2013/10/25 Net2TV Offering Portico TV to Serve Up Programming That Suits Your Passion
Net2TV is an OTT content provider with a unique business model. It packages web video clips into long-form linear made-for-television programming for a lean-back TV experience, differentiating from the “snacky” short-form content for the lean forward experience. Founded in 2012, Net2TV launched the Portico TV service in December 2012.
Topics for the Portico TV service are chosen to appeal to a passionate audience (e.g., news, food, tech, Hollywood, and indie film) in half hour segments. These are audiences who were previously served by the specialty cable channels — A&E, Food Network, Bravo, et al — before those channels began to offer, exclusively or in part, reality programming. Net2TV’s programming partner clips are curated and packaged with opens and closes, logical story flows and pacing. Each of five linear channels will run about eight hours of programming per week, which can be changed regularly.
Net2TV looks for programming that is free from the traditional TV rights. The programming is not traditionally available on pay-TV services, but instead culled from magazine publishers or YouTube content providers that want to become established as TV brands. Net2TV hosts all the content so it can track the viewing.
To help viewers discover the new programming, Net2TV developed the Portico channel guide. The cloud-based system offers programmers and advertisers a consistent experience across the various TV platforms.
Portico TV is free to consumers based on a limited amount of dynamically inserted targeted ads that stream with the show rather than requiring buffering. There are six ad breaks per hour with two ads running per break. Net2TV shares the ad revenue with the content provider and TV set manufacturer.
The service is targeted at devices like Smart TVs and tablets, where manufacturers are looking for content to enrich the OTT experience for their customers. Net2TV targets listings at the top of the menu (near Netflix, Amazon Instant Video and Hulu) to generate more traffic to the Portico.
On screen advertising (Roku), banners (Toshiba) and inbox advertising for Sharp and Toshiba are also used. Social media campaigns will be employed to reach Portico’s special-interest groups (food, tech, news, entertainment, and indie film) starting in late October.
First deployed on a Philips Smart TV, Portico can be natively installed on a TV or it can run as an app in a browser-based environment. Most recently it has landed on Toshiba tablets and PCs and the Roku streaming media player. Net2TV’s goal is to be available on 20 million screens by the end of 2013. At the beginning of October 2013, Net2TV was available on approximately 10 million screens.
For some of the devices, Net2TV had to move Portico to run in a browser, so it launched porticotv.com to enable viewing from desktops and laptops. Viewer numbers for portico.tv other than those viewing on Toshiba devices are not included in the screen counts.
In addition to advertising revenue, Net2TV is exploring alternate revenue sources to help support its program partners as the advertising marketplace matures. Net2TV has indicated that is has generated interest from multichannel programming distributors and networks who may want to add their content. As Net2TV’s library of programming grows, there may be syndication revenues from program sales to stations, cable networks and international outlets. The company is also exploring models in which advertising is sold by these pay-TV providers or by other parties capable of commanding higher CPMs (cost per one thousand views) and of selling into endemic categories, with a fee back to Net2TV.
The company’s programming partnership development is focused on companies that are producing video for online or print brands that want to move into TV. Net2TV is working to create a variety of programming rather than simply adding volume. It is currently adding a new show each week for each category except for news, which is updated every weekday. Recent additions to Net2TVs Portico program line-up include “World Eats” produced with programming partner ifood.tv, “Cook Taste Eat” with celebrity chef, Michael Mina’s production company, and “Newsy in 30” with partner, Newsy.
Gary Lauder of Lauder Partners is currently the lead investor. Net2TV is in the midst of a new financing round.
MRG Analysis: Net2TV revenue will come from advertising using dynamic ad insertion, advanced advertising with audience interaction, showcases and potentially from television distributors or syndicators. It hopes its focus on special-interest programming for audiences who are passionate about the subject area helps it gain advertisers looking to engage a specific audience.
In comparing Net2TV’s prospects to other streaming television providers, SNL Kagan estimates total ad revenues for Hulu in 2012 at US$452 million with more than one billion video ads served per month. Hulu’s advertising system allows the viewer to select the frequency and ads they want to watch to more fully engage the viewer. Hulu’s CPM is also much higher than the expected CPM for Net2TV. If Net2TV receives a CPM of $20 with one million ads viewed per month, they will generate $20,000 revenue per month which must be split with the content owner and device manufacturer. At ten million ads viewed per month, Net2TV’s revenue will rise to $200,000 per month before being split. Therefore, Net2TV’s exploration of alternate revenue sources may provide revenues to support the company and its programming partners while the audience grows large enough to generate ad revenues.
If the online video landscape develops the same way cable television did – with anchor networks attracting viewers and niche networks building on that base – Net2TV may be able to grow programming and audiences as more and more viewers move their viewing to OTT sources. As long as there is the wide quality gap between Netflix and a multitude of apps featuring web clips, Net2TV has an opportunity to carve out a place for free, long-form programming.
It will be a challenge for Net2TV to get viewer eyeballs when there can be over 50 video apps listed on a smart TV menu and Roku offers over 700. Being placed near the more popular services like Netflix, Hulu, and Amazon will help get viewers to see the Portico TV offering and if interested, watch the first time. Then it is up to Net2TV to grow the amount of content on Portico TV to keep viewers coming back.
Source: MRG Analysis
