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TV-TWO: Tokenizing Video Entertainment

  • 2 March 2018
  • Expert Insights

Our new Disruption by Blockchain series aims to highlight companies that are leveraging the incredible potential of blockchain technology to disrupt and revolutionize their industry. Through one on one interviews, we'll speak directly with industry leaders to cut beyond the hype and get directly to the heart of practical use cases and examples of how it will change the world, one industry at a time.

The following is an interview we recently had with Philipp Schulz and Jan-Phillip Hofste, Founders of TV-TWO.

1. What’s the history of TV-TWO? How and where did you begin?

JPH: Philipp and I met 2 years ago when we were working in a mobile advertising tech startup. In mid-2017 the venture was acquired by Telefónica Germany. Equipped with a ton of key learnings and an accelerated experience of working closely together, we decided to launch our own baby!

When we heard that Facebook and Google were looking to expand into TV, we were intrigued. When researching the market, we discovered that a fully functioning Smart TV infrastructure already existed (700 million sets globally), but its potential was largely untapped by TV networks. We decided that there was an opportunity worth exploring here, and that it was tailor-made for blockchain technology.

Simply put, our vision is to connect Smart TVs across the globe to the Ethereum blockchain. Basically, we want to reinvigorate broadcast TV for the digital age; and find a way for advertisers, viewers, and content creators to prosper via a decentralised value chain.

2. Who are the founders and key team members?

Philipp Schulz

PS: Me and Jan (the founders) plus our core development team are based in Berlin, but our team and advisors are all over: from the UK to Thailand.

We’re stoked to have a whole host of seasoned finance, tech, and blockchain experts and entrepreneurs on our side like Philip Nunn, CEO of The Blackmore Group; Kai Rieke, former marketing director at Germany’s Project A Ventures, and David Ben Kay, who was on the governing board of the Ethereum Foundation and was Microsoft’s general counsel in China, as an advisor (check out our recent Facebook Live AMA with him).

Jan-Phillip Hofste

 

JPH: For us, it’s important to have people who not only understand what we’re trying to do, but believe in our mission, and are passionate about it too.

3. What problem are you solving? 

JPH: TV networks have a vice-like grip on advertising, production, and viewer choices. We believe that the value exchange between users, content providers, and brands needs to change. It’s time the middleman was pushed out and people not only started enjoying broadcast TV again, but actually started profiting from it.

PS: As networks blast out the same old generic content formats, more and more people are ‘unplugging’ and choosing subscription TV services over broadcast TV. But advertisers aren’t getting a look in. Sure, Netflix and co. open up new ways for up and coming content creators to make great new shows, but the cost is pushed back to the viewer.

JPH: While other online video services are using advertising effectively, YouTube (and they’re the big one)’s focus on clicks and pre-roll ads seems misguided to us. Watch statistics are what count there, so for advertisers, while audience numbers are great, the ‘click’ metric is a false economy.

4. What is your solution to this problem?

JPH: There are stacks of mobile, tablet, and desktops apps out there; but no-one’s really investigated Smart TVs, despite the existing infrastructure. There are over 700 million of them in operation worldwide!

Our plan is to use Smart TVs to create a fully-functioning personalised video streaming service for viewers. One that’s algorithm-powered and uses machine learning to curate a content feed that’s of interest to each viewer.

Not only that, but they actually get paid to watch TV!

PS: The key to making TV-TWO work is our token system: Tokens For Television (an Ethereum blockchain-linked ERC20 token). Each token possesses the right to show sponsored messages to a defined percentage of consumers that watch television through TV-TWO. Advertisers can buy these to show their brand messages to the most relevant people. They’ll be able to target audiences much more effectively, using anonymised user data, and will have total visibility on their spend and how it’s deployed.

When a viewer watches an ad in its entirety, each used token is passed to them, which they can store in a digital wallet (and later trade for Ether). Alternatively, they can pass on the token to their favourite content creator, to help fund their next show idea.

5. Why are TV networks ripe for disruption? 

JPH: It’s been clear to us for some time that TV networks’ oligopoly on broadcast advertising needs disrupting. As we state in our whitepaper:

TV networks are assumed to offer commercial inventory, which many advertisers are interested in purchasing. The demand curve for commercial slots is downward sloping. The fewer commercials can be booked, the higher the price. This makes broadcasters price-setters. Advertisers are in a position where a prevailing price must be accepted.

In the US, six companies control 70% of TV advertising’s market share. No one else can really get a look in. There are huge margins involved. The average price for a 30-second spot on national TV during prime time is over $110,000.

PS: The way TV advertising works – in particular, the attribution model used – is pretty much exactly the same as it was 30 years ago. Now consider the leaps and bounds technology has made over the timeframe. The internet has completely changed so many aspects of our lives, and digital advertising has come along way too.

Programmatic functionality and behavioural targeting in particular, demonstrate the power of speed and relevance in online advertising. But nothing like this exists within television advertising; despite the increasing number of Smart, internet-connected TVs. And that’s our striking point!

How does it scale? – TV-TWO

6. What’s the future of your industry? 

PS: Tech is changing rapidly. And blockchain technology seems to be undergoing something of an accelerated evolution. We think that it’ll mature as a technology and that we’ll see stacks more decentralised apps enter the market, able to do everything from trade cryptocurrency to verify the authenticity of a piece of music.

Secondly, as more businesses realise the value of excluding profit-hoarding third parties from the equation, and platforms (like ours!) showcase the tech and its potential to a consumer audience, more individuals will begin to understand the value of their personal data, and the consumer-product-advertiser dynamic will begin to shift.

JPH: Governments will begin to wake up this too – something our advisor David Ben Kay referred to in our recent AMA. And while countries like China are banning ICOs and cryptocurrencies completely, that won’t necessarily halt progress on how the blockchain evolves as a tech platform.

The TV-TWO ICO started on the 24th of February. Our next step (by March 24th) is to continue forging partnership agreements. We’re already talking to Smart TV manufacturers and big ad companies. We want this to work: not just for ourselves, but for everyone in the TV-TWO ecosystem.

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