TV2U International is a new entity, but it has a professional team with a long history, having worked together for 12 years, on average.
The stock market is getting used to the “cloud” business model, which sees providers offering cloud-hosted “something-as-a-service” to other companies, who don’t want to spend the money on the hardware and software required to do that something for themselves.
The latest tweak on this strategy is “managed TV content-as-a-service,” being the business offering of TV2U International Limited, (that is the name on their prospectus) which is raising up to $10 million to list on the Australian Securities Exchange (ASX) in December. TV2U is completing its listing through a reverse takeover into gas explorer Galicia Energy Corporation Limited (GAL).
TV2U is offering 200 million new shares at 2 cents each, to raise $4 million, with the ability to accept over-subscriptions of up to a further 300 million shares. After completing the $10 million offer, the company is expected to have an enterprise value (market capitalisation plus net debt) of $17.4 million.
TV2U International is a unique investment offering, targeting the growing market of over-the-top (OTT) content, a term that describes the delivery of TV and film content over the Internet, without requiring users to subscribe to a traditional cable or satellite PayTV service (like Foxtel.)
Television technology has changed: TV can now be delivered through an app, over the Internet, and run on customers’ existing screens. No longer is a set top box (STB) needed. TV2U International has positioned itself to take advantage of the demand for television without the high capex costs. TV2U differentiates itself from other competitors as it has both the television platform and the content.
TV2U has developed a set of technologies that enable TV services to be delivered over the internet to multiple devices including televisions, mobile phones, tablets, set top boxes and laptops. The company’s market is customers such as Internet service providers (ISPs), mobile telephony service providers and telcos that want to offer a TV service. Formerly that was a very expensive undertaking, with capital expenditure (capex) needed on content first, and second, the means to get it to customers (STBs). TV2U is offering a TV service hosted in the cloud, and delivered through the company’s technology solution, which is known as Intelligent Video Accessible Network (IVAN).
IVAN provides a complete solution to allow operators to deliver a TV service. This is built through an ecosystem of partner technologies and an in-house software platform. This solution enables the operators to manage their TV platform and end users to experience a next-generation TV experience.
The company’s cloud-hosted managed TV services – TARA (television and radio anywhere) – includes the latest TVOD (transaction video on demand), SVOD (subscription video on demand), Karaoke, Xbox & PlayStation Games and International content. In this way TV2U offers its third-party customers a white-labelled TV service streamed over Internet Protocol (IP).
As with other “something-as-a-service” providers, the business model is an opex (operating expenditure) model rather than a capex (capital expenditure) model. TV2U’s customers need to offer visual content to their customers, but they do not necessarily want to spend money on the equipment needed, or know how to buy the content. TV2U does this for the customers. Because the high capex costs are removed from the equation, TV2U can reach previously unreachable potential customers operating in high-volume, low-average-revenue-per-user markets – which are typical of the Asia-Pacific region market – and offer them advanced digital TV services.
Buying this in as a managed service from TV2U means the operators can get up and running within a month, rather than the 18 months to two years it might take them on their own, and then – excluding any capex costs that might need to be implemented on their network, for example a content distribution network (CDN) might need to be embedded – they are only up for ongoing fees.
This enables TV2U’s potential customers to “pass the business plan through their board a lot simpler than having to go through a capex plan,” says TV2U chief executive officer Nick Fitzgerald. “We’re lowering those barriers to entry for the operator, we take care of the service, they have no running costs put on top of their managed service. It is guaranteed for life that we will upgrade the technology as technology evolves. They don’t have to worry about that upgrading cost,” he says.
The revenues are expected to come from the following avenues:
- Initial implementation of the hardware and software infrastructure to business-to-business (B2B) customers (third party operators);
- service fees from providing managed services to B2B customers;
- fees from providing content to B2B customers;
- consumer subscription revenue share from B2B managed service; and • recurring revenue based on a licence fee per active subscriber, from B2B customers.
However, Fitzgerald says TV2U also intends to apply its patented analytical technology to monetise people’s viewing habits in other ways.
“Firstly, we are device and network-agnostic – it doesn’t matter to us on what device the content we supply is watched, or on which network. We can track what the customer is using, because every stream we put out to every device is unique. We can tell who you are, where you are, what you’re watching, how long you’ve watched it for, even down to on what device you’re watching, which allows us to do some pretty cool things.
“One is, it allows us to build a recommendation engine that will push content to you based on your personal profile. We’re creating a personalised TV channel, which we call MyTARA, which will automatically search the internet for content based on your personalised viewing habits, all your hobbies and interests. We could provide a bird-watching channel, or a four-wheel driving channel, with content tailored for that,” says Fitzgerald.
The beauty of this ability is that it allows personalised advertising, based on the viewer’s likes, he says. “Say I am a customer watching my sport, my news, on the bus on the way to work. I get off the bus to walk to work. Because we can track you right down to street level, we know, for example, that you will pass a Starbucks – we can target you directly, by your location, and say, ‘you’re passing a Starbucks, did you know there’s a special on a café latte and carrot cake?’ It really is quite unique on how granular we can be on the analytics and the benefits we can bring through on the personalised profiling for viewing content, or personalised advertising.”
The viewing habits can also be monetised in other ways. “Say a mobile operator is taking a white-label service called TARA Mobile, and offering it to other mobile operators’ customers. They also get the analytics, they know who is watching their content, where they are, what device they use, they even know what version of software the customer is using on that device. They can say to that customer, ‘I see you’re using a Samsung Galaxy 3: if you come on to my network, we’ll upgrade you to a Samsung 6, free of charge.’ It’s a really powerful tool,” says Fitzgerald.
TV2U has a lot of content rights in place, but knows that it must always be able to add to that. “Content is the lifeblood of the business, but we’re also doing contra deals to take content into various regions as well. Take China, for example: it’s not so much about trying to make money out of China, it’s a two-way thing – if we can take Chinese content and distribute it globally, it’s a two-way partnership. The Chinese diaspora is equally as important.
“Or take Nepal, which has five million expats in the Malay Basin. We can take content into Nepal, but also take Nepalese content, hold it in our hub and stream it back out to Malaysia. The real precious content is the home-grown content. We could for example create an Indonesian content channel that we can stream globally. All of these things are possible,” says Fitzgerald.
TV2U International is a new entity, but it has a professional team with a long history, having worked together for 12 years, on average. TV2U was registered as a commercial entity in Hong Kong in June 2010 as a systems integrator and technology company: it realised commercial success on several major projects, including:
- managing the live uplink and streaming of the 26th South-East Asian Games in 2011, for Indosat Indonesia, the host service provider to regional broadcasters and more than 20 million;
- the live-streaming of the Indonesian Super League (ISL) football competition; and
- managing the OTT and analytics for Nemont, a tier-two telco in Montana, USA.
Earlier this year, TV2U changed its business model from that of a systems integrator to a global provider of white-labelled, cloud-hosted managed TV/entertainment service, and changed its name to TV2U International.
In its prospectus the company is not forecasting future revenues, but TV2U International expects to be profitable within its first year of operation.
The prospectus and application form are available on the website of Galicia Energy Corporation Limted, at www.galiciaenergy.com. Applications and funds are due by Thursday 26th November.
