What makes a phone smart? Apps. On the iPhone there are more than 700,000 apps available now; Google Play has a similar number of downloadable programs that add that extra sizzle to Android devices.
The same is true of the newest technology, smart TV. Analysts predict that up to 800 million smart televisions will be in use by 2017. Where will all the apps to power that revolution come from? Here’s a hint: Try Tel Aviv.
One of the major app makers for the smart TV space is a small Israeli self-funded startup, flying very much under the radar.
Vonetize CEO Noam Josephides
Noam Josephides is the CEO of Vonetize
, which he describes as a hybrid in the video app space. “We are a technology company and a content company at the same time.”
Vonetize not only makes the apps (and manages the backend servers and streaming services that power those apps), but also cuts licensing deals with both Hollywood and Bollywood to bring content to those apps.
This is not small stuff. The Vonetize Bollywood app has a half million users. Not bad for a company that has taken no VC money and has a staff of only eleven.
Don’t expect to see the Vonetize brand, though. Josephides realized early on that it would be impossible to compete with the Netflixes and Hulus of the content world. Rather, Vonetize is a “white label” provider. The consumer buys a specific app, such as the company’s popular Baby Channel or the Israeli-made Dog TV, which produces programming to comfort canines left at home alone for the day.
Powering Samsung video on demand
Niche is nice, but Josephides is most proud of his company’s relationship with Samsung.
In October of last year, Samsung -- the leader in the burgeoning smart TV space, with close to 2,000 apps already in its online store -- launched a video-on-demand (VOD) app powered entirely by Vonetize. Brave, Toy Story and Batman are all available via the Vonetize-built VOD app. Many are even in 3D. Everything is, of course, in full 1080p high definition.
Smart TVs operate via the Internet. They have their own built-in wireless cards and can connect to your home router. Apps are sold individually for monthly subscription fees: $3.99 (in the case of the Bollywood app) or NIS 30 (about $8) for Samsung’s Israeli VOD service.
The app infrastructure gets around one of the biggest complaints about how content has traditionally been consumed: You don’t have to subscribe to an “all-or-nothing” cable or satellite plan. Want just live concerts, Hollywood hits and parenting programs? That will set you back far less than what you’re currently paying, which includes hundreds of channels you probably have no interest in.
The cable companies, understandably, are terrified of this trend, which is known as “cord cutting.” Indeed Josephides, 36, says he’s been a cord cutter for 15 years now (he’s never had cable at home) and it provided his initial “light bulb” moment for how he could help other people enjoy quality content without exorbitant prices.
Vonetize has one other trick up its sleeve that could prove to be its most lucrative: The company has devised a way to take credit card payment via the television, something that, remarkably, didn’t exist before.
“Samsung went to Keshet [which is one of the operators of Israel’s Channel 2 television station] and asked them to make an app for their smart TV,” Josephides recalls. “Keshet responded, ‘Why should we invest in this? We can’t make any money from it.’” Now they can.
Vonetize spun its billing solution off as a separate company called SmartPay and is now promoting it as a cross-platform industry standard.
As a hybrid technology/content company, Vonetize is in a good position to make money. It takes a cut from all its licensing deals, which helps fund further software development.
“All our activities in both Vonetize and SmartPay are inherently profitable,” Josephides says. He adds that he hopes Vonetize will be profitable soon. Moreover, the company’s VOD app for Samsung gives it a five-year exclusive with the foremost smart TV manufacturer.
What about piracy, though? Paying for content doesn’t play so well for tech-savvy young people.
Josephides believes that once there’s an easy-to-use solution for consumers to get the same content that’s being downloaded for free today for a reasonable fee, it will be adopted – most quickly by the very people who frequent sites like The Pirate Bay and ISO Hunt. “Sure, there will always be hardliners who refuse to pay anything, but the early adopters of smart TV will be the people who know how to use Torrent sites.”
Then there’s the Apple in the room. Apple has been long rumored to be working on its own smart TV. How will this affect Vonetize’s market? Josephides says he’s looking forward to the moment Apple steps in. “They will do a blitz of PR, which will be a big step in educating the market in using smart devices and pay services.”
Josephides expects the Apple service to be open, as it is on the iPhone and iPad, to third-party developers. Other than the company’s Samsung VOD deal, everything Vonetize makes can be ported over to the Apple world.
And that includes dogs, babies and Bollywood.
By Ariel Blum