Jeffrey Katzenberg and Meg Whitman have raised $1 billion for a new mobile video startup — and there’s a whole bunch of reasons to believe it’s going to be a flop

REUTERS/Lucas Jackson

• Jeffrey Katzenberg and Meg Whitman have raised $1
  billion for a new mobile video startup that promises to yield a
  brand new form of premium, short form storytelling.
• The prospects for the venture, NewTV, don’t seem
  promising. It’s not clear how new this idea is.
• A long, torturous history of original web projects
  shows this concept has been attempted numerous times, and
  rarely succeeded.
• Plus, even $1 billion pales in comparison to what tech
  giants are spending on their original content efforts. And they
  already have platforms that reach millions.

Jeffrey Katzenberg and Meg Whitman are undoubtedly smart,
uber successful executives/CEOs/Mogul types. They’ve built and
steered huge enterprises. And they’ve make a lot of money along
the way.

The duo have raised $1 billion for a new mobile video
startup, NewTV, that
promises to yield a brand new form of premium, short form
storytelling. 
They must know what they are
doing, right?

The thing is, when it comes to the content business,
no one knows what they’re doing. And it’s
fair to ask: What are Katzenberg and Whitman thinking? Have they
heard about go90?

Credit the pair for bold thinking. NewTV promises to
reinvent entertainment for a mobile age. To build new viewing
patterns. 10-minute or less episode series. Shows designed for
gaps in your day (like waiting in line).
Katzenberg likened it to the launches of HBO and
Spotify.

“There’s many use cases in the past that exemplify why when
you come along with something that is exceptional and convenient
and premium, people will migrate to it if in fact it delivers on
the promise,”
Katzenberg told CNBC.

NewTV declined to comment. 

Short form video shows have been tried forever

This idea really isn’t that new. Hollywood and Silicon
Valley have been at this — making short form original web content
— for over a decade. Based on that history, there’s very
little evidence that people want this kind of content.

Let’s take a walk down memory lane:

Remember the teen mystery/soap Prom Queen? Foreign Body?
These were short form, scripted, episodic shows from Vuguru — a not
dissimilar web video venture
founded by Katzenberg rival and former Disney CEO Michael
Eisner back in 2007. 

Vuguru took a big swing at original web series. Eventually
it folded into Eisner’s The
Tornante Company, which focuses on making, you guessed it,
regular TV shows.

Remember when MSN (yes
MSN!) was making snackable web shows like “Mr.
Robinson’s Driving School“? When the guys behind the viral
stunt Lonelygirl 15 tried a teen soap built for
social media? When ABC was producing short
sci-fi for the web? When TV networks made webisodes?
Recall Alec
Baldwin’s “Love Ride” on Vessel?

We could go
on and
on and
on.

Okay, so perhaps it’s not fair to bring up 10-year old examples
of this, considering these series are mostly from the
pre-smartphone, pre-OTT era.

But we can find plenty more recent misfires. For example, in
2016, the YouTube-born video firm Fullscreen launched a
subscription service aimed at young consumers that included
original scripted shows, including a project from “Bright Lights
Big City” author
Brett Easton Ellis.

Fullscreen execs thought it would
get 5 million paying subscribers. It’s gone now.

Lets look at Facebook. It boasts of 2 billion daily users. It’s
news feed may be the most influential algorithm in the world (see
Trump, Donald). Yet according to
The Information, it’s struggling to get people to watch, or
even know Facebook Watch exists.

Have you tuned into the Kerry Washington produced “Five Points” lately?
No? Based on the numbers, you’re not alone.

It’s not easy to get people to adapt an entirely new
entertainment option

The biggest challenge Facebook Watch seems to be facing is that
it’s trying to create an entirely new behavior. It’s hard enough
launching a new show on TV, where people actually watch TV. Even
harder on a hidden tab on Facebook

If anything, either Facebook’s Instagram or Snapchat, with their
young, entertainment-oriented audiences, would make smart homes
for the kind of shows NewTV is describing. Maybe a blend of lean
back videos and the vertical interactive Stories format.

But to launch new shows, a new app, and a new viewing pattern?
That’s an awfully tall order, even backed by a billion bucks.

Just ask
Verizon! It spent and spent on go90, which was supposed to be
fully designed for young mobile loving, non-linear TV watching
consumers. It bombed, despite experimenting with short form
original shows, like the 15-minute episode, serialized show
Tagged.

But alas, NewTV wants to launch its own subscription app. 

NewTV has some top shelf backers. But they’re also competitors

Katzenberg has lined up a terrific list of backers: Warner Bros,
Disney, NBCUniversal, Alibaba.

“Every single major Hollywood studio joined in this round, along
with, as you pointed out, technology companies and strategic
financial investors, and they share our vision in creating an
entirely new entertainment platform that’s optimized for easy on
the go mobile viewing and allows top talent in Hollywood to tell
stories in an entirely new way,” Whitman told CNBC.

And who’s to say some brilliant young creator doesn’t have an
idea for a show that doesn’t fit in conventional formats and can
take advantage of mobile screens in a unique way.

After all, if TV networks didn’t start establishing half hour
slots for comedies, would “I Love Lucy” ever have seen the light
of day?

But it’s also noteworthy that none of these media giants took a
majority stake in NewTV, or is trying to do it themselves. The
New York Times’ Ed Lee says that Katzenberg and Whitman had
wanted to raise twice as much dough. It seems telling that they
didn’t.

Even with $1 billion, NewTV will be fighting an uphill battle.
That’s
roughly what FX spends on its original programming.
Netflix and
Amazon are spending five to eight times more.
And AT&T promises to significantly ramp up its HBO
budget. Don’t forget Apple. 

True, these tech giants focus on long form content. But they are
also increasingly making shows available for download on mobile
devices. So you can watch “Game of Thrones” on the train, while
waiting in line, whenever or wherever. 

Even one of its backers is potentially making life extremely hard
for the new venture. Disney, for its part, will be rolling out
its
own Netflix-killer streaming service right around the time
NewTV hits the market. It will have Star Wars and The
Incredibles.

NewTV better have something incredible up its sleeve, or it seems
destined to be an expensive content footnote.