SANTA CLARA, Calif.--Startup Net2TV is in discussions with "several" consumer electronics companies to install its service onto their smart TVs, and expects the actions to result in its online video service being fitted into around 20 million smart TVs in the United States by early next year.
Further, the company said it is in discussions with Roku to have its service installed on Roku's streaming video products.
"We're talking to Roku," confirmed Jim Monroe, SVP of programming for Net2TV. "There's no reason we shouldn't be on Roku."
Monroe explained that Net2TV isn't merely hoping to get into smart TV app stores. Instead, he said the company is working to ink agreements with the smart TV companies directly in order to have its service ranked at or near the top of a smart TV user interface.
Monroe also said the startup plans to soon launch advertising on its streaming video service. He declined to provide details, but said the company's service will soon start adding advertisements to the streaming content it is providing from Discovery Communications (Nasdaq: DISCA) and CBS Corp. (NYSE: CBS). Net2TV announced in February that Unicorn Media will provide dynamic ad insertion services for Net2TV's streaming video service.
Importantly, Monroe said Net2TV is hoping to insert standard TV advertising into its service instead of digital ads. Monroe explained that marketers to date have kept their TV advertising budget separate from their Internet advertising budget, but Net2TV is hoping to tap into advertisers' TV advertising budget (which is much bigger overall than the digital budget) because Monroe said the company's service creates "a TV-like experience."
"We will endeavor to take their [advertisers'] TV ads," Monroe explained here at the OTTCON conference. But he acknowledged the difficulty of such a strategy: "I'm sure it won't be perfect, but that's where we're headed."
"It's TV," Monroe said of Net2TV's service. "It deserves that same level of attention."
Former executives from Netflix (Nasdaq: NFLX), NBC and MTV launched Net2TV in December. The company quickly inked a deal with Philips to have Philips install Net2TV's Portico-branded Internet TV service on Philips' connected TVs via a software update. Monroe declined to say how many Philips TVs Net2TV's Portico service is now on.
Monroe explained that Net2TV essentially collects and curates free video clips on the Internet into TV-style shows. He said the company has inked agreements with a wide variety of content suppliers including the Wall Street Journal, Chow.com and others, to collect their free video clips and assemble them into TV-style content. For example, Monroe said Net2TV combed through Chow.com's archives for clips about different kinds of romantic dinners. The company assembled those clips into a 30-minute show about how to prepare and serve romantic dinners, complete with an introduction from a Chow.com host and breaks for TV commercials.
"Instead of a series of clips, we think of it as a show," Monroe said.
The result, Monroe explained, is content that features the "format and trappings" of a regular TV show that Net2TV can distribute through smart TVs--and can sell TV-quality ads against. Net2TV's content suppliers, like Chow.com, can then share in the resulting revenues from the ads.
Monroe said Net2TV's service currently offers four channels, including a tech-focused channel and one for cooking and food, but the company plans to expand that portfolio to around 12 channels, including ones for kids and comedy. He said the company's service could be delivered through a Portico-branded service (as it is on Philips TVs) or through a service carrying the brand of a connected TV manufacturer like LG or Samsung.
Moreover, Monroe hinted at additional revenue opportunities for Net2TV like sponsored channels. For example, he said the maker of Barbie toys could create a Barbie-themed channel that would offer videos of the toys in action--an effort that could eventually lead to sales of the actual dolls.
"A lot of companies have content initiatives these days," Monroe explained, pointing to the wide array of action sports videos produced by beverage company Red Bull.
Monroe explained that Net2TV's ultimate goal is to improve the content offerings available on smart TVs by bringing online video content in line with that available through cable TV. Smart TV providers "are looking around for better [content] solutions," Monroe said.
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