Hold that cable! Ontario firm aims to revitalize industry
TV meltdown creates an opportunity
Can a small Ontario c ompany s ave t he cable- television i ndustry? Maybe not. But Pickering- based ZoneTV is determined to help those troubled media titans avoid extinction.
Business crises don’ t come much bigger t han the meltdown of cable, a US$ 58- billion industry in the U. S. alone. With the rise of high- speed Internet and direct streaming ( basically, Netflix), more than a million U. S.- based “cord- cutters” cancel their cable-TV subscriptions every year. In Canada, the CRTC says 158,000 cable subscribers tuned out in 2015.
And now the cable companies — and equally beleaguered satellite TV providers — must also confront “cord- shavers” ( consumers who trade down to cheaper “skinny” packages), and “cord- nevers” ( the growing millennial cohort who have never paid for TV).
But every crisis creates opportunity. Founded by Toronto web entrepreneur Doug Edwards, ZoneTV has spent years creating incremental content that helps carriers such as Bell Canada, AT&T and CenturyLink retain subscribers. Currently it supplies such services as a Games Network that lets consumers ( target: women aged 30 to 60) play more than 30 online amusements, including poker and Bejew- eled. ZoneTV’s App Network gives subscribers ondemand access to specialty programs on topics such as cooking and fitness — plus TumbleBooks, an app that reads books to young children ( possibly while their parents are playing poker and Bejeweled).
But now Edwards and his 30-employee firm have come up with a secret weapon for i ncumbent carriers: two dozen Cloud-based specialty channels that aggregate select Web video content and distribute them through cable companies’ onscreen channel guides.
This is cooler t han it sounds. ZoneTV staff, supported by artificial intelligence, scour the net for the best, professional video content in verticals such as sports, fitness, fashion, comedy, food and technology. Consumers save hours of clumsy Google searches looking for Web content on cats, golf or home repair — plus they get to watch it on the best screen in the house instead of a tinny- sounding laptop.
“If you can tune to the CBC, you can find our content,” says Jeff Weber, a former U. S. pay-TV executive who joined ZoneTV as CEO 16 months ago. “We do all the work in the background.”
ZoneTV is also touting the platform’s Magic Wand feature. When subscribers enjoy a program, they can click a “like” button that tells the system to present them more of that type of show. “We customize the channel for you on the fly,” says Weber, “so what’s on next is more of what you like.”
Subscribers wil l pay about US$ 7 a month for Zone’s full Dynamic Channel lineup, the fees to be shared with the content producers and the cable companies. After testing the platform with carriers over the past year, Weber promises some big deals this spring. He expects the first Canadian carriers to sign on by the end of this year.
While he won’t reveal ZoneTV’s revenue forecasts, Weber believes his new flagship product will vault the company to a higher level. “It’s an order- of- magnitude step- change,” he says. “At $ 7 a month, you don’t need a high percentage of customers for it to be a really large business.”
Weber notes that most of the innovation around premium digital TV is coming on the Web- streaming side, undermining the cable companies. “We pride ourselves on going against the grain,” he says. “We think these companies will be around for a long time, and we want to be part of that.”
Zone’s looming breakthrough illustrates the power of Steve Jobs’ classic maxim, “Do one thing well.” Zone founder and executive chairman Doug Edwards has been focused on digital entertainment for two decades.
After studying computer programming, he worked for an e- commerce startup that was acquired in 2000 by Hip Interactive, then one of Canada’s leading developers of computer games. But Edwards says Hip chose to focus on packaged software at a time he believed online games were the future. So he quit and founded his own business, starting with a $ 10,000 contract to help Bell Canada develop online games and entertainment. ( Hip filed for bankruptcy in 2005.)
Edwards’ company, ES3, grew by building cuttingedge Internet TV, music and game platforms for telcos in Canada and the U.S .“We were very much ahead of the curve,” says Edwards. In 2008, the firm pivoted to focus on entertainment experiences: games, interactive sports and TumbleBooks. Instead of developing one- off technical platforms, Edwards could create these products and resell them again and again to different cable systems.
That strategy’s success proved t o Edwards t hat cable customers will happily pay for new, unique services that let them get more from their TV.
He decided the company should go all-in on programming. So he hired Weber as his Hollywood- based CEO, and raised more than $ 4 million in angel and seed-round financing.
Still just 43, Edwards says his work is just beginning. The company is looking to do a Series A financing, to gain more resources to enhance the new platform and market it around the world. For the future, he says ZoneTV will likely produce its own content, following a trail blazed by HBO and Netflix.
“All these years, and now we’re a startup,” says Edwards. “I love it. This keeps us young. And it keeps people engaged.”
WE CUSTOMIZE THE CHANNEL FOR YOU ON THE FLY.