VC Video Investments Go Over The Top

Although early video investments (and acquisitions) were focused on the desktop, a new influx of funding is pivoting to channels like over-the-top TV.

In the span of three months, more than $150 million in VC funding has been injected into startups capitalizing on the demand for new video content – and addressing the challenges of monetizing it all.

In June alone, smart-TV data platform Samba TV raised $30 million, Conviva raised $40 million and sports-focused streaming service FuboTV banked $55 million.

Before that, the ad-supported streaming video service TubiTV snagged $20 million in May while Mux, a video analytics platform for publishers, raised $9 million in April.

Foundation Capital, an early investor in TubeMogul, which was acquired by Adobe for $540 million, later invested in Conviva. The startup analyzes OTT viewing patterns and makes sense of the metadata for media companies like HBO and Sky.

And investors say it’s only the early innings in the next wave of video innovation.

“With increasing adoption and advancements in new platforms like mobile and VR, we expect OTT digital video revenue to double by 2020,” said Ashu Garg, general partner at Foundation Capital. “Right now, there is no easy, affordable and efficient way for brands to purchase ad space and capture analytics across multiple channels.” 

Investors typically look for categories undergoing digital transformation when deciding where to place their bets.

“VCs are looking for markets ripe for heavy disruption and where there will be players addressing the needs of the end consumer,” said Farhad Massoudi, CEO of Tubi TV. “I think it’s pretty clear that TV, which is a massive market at about $70 billion just in the US, is one of them.”

Although industry observers have long predicted linear TV dollars would eventually move to digital en masse, OTT may be the first big beneficiary.

“We’ve been talking about TV dollars’ shift to digital for decades, but since TV spend isn’t [as effective when] ratings are down, more money is being left on the table,” Massoudi said. “Brands still want to communicate with their consumers with premium video advertising, but need a more efficient way to do it.”

While video platforms like Netflix, Hulu, HBO Now and Amazon have popularized OTT subscription models with consumers, advertising hasn’t kept up with demand.

And many recent video investments aim to address that gap in the market.

“The challenge is that advertising channels are still siloed,” said Foundation Capital’s Garg. “We have many online content platforms, but we don’t have an integrated approach for building multichannel opportunities for advertisers. The process is expensive and inefficient.”

But many envision a future where programmatic eventually helps drive those efficiencies, which is spurring more investment from TV companies.

“Programmatic removes a lot of friction and opens up more diversity in demand,” Massoudi said. “That’s one of the biggest complaints about video on demand from the advertiser’s perspective – they want the scale, targeting and measurement they see in digital.”

 

Add a comment

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>