’s biggest blockbusters, thanks to deals with Sony Pictures, Warner Bros, Miramax, and more. MegaChannels, as it was known, was essentially the Netflix of its era: an era of 56kbps modems, and when the actual Netflix just a startup offering DVD rentals by mail.
Like many tech companies of the era, MegaMedia Networks flourished with over 800,000 views per day, but eventually suffered from a collapse in advertising revenue in the wake of the tech bubble. Though MegaChannels did not survive, Mobley walked away with more understanding of how the media industry of the future would look than any TV exec at the time would have.
Ready and Waiting
A decade later, Mobley would reemerge on the media scene at the helm of a new venture, known as FreeCast. With its unusual approach, the company began as a bit of a curiosity in its industry, following a radically different strategy than the leaders ofthe space which Mobley himself had created.
Rather than paying to license content and create a library, as Netflix did with about 5000 titles, FreeCast focused on aggregation, creating a TV Guide to the wild world of web video in which popular content, including both live linear video and millions of titles, was spread across hundreds of thousands of websites, apps, services, and storefronts.
In 2012 when cord-cutting was widely written off as some sort of myth and Netflix was synonymous with web television, the value in an aggregated service with no exclusive content was hard for many to see. Though over 4 million consumers understood it well, snatching the first licensed retail version of the company’s web based guide off store shelves in record time.
Fast-forward to 2015 and Mobley’s FreeCast had clearly carved out a space with its SelectTV Platform that other companies wanted in to. Pay TV providers were hemorrhaging subscribers, and media industry stock value was evaporating, at one point to the tune of over $60 billion in 48 hours! TV networks and movie studios meanwhile had fallen out of love with Netflix and other SVOD libraries, opting to launch their own services instead, creating more options for consumers, but also frustration as web television once centralized within Netflix began to move between dozens of similar services.
Proven Right on Apple’s Dime
In a world in which “content is king” as the saying goes, there was still skepticism as to whether a company like FreeCast could field a competitive and profitable video offering without paying licensing fees, even as rivals invested billions in content. FreeCast’s approach instead facilitated engagement and transactions between consumers and content providers, like the networks and studios, keeping costs low for all, and leaving 100% of ad revenues with the content providers. Keeping these ad, subscription, and pay-per-view revenues with the content providers allows FreeCast’s service to become even more lucrative than cable television’s regional retrans fee agreements.
That skepticism disappeared earlier this year when Apple announced that it too would create a guide to web-based television, after years of flirting with the idea of a virtual pay-TV offering of its own.
While it’s impossible to know how much time or money had been spent by Apple in its efforts to break into the TV space, the company has likely been working on it since as early as 2009. Since then, the rumored TV service has been oft discussed in news headlines and within the TV industry, suggesting that Apple had indeed been working towards it. From taking a stab at the challenge of getting local television online to advanced negotiations with CBS to bring the network to its service, Apple had clearly invested both cash and manpower in the plans.
Despite regular news stories claiming that an Apple TV service was imminent, the company more recently dropped a bomb on its observers with the announcement that it was giving up on live TV to build a guide instead, abandoning years’ worth of efforts and investment.
Even Apple, a company able to spend virtually unlimited resources on the project, has chosen to abandon the traditional approach and instead do exactly what Mobley’s FreeCast is doing.
For the Florida startup now faced with the prospect of competing with a massive juggernaut of a company like Apple, the news couldn’t be better. Those billions spent may have proved fruitless for Apple, but they validated FreeCast’s unique offering, cementing the company as a leader in a space that was suddenly due to receive massive interest from the entire tech and media world.
A Revenue Revolution
Perhaps what’s most intriguing is that FreeCast’s SelectTV is co-brandable, available as a licensed or white-label guide. This will allow any device manufacturer, regional telco, hospitality provider, or other large community of users to affordably field a competitive video service that can hold its own against those coming from multi-billion dollar companies.
Since FreeCast has done all the work, other companies will be able to almost effortlessly leapfrog Apple in its quest to start making money in the television industry. The potential is huge.
What FreeCast’s service does is take the consumer trends that are currently hurting traditional media’s bottom lines, and monetizing those behaviors. As consumers flock to online video sources, making it easier to access them through SelectTV means advertising and pay-per-view revenue for the guide provider, which could be anyone who partners with FreeCast.
For traditional TV providers, SelectTV is an affordable service that could easily be branded to match their existing products and added to their subscribers’ packages. Near instantly, they’d go from suffering from consumers’ move to online video, to profiting from it.
For any tech startup, from SnapChat to Spotify; companies that have millions or billions of users but a hard time monetizing them, SelectTV is an easy recipe for revenue. If even one percent of SnapChat’s 100+ million monthly users were to opt in to a $2.99 per month TV service, that would mean over $9 million a year in new revenue, for almost no effort beyond saying “yes” to FreeCast.
Manufacturers such as HP, Samsung, Microsoft, and even Apple could get in on the game, benefiting from new sales or pre-loads onto products they already produce. In doing so, they save themselves from having to play catchup and spending more money to develop new technology to replicate or one-up something that already exists.
Apple finally has the right plan to attack TV, but by the time they get it up and running, they could be a year or more behind not just FreeCast, but dozens of brands that will be utilizing the startup’s technology.
Read on The Huffington Post