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GetGlue Sale: Let the Second-Screen Shakeout Begin

Consolidation is already under way among TV app makers, which face long odds against social giants

Over the past few years, dozens of startups have emerged looking to cash in by delivering TV-related content — including guides, advertising and social features — to couch potatoes. But it hasn’t been a path to overwhelming success.

And now, the shakeout that determine which will be the last second-screen apps standing has officially kicked off. On Wednesday, TV guide app company i.TV announced the acquisition of GetGlue, among the first startups in the space with some 4.5 million registered users for its second-screen and TV check-in service.

There would seem to be sure-fire reasons to justify a gamble on a second-screen TV app. Six out of 10 Americans own a smartphone today, and nearly half of them use it in front of their TV sets. And, of course, just about everyone watches television — lots of it.

But now, Twitter has doubled down with a vengeance on television deals, including a breakthrough pact with Comcast and NBCUniversal. Facebook is also striking more TV partnerships, promising networks and advertisers broad reach as well as targeted viewers. And it’s only a matter of time before Google steps forward to tie social networking and identity service Google+ into the TV ecosystem as well.

So what’s to become of the dozens of startups that came out of the second-screen craze? “There’s definitely going to be a lot of consolidation that happens,” said Jesse Redniss, the new chief strategy officer at social-marketing firm Mass Relevance and former USA Network senior VP of digital in charge of the cabler’s social TV efforts. “It’s going to be really tough for (third-party apps) to reach scale, in terms of 15 million or 20 million people.”

Terms of i.TV’s deal for GetGlue were not disclosed, but sources said it was an all-stock deal worth far less than the $24 million GetGlue had raised from investors including Time Warner Inc., Union Square Ventures, RRE Ventures and Rho Ventures. With the deal, GetGlue CEO Alex Iskold will depart the company.

According to i.TV, GetGlue will remain a separate product while letting it benefit from i.TV’s “broader platform of partners and services.” Provo, Utah-based i.TV claims 15 million people use its TV app every month. “Together, i.TV and GetGlue will reshape the social TV and second screen landscape,” i.TV CEO Brad Pelo said in announcing the deal.

It wasn’t the first time GetGlue — which like other TV-app makers has struggled to gain a big user base — tried to team up with another app player in hopes of gaining scale. Last year, GetGlue entered into an abortive bid to be acquired by another New York-based social TV app startup, Viggle, for about $60 million in cash and stock. That deal fell through when Viggle, backed by Robert F.X. Sillerman, was unable to raise financing necessary for the deal.

Ian Aaron, CEO of social TV app startup ConnecTV, has watched numerous second-screen players fail to gain traction over the past three years — including, he conceded, ConnecTV itself.

In a fight for survival, ConnecTV has pivoted its strategy. Last week the startup, whose investors include 10 broadcast station groups, released an overhaul of its app refocused on a simple idea: It lets users “clip” six-second video segments from among 400 live TV channels and share them on Twitter and Facebook, via a link in email or within the app.

The reason for the change: “We haven’t seen the engagement we were looking for with second-screen apps, while social video like Vine and Instagram are big and growing,” Aaron said.

ConnecTV’s previous app had signed up only 980,000 registered users; other social TV players are similarly tiny. U.K. second-screen import Zeebox, even with the backing of NBCU, Comcast and Viacom, has tallied only around 3.5 million registered users in the U.S. (it doesn’t disclose how many are active). Viggle, which rewards users for tuning in to TV, has made very little headway: It counted just 757,273 monthly active users for June.

Shazam Entertainment is alone among second-screen players boasting a large base, with 100 million users in the U.S. But most of those people downloaded the app for the music-recognition features, and it isn’t clear how many are regularly “shazaming” TV content since the company enabled that feature a year ago.

It turns out second-screening isn’t very widespread today. An eMarketer analysis this month of several industry surveys conducted this year showed that just 15%-17% of TV viewers engaged in real-time socializing about the TV shows they were watching.

Skepticism about exactly how many TV viewers are engaging in second-screen activities is healthy, but it behooves networks to make several different bets, said Ryan Osborn, NBC News’ VP of digital innovation. “We’re in the second inning of a long extra-inning game,” he added.

Dijit Media CEO Jeremy Toeman, meanwhile, said that the functionality that will determine winners and losers among TV apps is how well they further the goals of broadcasters, cable networks and pay TV operators — in other words, how successfully they get people to watch more TV. The startup’s Next-Guide provides a way to find shows and set reminders for favorite shows, rather than trying to reinvent the way people watch television.

“If you’re a startup, you need to fit into that world, not be an adjunct to that,” Toeman said. “Nobody should enter this space on the premise that TV watching is broken.”

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