February 7, 2012 – 11:25 am
In a sign that investors believe that connected TV apps represents the next digital business opportunity, Flingo, a publisher of smart TV apps, says it has raised a $7 million first round funding The San Francisco software company's platform is designed to serve streaming video, ads and broadcast TV across the 7.8 million screens it currently has placement on. The company also boasts an international reach of 118 countries.
The funding will be used to expand Flingo’s placement on devices. It will also use the proceeds, which were invested solely by August Capital, to build out its "automatic content recognition" technology, which identifies thousands of broadcast network programs around the world in real-time.
Once a program is identified, Flingo’s SyncApps technology can immediately bring contextually relevant content directly to the viewer’s TV, laptop, tablet or smart phone.
Flingo recently announced that its Social TV framework enables one-click sharing to Twitter and Facebook from broadcast TV. A+E Networks’ has just signed up to use the social TV technology for its programming on its History and A&E channels.
It all sounds impressive. But for most major media companies, the smart TV app space is still about two years away from becoming a serious business proposition. So this is really about laying the groundwork for what could be -- should be? -- the "next frontier" in digital video. So expect more investment and, more importantly, more content companies to start experimenting with the smart TV app space.
In addition to apps embedded on TVs, Flingo is also expanding into the increasingly crowded social TV space, which ties viewers to Facebook, Twitter and entertainment "check-in" services of the kind offered by Shazam, GetGlue, Yahoo's IntoNow, Miso and Umami.
But there too, the revenue picture has barely been sketched, mainly due to lack of scale on the part of most services (Shazam and IntoNow are the exception, as both were involved in prompting Super Bowl ads this past Sunday).
While it makes perfect sense to develop platforms that tie all consumers' screens together on to one neat platform to deliver content and advertising, the payoff is a ways off. And with all the competition from the likes of ad networks like YuMe, entertainment tech companies like Rovi and Google's multi-screen Android platform hovering above all of them, success is far from assured.
The big challenge for companies like Flingo, of course, is building enough audience scale to make it attractive to content providers and advertisers.
For one thing, more of us are buying connected TVs, but how many of those buyers actually use the apps that come embedded in those sets? And of the ones who do access smart TV apps, how many use more than one or two apps (Netflix and Hulu Plus are the primary ones used in TVExchanger's household. Occasionally, we watch Sony's Crackle)?
About a quarter of all flat panel TV sales had some internet connectivity, estimated researcher DisplaySearch last year. The analyst also projected that half-a-billion sets would be sold globally by 2015.
For the most part, people are buying connected TV sets these days because prices have come down. Besides, having a wifi-enabled TV seems like a natural for consumers who have spent so much on smartphones, tablets and e-readers. In a sense, having wifi as part of one's TV functions is beginning to feel a lot like having air conditioning in a car -- it doesn't cost that much extra, so why not? But consumers don't buy cars for the air conditioning; neither do they buy connected TVs for the apps.
The problem of smart TV apps is kind of chicken-and-egg. There's no real audience for these apps yet, primarily because there's not great content (not counting Netflix and Hulu Plus). And the reason there isn't much content is because there's no real ad support to pay for it -- again, because the audiences aren't there.
With all that in mind, 4-year-old Flingo has made some good first steps: it's got deals with manufacturers such as Samsung, LG, Vizio, Sanyo, Insignia, Western Digital, and Netgear. And it has the A+E networks relationship in place for its social TV tech product.
With $7 million in hand, Flingo will have to prove its momentum by signing up a lot more networks for its social TV offering. Given the amount of social media activity during the Super Bowl -- as of midnight eastern time on Sunday, the Super Bowl attracted 11.5 million comments across Twitter, Facebook and blogs, according to social TV data provider Bluefin Labs -- that will where Flingo will see the earliest traction, since this is where most advertisers and media companies are looking right now.
The smart TV app space, meanwhile, may still be far from mainstream, the next several months are likely to see more exploration of the revenue possibilities of that space.
By David Kaplan
February 7, 2012 – 11:25 am