The latest cutting-edge technologies for consumers’ living rooms are television sets and Blu-ray players that connect to the Internet. Flingo, a San Francisco-based software firm, has found a market within that space by building interactive applications that allow content providers and advertisers to stream their offerings to web-connected devices. In an interview with India Knowledge@Wharton, Ashwin Navin, Flingo’s co-founder and CEO, predicts that phone and cable companies will soon join in as the market grows for web-enabled TV applications.
An edited version of the conversation follows.
India Knowledge@Wharton: The convergence of the Internet and television is a space that a lot of people want to leverage. Where is the industry headed?
Ashwin Navin: The Internet has found its way into pretty much every aspect of our lives. We have connected experiences throughout our work and home. People now have several computers in the home and the web is with you whenever you carry a cell phone. As we were starting this company, it felt like the great frontier for the Internet was the living room and the TV, where there is a glaring void of connectivity.
The TV is an environment that is dominated by a handful of companies that are the gatekeepers for everything that we see, hear and enjoy. My new company endeavors to open the TV market and change the rules a bit for the established gatekeepers. Taking advantage of the fact that the Internet is such an efficient place to deliver very personal experiences for content, whether it is information or entertainment, we need to make the TV more personal and ultimately more social as well.
India Knowledge@Wharton: Some of the big companies in Silicon Valley and San Francisco are looking at television and the “digital living room,” including Google, Apple, Facebook and Yahoo. What is motivating them?
Navin: There has definitely been this explosion of platforms. From a content perspective, [this] is troubling because content needs to find an audience in order to have value, and the number of platforms that are available for me as a content developer [or] content creator to develop and distribute on is getting too diverse. The companies that you mention all have very well established platforms for the web and for mobile.
Television is a really enticing landscape, given that it’s a very large industry with about $80 billion in subscriptions and advertising. All the web companies or the mobile companies you cited want to get a piece of it and maybe even grow it. They want to participate in a business that’s controlled by a handful of established television distributors and programmers. But it’s going to be a while before the web companies that are bringing engagement from the web or mobile devices can penetrate TV. There are going to be entirely new platforms that emerge on TV.
India Knowledge@Wharton: Who are the “gatekeepers” we are talking about?
Navin: The gatekeepers are cable and satellite companies, and the telephone companies to some extent, although they’ve had some trouble breaking into what has been dominated by cable and satellite for a long time.
India Knowledge@Wharton: Where are the device makers on the spectrum?
Navin: That’s an interesting question. Even Comcast to some extent will find that the manufacturers of devices have a pretty key piece of real estate that we all want to build on. Google — with the announcement that Google TV [will be integrated into] Sony [televisions] — clearly understands that. The cable companies haven’t really announced anything formal, but we know they could potentially be interested in developing software and services on consumer hardware as well. Currently, their services run on hardware they control. But in an IP- or Internet-delivered mode of consumption, the hardware itself is all that you really need. The TV, the Blu-ray player — these are the set-top boxes of the future.
India Knowledge@Wharton: Does that mean I could plug an Ethernet cable directly into a television set?
Navin: That’s right. It’s already happening. I have a TV I purchased at [U.S. discount retailer] Costco. It is a Vizio TV. Not only does it have an Ethernet port, but it also has a Wi-Fi antenna built into the TV. [When I first] turn it on, it scans to see what my home Wi-Fi network is called and asks me for the password. Once I’ve connected it, I can start to stream video to this TV in high definition — whether it’s paid video or ad-supported. That’s a fundamental change in the way video programming can arrive at my living room.
India Knowledge@Wharton: What is driving that change?
Navin: Two strong efforts…. One, companies like ours that work with manufacturers to enable this capability. And [two], content companies that want to distribute and reach audiences through this distribution platform.
India Knowledge@Wharton: It’s the Flingos of the world that are going to the LGs and Samsungs and saying, “Look, we are going to help you as you control the real estate for this device.” And CBS and MSNBC are saying, “We’ll also jump on the ship.”
Navin: Yes. We went to all the manufacturers and made available to them some software, which makes it easy for video to stream to connected TVs and connected Blu-ray players. We have licensed that software to a handful of them and are closing more and more deals with [TV] manufacturers every month. We also went to the media companies and said, “This year  there are going to be tens of millions of TVs in the U.S. sold with Internet connectivity and the ability to stream video.”
We’ve got a full year [of sales] with Sony, Samsung, Vizio and LG. We can deliver video in HD over Wi-Fi or IP to these devices. We have also published apps and content for Warner Brothers, Fox, CBS, MTV and other media companies. All of these companies have basically embraced the opportunity to reach consumer TVs in an alternative method using streaming video.
India Knowledge@Wharton: As the sector matures, will prices continue to fall?
