Internet-enabled television (TV) is probably one of the biggest media and technology events of the past two decades and it is arriving in a big way this year.
Given that the average American spends nearly five hours a day watching TV, of which at least 12% are already internet-enabled, the impact could be large and likely to lead to unexpected results.
Arvind Sodhani, president of Intel Capital, the world’s largest corporate venturing unit with more than $10.8bn under management, last year predicted internet-TV as one mega-trend to watch out for at his Global Summit and this week Roku, a US-based TV internet streaming company, raised $60m in its series F round from a host of media-focused corporate venturing units.
Mutual fund manager Fidelity led Roku’s latest round, and was joined by publisher Hearst’s corporate venturing unit, satellite television group BSkyB and its media parent, News Corp.
This is a large round and an interesting mix of a consortium, with Fidelity and Hearst coming into the syndicate as new investors.
Fidelity’s corporate venturing investments tend to be either late-stage deals ahead of a potential flotation or longer-term deals in energy and healthcare where the deal could be held for 30 to 50 years.
Hearst is one of the world’s biggest content producers and media distributors and Roku could enable it to further deepen its hold on the TV market, even as the internet disrupts the other routes, such as cable, satellite and over-the-air.
Roku is working with two dozen original equipment manufacturers that are making more than 3.5 million Roku Ready devices, predominantly TVs, that will be in retail by the end of the year.
Roku Ready devices access the Roku 3 platform, which streamed more than one billion hours of video and music last year, through the Roku Streaming Stick. In the coming months, Roku said it would “continue to expand access points to its streaming platform”.
Ken Bronfin, senior managing director at Hearst Ventures, said: “We are truly impressed that Roku has built such a unique position in the market and we look forward to working with them to develop innovative products and services for our television audiences.”
He added by email: “Although most of our deals are [series] B and C rounds, we’re open to doing early stage (e.g. Hootsuite) all the way up to PIPEs [private investments in public equities] (e,g. XM Satellite Radio) when we really like the companies.”
And there is no question, Roku’s investors have believed in the company.
In July last year, venture capital firms Menlo Ventures and Globespan Capital Partners, as well as strategic investors, including internet film distributor Netflix, US-listed media company News Corporation, which holds a controlling stake in BSkyB, and its UK-listed satellite subsidiary, jointly invested $45m in Roku.
Anthony Wood, the inventor of the digital video recorder and founder of Roku in 2002, said: “BSkyB and News Corporation are exceptional partners and we look forward to deepening our relationship with Hearst in the months to come.”
Other executives are looking at how to tap into the brave new world of internet-enabled TV, especially as technology firm Apple tries to disrupt the market in the same way it did with music distribution through ITunes and mobile phones with the IPhone. Media executives have been widely tipping Asia-based companies, such as Sony and Samsung, to do well in the internet-TV era. Software provider Microsoft has also been foraying into internet-TV through its Xbox gaming platform.
Richard Chernin, a former president of News Corp’s Fox network subsidiary, is reportedly trying to buy online video company Hulu, while UK state-owned media group BBC’s IPlayer has successfully helped the organisation take its content online.
BSkyB also has a stake in internet TV company Zeebox, which was founded by the developer of the IPlayer, while Intel Capital has backed another UK-based player, Veebeam, as television deals have exploded in the past three years.
It all makes for the potential to be a ground-breaking few years from now.