Few Media Companies Fund ACR and Second-Screen Interactive TV Start Ups
A minor wave of investment in the last two years has funded social TV technology and companies that use automatic content recognition (ACR) software to handle interactive TV applications on TV sets, smartphones and tablets. Though the price tag for getting in on this nascent industry has been relatively low, few major media companies have invested in the technology. Add up all the disclosed investments in the space and the total is less than $150 million, according to data compiled by Sharp’s social TV chief Anne-Marie Roussel on her personal blog: http://xrl.us/bm3k2h. She counted more than 30 new companies in the sector. Some haven’t disclosed their funding, so the total that’s been invested in the cohort is presumably higher.
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Some media companies have made modest bets on these companies: A consortium of TV station groups invested in ConnecTV, Time Warner has a stake in BlueFin Labs and Sony’s entertainment division bought Gracenote. Overall the ACR companies have found funding with financial and venture capital investors, not the traditional media companies and distributors they seek to work with.
If these ACR companies succeed, they could create a new layer of interactivity on TV programming, allowing viewers to more easily share information about what they're watching, tune in, request information about products and buy things they see on TV from their phones or iPads. There’s no guarantee the technology will pan out, and some in the industry are beginning to question whether the recent hype surrounding ACR and second-screen apps is warranted. “In general, people have over-speculated on the value of lots and lots [of] rich concurrent interactivity,” said Colin Decker, a senior adviser on media and telecom investments at the Virgin Group. “I think people are getting basically 90 percent of what they will want from a two-screen experience by having an iPad in their lap with a Web browser open."
The technology and businesses that use it are still nascent. “We broadcasters feel like we've bet on a really strong horse, and I'm not even sure the gates have opened yet,” said Roger Keating, senior vice president of Hearst TV. It and Belo, Cox Enterprises, Gannett, Meredith Corp., the Washington Post Co.’s Post-Newsweek, Raycom, Scripps, Barrington and Media General have partnered with the Emeryville, Calif.-based ConnecTV. “To the extent it does explode, we want to be a part of it,” Keating said. “And we also think we can help determine the outcome.”
One reason media companies may be staying away from owning and investing in these types of companies is they could doom them. “It’s impossible for a media company to convince its competitors to use its infrastructure,” said Ashwin Navin, CEO of Flingo. Media companies are fierce competitors for prime-time TV viewing audiences and would be unlikely to trust that they would be treated fairly on a competitor’s technology platform, he said.
Larger investments in the technology will probably be held back until it’s more mainstream, Navin said. “No one took TiVo seriously until it was at about 30 percent penetration.” The practice of watching TV while using a smartphone or tablet is already mainstream among people who own those devices. According to a recent Nielsen survey, 88 percent of U.S. tablet owners and 86 percent of smartphone owners polled said they used their devices in front of the TV at least once during the previous month. About half as many said they use the devices with the TV on daily (CD April 6 p13).
"This is a whole new world,” said Jeremy Toeman, chief product officer for Dijit. “It’s all exploratory and most of it is not going to stick,” he said. “ACR is pretty hot right now, probably more than it should be.” For now, it’s worth the investment to find out if the technology will catch on, Keating said. “We think it has potential to be big, but you never know,” he said. “The difference between having something that’s a dud versus the next Facebook is unknowable.”