Navin: Electronics have always been getting bigger in size and cheaper. Now what we’re seeing is that the Internet-connected models are [at] the same price as the TVs that don’t have Internet connectivity. Consumers are actually asking for the Internet-connected models. They want the one with Facebook and Twitter built in, with movie rentals built in and the ones with TV shows available on demand.
India Knowledge@Wharton: Let us talk about the inception of Flingo and how that idea became a concept and a company.
Navin: Before Flingo, I co-founded a company called BitTorrent, [which offers a peer-to-peer file transfer program]. BitTorrent continues to be probably one of the biggest distributors for digital media used in millions of households. I think today there are around 75 million BitTorrent users actively using the software to acquire all kinds of digital media. That movement grew to a big enough audience that media companies felt they had to embrace digital media — there was no way to stop people from getting their content online.
Then sites like YouTube took the world from downloading to streaming into a web browser. The reason sites like Hulu [which distributes network and studio-authorized content] exist is because the audience that was using either BitTorrent or YouTube [where much of the TV or movie content was uploaded and shared without authorization] was probably in the hundreds of millions. And a site like Hulu or the licensing deals media companies have done with Apple, Netflix or Amazon are all the result of the way people were getting their content online before.
So those of us who started Flingo feel pretty attached to this movement. We believe the next evolution of digital media is when I can be sitting in front of my TV and experiencing content that is currently delivered to a website. That’s when digital media crosses over from tens of millions of people into the hundreds of millions of people. My parents will never watch their favorite TV shows streaming on a laptop. They pay US$60 a month to a satellite provider to get three channels that bring them Indian content; that’s a fairly high price for a small amount of content. But that’s just the way they’re going to do it because they want to consume video in front of their TVs in their living rooms and they will always do it that way.
When the TV they buy enables that content over the Wi-Fi network, they won’t know the difference if the experience is developed correctly. They won’t know the difference between the video stream and that broadcast over satellite. That’s when we can penetrate a much, much larger group of people.
India Knowledge@Wharton: The value proposition is in providing the software to make that experience as seamless as possible?
Navin: That’s correct.
India Knowledge@Wharton: Is there something you can cite like a popular example or something you have in development?
Navin: Warner Brothers operates a website called TheWB.com. It makes a number of shows and videos available on their site [that were] produced in the Warner Brothers studio and enabled for web distribution. We presented a vision to Warner Brothers that would allow WB to not only stream to your web browser, but also to the connected TVs [from] manufacturers like Samsung and Vizio. Warner Brothers engaged us. We built a WB app for those TVs — specifically for the Internet-connected TV market and we are doing that now with other studios, with other TV networks. We are doing it for some sports leagues. We do it for a lot of web video properties. I think we’ve gotten in total probably around 25 customers that have engaged us to build their TV apps.
India Knowledge@Wharton: How is Flingo differentiating itself in the TV-app market?
Navin: We are the category experts. We have worked with companies that [make] the chips that are inside these TVs. We work with the middleware companies to enable the software in these TVs. We work with TV manufacturers. We work with the media companies as well.
India Knowledge@Wharton: And you don’t have to worry about the cable box operators, right?
Navin: This is a pure Internet model. Let’s just say you’re a filmmaker or you have a new show that you would like to get on TV. We can publish a new series … in literally minutes and get those [episodes] onto millions of TVs, which a cable company and a network could not do. I anticipate that the pay-TV services like HBO, ShowTime and Starz are all going to have their own TV apps as well.
India Knowledge@Wharton: Flingo has just finished an early round of friends and family funding. What’s next?
Navin: We’ve been fairly successful establishing expertise in the TV platforms [with] Samsung, Vizio, LG and Insignia. We’ve recently been engaged by a couple of the traditional cable operators and IP TV operators to bring our apps and our expertise to those set-top boxes. In the coming months, the experience for traditional linear TV and interactive applications are going to weave together and we hope to drive that convergence.
Internet-connected TV does not have to be a substitute for traditional linear feeds. This could be a way to actually increase the revenue opportunity for content creators. It’s a way for them to continue to distribute 24 hours of linear feeds to Comcast, DirecTV, etc. and build an interactive experience in the connected TV that’s synchronized and enhanced.
India Knowledge@Wharton: The way this is set up it almost seems like the telephone company and cable operators will have no choice but to play along.
Navin: They absolutely have to embrace this, and the faster they do it, the better it will be for their business.
India Knowledge@Wharton: The rate at which homes are Wi-Fi enabled is only going to increase. Internet- or Wi-Fi-enabled televisions will become ubiquitous as well. Is that the theory?
Navin: I believe the volume for Wi-Fi-enabled TVs will be much larger than the unit volume in cable set-top boxes or set-tops like Apple TV or Google TV.
It’s really valuable real estate. The reason Apple is the king of digital media right now is because they have the hardware people look for by name. That’s going to happen in the television landscape as well when the major brands like Sony, Vizio and Samsung step in between the consumer and ABC, CBS or NBC.