It’s a Great Time to Start a TV Startup, part 1: History and Lessons Learned

Thinking back on the recent history of TV startups, I’ve come to the conclusion that this is likely the best time in history to start a TV or entertainment-related startup. This’ll be a two-parter from me, and I’ll start by a summary of the past 20-odd years of innovation and change in the industry. While many people would say the TV startups that came and went over the past 5 years (Aereo, Miso, GetGlue, ZillionTV, BeeTV, Yap, etc) and the ones still in play (Zeebox, i.tv, Peel, Viggle — disclosure: I work there! etc) were the “TV 2.0″ startups, I’d actually argue they were the 3.0, and it’s now time for 4.0 (though I could easily go for 7.0 without a big stretch). Confused? Lemme ‘splain:

TV 1.0, or the “Plain Ol’ TV” era (1M BC to mid-1990′s): Technically we could say this is just the “three channel” era, and the advent of Cable TV then Satellite TV were the 2.0 and 3.0 endeavors. Now in reality the advent of Cable Television was unquestionably the biggest shift the industry’s ever seen, as it not only changed the financial dynamics in a massive way, but also set the stage for the huge providers that then themselves were set up to become dominant ISP’s.

But for today’s purposes, I’ll skip through to the mid-90′s, to define “TV 1.0″ — a time where TV watching was all done on a “TV set”, likely with a set-top box, and the majority of TV watching was done “live” (something I’ll be explaining to my kids forever). To give it some context though, TV 1.0 startups included CBS, ABC, Comcast, etc.

TV 2.0, the “TV My Way” era (mid-1990′s to late-2000′s): Started with the DVR/timeshifting, included streaming media devices and placeshifting, ended with streaming. It’s almost impossible to explain how profoundly different TV is today than it was a mere decade ago. But to explain the difference between the previous decade is equally profound. First, the DVR moved TV off the default schedule, and onto our own personal schedule. Back then the only way a show could be “spoiled” was because you hadn’t watched your VCR tape, or some idiot friend from the East Coast called you (on your landline) and ruined a moment. My friend Richard Bullwinkle, former Chief Evangelist at TiVo says:

“The DVR was an excellent stopgap technology to help us all understand that Live TV was, if nothing else, inconvenient.”

With the advent of the Slingbox, and to a lesser degree a variety of streaming devices/services, TV then moved not only off schedule, but off-device. This change, called placeshifting, was the underpinnings of all forms of TV Everywhere, Netflix streaming, and everything else that moved the TV experience from primarily a “living room” activity to a “wherever I am” activity.

And then came a little video streaming site combined with Lazy Sunday, and poof, the world exploded. YouTube led to all forms of uploading/streaming, which led inevitably to the advent of Netflix streaming. Combine these pieces and you end up at the beginning of the 2010′s with the commonly accepted notion that “I watch *anything* I want, on *any device* I want, at *any time* I want, in *any location* I want. TV 2.0 startups included TiVo, ReplayTV, Sling Media, Roku, Netflix, YouTube, Hulu etc.

TV 3.0, the “Enhance TV” era (2010–2015): Combine the maturity of “Web 2.0″, which allowed developers to “mash up” any Internet services any way they saw fit, with the radically new availability of content and services from/related to the TV industry, with widespread access to powerful mobile devices and everywhere-access to high-speed Internet. What entered next was a wave of startups all focused on finding ways to “improve” the TV experience. Also sprinkle a dash of Venture Capitalists looking to find the next hitherto-undisrupted industries, and young entrepreneurs with visions of change.

Unfortunately we need to sour the story for a moment, as most of these ventures went belly-up. In some cases the companies needed deeper pockets and longer runways. In many others we were seeing technology solutions seeking out consumer or industry problems. Some are still up and running, and thriving. Most aren’t.

And with failure I think the most important thing to look at is what we should learn from it.

The TV experience was far from broken. For people who liked traditional/broadcast TV, aka the majority of TV audiences, all these new apps and services just put barriers between them and their beloved content. For people adopting streaming, on-demand, well, it’s already pretty awesome. Far too many startups went out with the proposition of “TV is broken” — it’s not.

People don’t want to multitask within TV. I can find a few dozen studies on how people are “second screening” their TV watching experiences. But this equates more to distracted living than some latent desire to watch a TV show and read “background” info written by an intern at the exact same time. Sure there are a few wins in this field, but not nearly enough to support a young startup.

YouTube is the best YouTube experience. While I can throw out a few ways to make YouTube a better experience (ahem — search while watching? better search algorithms? verified accounts?), fundamentally people are perfectly fine using YouTube as is. And as Hunter Walk put it best: “[YouTube discovery startups” struggle because video discovery just isn’t a venture scale business.”

SDKs and APIs don’t make TV an “open” business. I’ve watched a bunch of startups go after opportunities they see because companies like DirecTV and Hulu make API’s to access or interact with content. But these API’s are not the deep, raw access to services like Google Maps and Yelp provide, they are shallow services to enable very simple and basic access to limited feature sets. Maybe one day that’ll change, but until it does, there’s just not enough meat on the bones to support a startup.

Cord Cutting isn’t real enough. Want to hear an UN-sexy headline from a tech blog? How about “Pay TV Industry Alive and Well” or “Turns Out Almost 90% of Americans Like Paying for TV”? Ain’t gonna happen. So we’ve seen cord-cutting mania across the landscape, causing entrepreneurs and investors alike to think its a huge market/opportunity. We can all argue the numbers, but fundamentally until the past 3–6 months, there’s been no evidence, whatsoever, that there’s a big swell of people dying for some cord-cutting product that they’d then in turn pay for. Don’t get me wrong — this market will emerge one way or another, whether by cord-shaving or cord-nevers or cord-cutting itself. But it’s nascent today, and that’s a problem for a current startup funding climate that expects hockey-stick growth after two weeks of growth hacking.

Coming tomorrow(ish), part two: the rise of TV 4.0 and keys to success. Which focuses on a the following theme (well-said by Dana Loberg, founder of MovieLaLa):

It’s definitely an exciting time to be working in a startup in the entertainment /technology cross-section. There’s a lot of changes occurring because technology has fundamentally changed the way we communicate, engage with each other and even consume content.

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Originally published at livedigitally.com on March 2, 2015.