Tuesday, July 9, 2013

Renewed Investment in the 2nd Screen Industry

In the last few weeks there has been notable activity in the 2nd Screen space.  Watchwith raised $5 million and ConnecTV raised $1.4 million.  In the Discovery space, Matcha closed its operations while Squrl and Vidora launched consumer-oriented services.  Yahoo bought Qwiki (for creating user generated 2nd Screen content) and Samsung acquired Boxee (presumably to attack the digital video end of the living room).  And then over the weekend, billionaire Carlos Slim announced he was investing $40 million into Shazam to accelerate their pivot from a music service to a second screen TV advertising service.  So while we have predicting that the space would consolidate (with some evidence that consolidation is taking place), there is enough market interest in the growth potential of the space to attract new investment and new services.

So with the summer upon us in earnest, it is a good time to take a quick inventory of the space through the lens of “Engage, Monetize, and Acquire”:

Engage.  While there has been much press around zeebox and Viggle having a combined 8m users, Xbox SmartGlass has quietly been downloaded 17m times.  So targeting the right demographic and leveraging the “passive but pervasive” capability of a second screen ecosystem seems to create utility and enough value to generate significant consumer activity.

Monetize.  There are more opportunities than ever these days to find real examples of monetization.  March Madness, for example, pushed 49 million live streams out (vs. 18 million the year prior) and 14 million hours of live video during the 3-week event.  69% of fans used the mobile app while watching the game and 26% of them watched some of the games live on their mobile app.  During the weekends, mobile viewing exceeded PC-based viewing.  Even if you assume only 1/3 of those streams went through their second screen app at a nominal CPM rate for sports, they generated sizable millions in second screen revenue from that event.

Acquire.  Once there is real engagement and a monetization model, app publishers can focus on attracting large numbers of consumers.  Viggle (3 million subscribers) and zeebox (5+ million downloads) have this figured out, with both leveraging online marketing and zeebox leveraging the TV channel power of their strategic partners, growing at steady rates.  March Madness had 3+ million unique mobile viewers through their app in the 3-week-long event.  Xbox clearly figured out a formula with their existing install base (30 million subscribers in the US alone).  Scripted TV shows and sports networks are promoting their apps as well, often giving exclusive content in the apps as an incentive for utilization.

So enjoy your summer and, despite the dynamics of this young and emerging market, take comfort in the fact that with each passing week, smartphone and tablet penetration continues to accelerate in the western world, fueling the potential for 2nd screen engagement and monetization.

We’re looking forward to discuss engagement and monetization with a focus on the growing European 2nd Screen industry at the 2nd Screen Summit: Amsterdam to be held on Sunday, September 15that the Okura Hotel.   Early registration is now open and we’ll be announcing a great set of anchor keynotes for the event this week.  Stay tuned!


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