Finding There Were Too Many Apps for That, Second-Screen Startups Try Plan B

Wave of Companion Apps Drew Little Ad Spending as Social Media Offered Wider Reach

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Credit: Taylor Callery

Philo, Miso, GetGlue, IntoNow and Umami. Do these names sound familiar? They are relics of the dozens of so-called second-screen startups that hit the market between 2007 and 2013, promising to revolutionize TV.

It was a very sexy proposition to both TV networks and advertisers: a way to engage (and monetize) viewers who were using other devices while watching TV.

There was an app for seemingly everything. Users could check in to TV shows and receive points, play games, discover content and interact with other TV fans. Most major marketers were eager to test companion apps by sponsoring show experiences with these features and syncing ads that ran on TV to these platforms.

But the apps failed to draw significant ad spending as marketers shifted their focus to broader social-media platforms like Twitter, where they could reach much larger audiences. Only a handful of TV apps remain, like Viggle, which has 1 million monthly active users, and Beamly, which hit 4 million active users per month this summer.

The inability to draw significant audiences spurred a wave of consolidation. Viggle, Beamly (formerly Zeebox) and i.TV are evolving their business strategies to appeal to consumers and advertisers. Some are broadening their focus, moving beyond TV to categories like movies, music and live events, while others are revamping their ad models to allow marketers to buy audiences rather than programming.

But perhaps the most interesting opportunity for these platforms is the ability to act as data companies. "They have insights into super fans and allow networks and advertisers to understand those super fans better," said Jesse Redniss, co-founder, Brave Ventures, a strategic advisory and tech investment firm.

Cracking the code
Viggle, which launched in January 2012 as a loyalty program for TV, has realized the potential power of the data it collects. "We know what our users watch, listen to, the brands and ads they engage with and what they redeem," said Greg Consiglio, president and chief operating officer. The company is currently in conversations with data companies about how they can partner to combine their data, he said.

Second-screen platforms also may be ripe for acquisition by larger companies looking to power their own apps and digital extensions. Beamly, which has the backing of media companies including Viacom and NBC Universal, is now providing support for network partners, allowing them to plug real-time feeds, trivia and polls into their own sites through a self-service platform.

It's a smart move since networks have been relying less on third-party apps to host second-screen experiences, instead incorporating more of these features directly into their network apps.

Viggle also has a partnership with DirecTV that allows subscribers of the satellite service to earn points while watching TV.

"Maybe DirecTV will buy Viggle and use them to power their loyalty program," said Rob Griffin, exec VP–global head of digital, Havas Media Group.

But the future of second-screen apps as advertising platforms remains questionable.

"No one has cracked the code yet. Our clients are spending on Viggle and Shazam, but not very much. We are doing much more with Twitter Amplify and just signed a deal with Facebook," said David Cohen, head of media at UM.

"The only time we are looking at these individual apps is to package an experience," said Shelby Saville, exec VP-digital at Spark. NBC, for example, might sell Beamly as part of a larger package for "The Voice."

Brad Pelo has been in the second-screen TV space for six years as the CEO of i.TV, which acquired GetGlue last year and rebranded it as tvtag in January. While he still believes multitasking TV viewers will engage with apps when provided with the right opportunity, he says no one has been able to create an experience that attracts repeat users without the promise of incentives. "Advertisers are looking for natural behavior; it is different to check into an ad because of an incentive than to do so naturally," he said, adding that it's been a challenge to command more than test budgets from marketers.

Beyond apps
I.TV is looking to win over advertisers with a batch of new products and updates. The company launched a sports app, Spit, earlier in the month, and plans to roll out an updated version of the i.TV platform and an update to tvtag in October.

Beamly is in the process of revamping its ad model. The company took a hiatus from selling ads amid the rebrand, but is returning to the market, said Jen Kavanagh, exec VP-general manager of Beamly's U.S. business. The company has transitioned to a 24/7 social platform for TV from a TV synchronization app. Moving forward, brands will not only be able to own an experience around shows, but can buy inventory programmatically to reach targeted audiences, Ms. Kavanagh said.

To expand advertising solutions, companies are also looking beyond the app and TV universe. "We shouldn't be bundled with apps or second-screen TV. From the get-go we have always considered ourselves an entertainment-marketing platform that rewards people for what they love to do," Viggle's Mr. Consiglio said. Viggle expanded its offering through several acquisitions, including social-TV guide company Dijiti and online publisher Wetpaint. But Viggle, which is public, has had difficulty turning a profit, reporting a loss of $8.4 million in its most recent quarter. For the full year that ended in June, the company lost $27.3 million.

Ultimately, Mr. Consiglio's vision is to allow users to earn points for not only TV they watch and music they listen to, but for videos (and possibly ads) they view on the web. Mr. Consiglio said he is in conversations with websites to make them Viggle-enabled. Earlier this month, Viggle launched a widget called "Remind Me" on Internet Video Archive, an online trailer service. The widget, according to Viggle, "allows users to sign up for reminders when a movie or TV show has new previews or video clips and when it airs on TV or becomes available on video-on-demand services." Users of the widget earn points and rewards.

Lexus is making a bigger investment in Viggle, striking its first upfront deal with the platform this year, said Kirsten Atkinson, media director at Team One. The automaker is buying directly from the platform rather than a TV network to create custom programs.

And Hyundai works with Viggle in order to "own more of the experience," said James Zayti, director, Hyundai Media Planning, Innocean USA. It allows the automaker to have a bigger presence on Viggle rather than being one of many brands tweeting about the same show on Twitter.

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CORRECTION: An earlier version of this article incorrectly said Viggle reported a loss of $91.4 million in its most recent quarter.

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