The most notable thing about GetGlue’s agreement to be acquired isn’t who’s buying the social TV pioneer. It’s who isn’t.
The buyer, for the record, is Viggle Inc., a competitor in the social TV space that, like GetGlue, doles out rewards for people who use its social media application while watching television. The $110 million cash-plus-stock offer for GetGlue gets Viggle 35 employees, including Alex Iskold, GetGlue’s founder, and a registered user base that’s reported at around 3 million.
So them’s the numbers. What’s telling, though – and not in an altogether positive way for social TV – is that GetGlue’s exit ends up being something less grand than what enthusiasts have envisioned for the category. Lost Remote, a website for the social TV category, speculated in October GetGlue might attract interest from the likes of Twitter or Nielsen, for example. Instead, the buyer is a virtual-crosstown rival. Their merger – two smallish upstarts – does not signal an epochal moment for social-TV in the way that another sort of transaction could have.
Here’s a short list of other companies that didn’t buy GetGlue: Comcast. Time Warner Cable. Google. DirecTV. Dish Network. AT&T. Verizon.
Those are the companies that presumably have the greatest exposure to disruption from social TV. The fear among large multichannel video program distributors, or MVPDs, is that the second-screen engagement social TV platforms feed on will gather sufficient momentum to siphon away viewer attention and advertising inventory value while creating new revenue streams – program-related advertising, mainly – that the video incumbents let slip through their hands. A rogue band of independent social-TV purveyors presents an affront to cable/telco/satellite TV operators, because these renegades threaten to make money off the back of an ecosystem the MVPD incumbents pay for. (Here’s a fresh take from AdWeek on advertising possibilities arising from the GetGlue-Viggle alliance.)
In other words, when a social-TV app like GetGlue creates community and conversation around a show like FX’s “Sons of Anarchy,” it’s leveraging an asset DirecTV or Comcast or Time Warner Cable has paid for as part of a distribution contract with the originating TV network.
Worse: social-TV apps like GetGlue and Viggle use program-synchronization technologies that automatically detect what programs a user happens to be watching, and spit out related content to tablets and smartphones. To MVPDs, the lassoing of program-ID codes for commercial purposes feels like larceny.
GetGlue has been a visible leader on the social TV scene. I’ve heard Iskold speak at two industry conferences, and have found him likeable and smart. When I think of social-TV, GetGlue is one of the two or three prominent platforms that come to mind. It’s earned a fair amount of kudos from the press, and attracted meaningful numbers of user “check-ins” for shows like October’s “Walking Dead” season premiere on AMC (about 170,000). So there seems to be some upward trajectory.
That, plus a relatively small price tag – AllThingsD’s Peter Kafka calculated the purchase at $70 per user – would have seemed to make GetGlue ripe for an acquisition that would align it with Big Media. Instead, GetGlue’s merger with a like-sized rival signals consolidation within a category that was already humble to start with. That’s not a good sign for social TV entrepreneurs and early-stage companies for two reasons:
It suggests the available revenue base is limited. The category should be growing, not shrinking, at this early stage of exploration. Normally, we’d expect to see a dozen or so players with investments from notable VCs and media investment arms in pursuit of a promising arena that demonstrates real revenue streams – more so than fuzzy metrics like registered users.
It tells us larger companies aren’t interested. Or if they are, they’re going to pursue social-TV involvement from a homegrown platform. Either way, it’s bad news for independent social TV firms.
In particular, the idea of a built-from-within social TV offering from an incumbent MVPD should feel scary to independents. We’ve heard MVPD executives say they believe they can do a better job at assuring frame-accurate program synchronization for second-screen apps than the likes of GetGlue, Shazam and others can achieve by relying on audio codes. The advantage of the facilities-based incumbent in reliably melding program streams with handheld device apps may be daunting for independents that rely on intermediary solutions.
And it’s not as if Big Media isn’t aware of the social-TV uprising. Investment arms for Comcast and Time Warner Cable maintain far-reaching radar to track companies and categories that could add value to their platforms, and social TV is very visible on their screens. Comcast already has demonstrated interest in the category: Tunerfish, a Mountain View, Calif. start-up with Comcast funding, is working on ways to leverage social media conversation around television into search and tune-in functionality. (A friend chats up a “Walking Dead” episode via social media and you can instantly tune to it on your set-top box or DVR.) And Comcast recently cast its lot with Zeebox, partnering with the U.K. social TV/second-screen app that feels a lot like a GetGlue competitor.
It’s possible the pairing of Viggle and GetGlue will create the combination of synergy and capitalization needed to make the combined company a social-TV powerhouse. But my early instinct says this is an inglorious exit for a notable pioneer, and a less-than-convincing vote of confidence that a standalone social-TV platform can make a big splash on the TV advertising scene.