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Net2TV’s Morgan Opens Door to OTT

Net2TV Corp. is taking aim at the next generation of television using an over-the-top distribution approach that enables its partners to rapidly develop special interest channels that can be produced and created at costs that vastly undercut traditional models.

Early on, those results can be found in Portico TV, a free, ad-supported streaming-TV service launched by Net2TV in December 2012 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. Of recent note, Portico TV gained entry on the Opera TV Store, giving it access to a massive range of connected devices from Sony, Hisense and TiVo, and complementing its reach on platforms such as Roku, the Amazon Fire TV, tablets and Web browsers.

But Net2TV, which has also inked a deal to gain distribution on Arris’s set-top box platform, has bigger plans afoot, as it looks to strike deals that will enable cable operators and other traditional multichannel video programming distributors to complement their lineups with OTT-delivered channels.

Next TV editor Jeff Baumgartner recently caught up with Net2TV CEO and founder Tom Morgan to discuss the company’s approach with Portico TV and how it will use it as a springboard to additional markets.

NTV:Portico brings a new twist to the idea of mixing over-the-top distribution with a linear approach. How are you bridging those two worlds?

Tom Morgan: We started on the idea of bringing multichannel into the OTT world. That’s really what Portico is. It’s a multichannel app. Our focus has always been on the channel development and management process, not necessarily on us being a consumer-facing product.

We did Portico because we needed an app in these app stores, so we built it. But our focus has always been on promoting the programming, the channels themselves, whether it’s Cycle World or Sports Illustrated TV. We work with known brands to build ad-supported, long-form channels built out of things that were never originally meant for 22-and 44-minute long linear television.

NTV:Explain how you stitch together those clips and essentially turn them into a long-form TV program.

TM: We put together a television team in the Bay Area … and built a system that allows them to real-time stitch and curate long-form shows out of a video database. It’s all around a very cost-efficient and dynamic management of how to glue together a playlist. We treat a show as a playlist. The beauty of that, in the long term, is we can do things like [promote] what’s coming up next after the break.

Our completion rate is 96% — if someone starts a show and is there for at least a minute. The average duration is about 26 minutes.

NTV:What kind of gap are you trying to fill? There’s a lot of different ways to watch video over-the-top now.

TM: From our standpoint, we [focus on] targeted channels and brands that go into niche and passion-based sectors. Given that a lot of the traditional TV networks have moved to reality … we started focusing on [content] that could back fill into areas such as lifestyle and cooking. What we’ve found is that we have a completely different economic model and, therefore, a lot of the niche channels are now very economically viable.

We have production and curation costs that are sub-$2,000 per half-hour, which is mind-boggling compared to what it costs to produce a half-hour or hour-long normal television show.

And when you look at the skinny bundles — Sling TV and some of these other multichannel packages — what you’re seeing is a repackaging of American television and the idea that these new classes of channels can go into places economically that a more traditional, expensive channel cannot do.

NTV:In addition to expanding to new platforms, what else are you doing to promote the service and stand out from this sea of over-the-top options?

TM: We’re starting to make available Portico and our channel management system, which is the backend and how we feed it in, available to third parties. We always wanted to build a system that lets the channel owners manage their own channels. It’s very easy to offer channel management as part of a white label, manage-your-own [service] where we’ll do it with you, but under your brand. Or if you want your own version of Portico, we can bring you up very quickly and work with you to manage the service and promote your programming whether you do it in your own app as a multichannel service or whether you build a channel and feed it to the various multi-channels that we are seeing out there.

What you’re starting to see is a new era of multichannel. The large CE companies are abandoning their app stores and moving to a multichannel model where it no longer loads your app, but it’s about what channels you want. And you’ll see a lot of those types of announcements by mid-year to the next CES [Consumer Electronics Show].

Then you’re seeing all of the MVPDs develop direct feeds. We’ll start distributing channels — not Portico — into MVPDs within the next 90 to 120 days.

NTV:You’ve already been working with Arris on a set-top box integration, so that gives you a relationship with a company with tight ties to the MVPD world. What progress has been made there?

TM: There’s nothing public, but realize we were officially funded by Gary Lauder [the managing director of venture-capital firm Lauder Partners], who invested lots of money in ActiveVideo Networks [a cloud TV vendor that was sold to an Arris-Charter [Communications] joint venture earlier this year] and our original objective was to feed things into those cloud TV environments.

If you look at Sling TV and some stuff from Verizon that’s coming out, there are lots of different classes of multichannels on the way. Our objective is to get these new channels efficiently distributed into those environments and help our partners. The ingest systems and management systems were never consistent, so it’s been hard to scale it. We hide all of that.

We’re about [turning] a clip database into half-hour TV shows that people will watch. Our measured success is duration and completion rates, satisfaction levels and return viewership. Those issues make the money.

NTV:What kind of usage are you seeing now?

TM: All of our viewing metrics … have exceeded what I thought they would be. The hard part is raising sufficient money to build audience and really go after it. Portico is a Trojan Horse in the sense that we went for distribution equivalent to homes passed. The implication of the Opera announcement is that it takes us past 50 million homes passed equivalence, meaning there are 50 million connected devices, plus Android, plus iOS, plus browser, plus syndicated players. That’s above and beyond the 50 million.

But we’re not trying to make Portico a consumer-facing product. We’re not in the Hulu business.

NTV:What are your priorities for the rest of 2015?

TM: You’ll see us announce some MVPD deals. We’ll be taking straight channel programming into other people’s multichannel environments. We’re the only third-party programmer that is built on the idea of feeding the AVN [ActiveVideo Networks] system. That’s what Gary funded us for. We’re not licensing that system. We feed that system. Charter has that [AVN] system. Cablevision [Systems] has that system. Liberty Global has that system in Europe and in England.

And we can clone Portico in very short order. We can bring up a white label version of Portico without changing one line of code. We want you spending money on your viewership, your audience development and you’re distribution, not paying for technology development. We’re more of a curation and distribution platform than we are a consumer-facing product.