In a market as heavily regulated as France, where Netflix faced tremendous resistance ahead of its launch in September 2014, introducing a disruptive, digital TV service seems like mission impossible, but not to Jean-David Blanc and Pierre Lescure, the co-founders of AlloCine and pay TV giant Canal Plus, respectively.
Lescure, now president of the Cannes Film Festival, and Blanc, an angel investor in startups, have raised €10 million ($11 million) — mainly from Paris-based private equity investment firm Idinvest — and have succeeded in getting most French TV groups onboard their subscription OTT service, Molotov.tv. Pay services Canal Plus, Orange Cinema Series and beIN Sports are in negotiations to be distributed by the service.
Blanc and Lescure are looking to raise an additional $100 million, and are considering making the U.S. Molotov’s first international market. The company’s founding team also includes Jean-Marc Denoual, formerly of French broadcaster TF1, and Kevin Kuipers, who formed the gaming site Gamekult and social-media site Sens Critique.
Molotov.tv is being described as the Spotify of television, a subscription OTT service that allows users to stream live TV programs — including soccer — broadcast on nearly every French TV channel on their computers, mobiles or tablets. Like Spotify, users can sort content based on individual tastes, favorite actors, TV shows, movie genres or friends’ recommendations. Unlike content streaming services such as Hulu, Molotov.tv also allows users to bookmark shows, and boasts a recommendation algorithm and a social-media component that connects users to people they know, and showcases buzzy programs, and scenes that have created the largest activity peaks on Twitter.
Molotov.tv’s primary goal will be to lure millennials, who are watching less and less TV, says Blanc.
France is in fact a good market in which to launch Molotov.tv for one basic reason: quality TV content is abundant, Blanc says. Indeed, as Lescure points out, France’s TV broadcasters invest about $3.5 billion in programs, and pay TV channels such as Canal Plus invest an estimated $2.9 billion. “But most programs don’t reach audiences, who are often tired of zapping and sifting through every channel,” he maintains.
It took Molotov.tv’s team about 18 months to enlist the bulk of its TV channel participants. “We highlighted the erosion of ratings on traditional TV, explained how we would remain distributors and not editors, and pitched a modern business model where we don’t sell ads. The idea is not to make money off TV channels’ content,” Blanc says. In fact, Molotov.tv has applied to France’s broadcasting authorities to obtain the legal status of distributor. As such, they’ll pay tax from subscription earnings, and pay royalties to various rights holders’ orgs.
So how will Molotov.tv get its revenue?
“A freemium model,” Blanc explains. Content from free-to-air channels will be accessible to anyone, and content from pay TV channels will be available to subscribers of those services. Blanc says that pay TV channels will give Molotov.tv a distribution commission, and Molotov.tv will share revenues with pay TV channels when they generate new subs who sign up through the Molotov.tv service.
Blanc declines to give the number of subscribers needed for the platform to break even, although he allows that they are targeting millions in the market.
The service will be geo-blocked, but if a channel has global rights to programs, such shows will become available in those territories for a duration varying between seven to 30 days — depending on the catch-up windows on each network.
The next step for Molotov.tv will be to integrate content from Web platforms such as YouTube.
The plan is to expand the geographical footprint of Molotov well beyond France. “We’ve already started approaching international TV groups, and the discussions are going well,” Blanc says.
The market might get overly competitive really fast, however, with Apple developing a live TV service (though that launch has been pushed back to 2016). “We share the same vision, and provide a different answer. I believe what we offer will be much different than Apple TV,” says Blanc.
And the step after that? To give Netflix a run for its money.