Net2TV, the company behind the Portico TV service for Roku players, smart TVs and browsers, confirmed that the company is seeking a sale of its engineering platform and intellectual property.

Portico TV is a free, ad-supported streaming-TV service that features full-length shows (stitched together from a database of video clips) from brands such as Time, Newsy, Popular Science, Sports Illustrated and Cooking Light. Portico TV recently joined the Opera TV Store, giving it access to connected devices from Sony, Hisense and TiVo, and building on its reach on Roku players, Amazon Fire TV, tablets, smartphones and PC browsers.

Net2TV had also struck a deal to gain distribution on Arris’s set-top box platform via its OTT “market,” and, as  Net2TV CEO and founder Tom Morgan told Next TV in this Q&A (subscription required), the company was working on some deals with MVPDs.

But despite being available on 40 million screens, Portico TV found it challenging to build and scale an audience.

“We felt we did a very good job curating [content] and proving the point that you could take digital-first stuff and turn it into quality programming,” Morgan said Friday.

The challenge, he said, was how to distribute that content in app stores on smart TVs.

“That proved much harder than we thought,” Morgan said. “We thought that the stellar brands we were using could cut through a lot of the clutter. And there's a lot more to it than just that. Building audience is still the name of the game." 

And gaining attention and eyeballs amid a sea of apps remains a big challenge for all OTT providers. Securing proximity to the most popular apps certainly helps.

While viewing Roku as “by far the best in the industry” when it comes to building an audience due to its promotional capabilities, Morgan said Portico TV, which is still operating, had “stellar performance” on the Philips TV platform because the service was “one button away from Netflix.”

“We came to a conclusion. you either had to have an existing media business -- a local television station , a network , a media property -- or you had to have a large pool of resources like what Jason Kilar's doing (with Vessel, which has raised more than $134 million)…and go with heavy digital spend,” Morgan said.

Net2TV tried to create a software-as-a-service platform, but found that it’s not set up to be an enterprise company. “We just ran out of runway,” Morgan said.

Net2TV is close to a sale, expecting to complete it next month, but isn’t discussing who it’s in talks with. However, the aim is to sell its IP and engineering platform, which includes a curation and playlist system and a content management system. Morgan also hopes to find a buyer that’s interested in taking over the Portico TV service as well. The content libraries developed for Portico TV are expected to go back to Net2TV’s partners.

Net2TV hasn’t said how much it had raised, but the company, founded in 2012, was funded by Gary Lauder Partners, which sold ActiveVideo to a joint venture of Arris and Charter Communications earlier this year for $135 million. Net2TV also uses ActiveVideo’s cloud video platform.  Morgan said Lauder was “patient and supportive” with Net2TV.  

Before Net2TV started to push for a sale, one of the things it was working on was adapting its platform to support more localized syndications.

Interestingly, Net2TV’s OTT platform did not lean heavily on adaptive bit rate, a technique that allows the bit rate and resolution of a stream to adjust based on the available bandwidth. Morgan, who is late of ABR pioneer Move Networks (acquired by EchoStar in 2011), said the networks and video players are getting good enough to eschew ABR.

“What we found is that the play-listing and sequencing of a series of videos and…ad insertion were more important,” Morgan said of what Net2TV had learned. 

Portico TV, Net2TV Corp.’s free, ad-supported streaming TV service, will secure a new distribution point early next year when Arris adds offering to its OTT platform for set-top boxes. 

Arris will offer Portico TV on set-top boxes outfitted with the recently launched Arris Market, an OTT offering that complements traditional linear TV programming offered by cable operators via the vendor’s Whole Home Solution, which is anchored by a six-tuner HD-DVR with an integrated DOCSIS 3.0 modem and WiFi connectivity. Arris has not announced any operator deployments of Arris Market, though it’s believed that WideOpenWest will tap into it to provide access to Netflix on the MSO’s “Ultra TV” platform, which relies on Arris-made multi-room HD-DVRs. Other MSOs that have rolled out Arris's Whole Home Solution include Shaw Communications, Buckeye CableSystem, EastLink, Comporium, Consolidated Communications and Service Electric Cable TV. 

Portico TV currently offers more than a dozen free, ad-supported OTT VOD channels with partners that feature long-form TV shows, including “Better Homes and Gardens,” “Southern Living,” “Saveur,” “Cooking Light,” “World Eats,” “Inside Golf,” “Cycle World, “Sports Illustrated,” “Field & Stream,” “A Closer Look with the AP,” “Newsy in 30,” "NASA Television," “The Week in TIME,” “PEOPLE This Week,” “Celeb TV,” and “Popular Science.”

Portico TV’s content is produced by curating and stitching together short-form Web videos on a given topic into 30- or 60-minute programs that are structured like traditional TV shows, including teasers before commercial breaks and a host who transitions viewers from one segment to the next.

The Arris agreement “gives us an opportunity to be in the same neighborhood of the most popular channels on television,” Jim Monroe, Net2TV’s SVP of programming, said.

Portico TV is also offered on Roku boxes, Android and iOS smartphones and tablets, and connected TVs from Samsung, LG Electronics, and Philips. Portico TV also has a deal with Sony, but hasn’t been launched on that platform yet.

Net2TV won’t say how many consumers are tuning in, but Monroe said Portico TV is getting a 30% repeating viewing rate, and a “completion rate” in the range of 90% to 95%, with average viewing of 19 to 22 minutes.

While the notion of creating subscription-based programming is on the company’s roadmap, it’s not something Net2TV has executed on so far. 

“We’re taking cues from our programming partners,” Monroe said.