When the free streaming service Locast shut down last month after losing a crucial court battle with TV networks, it left millions of users without a cheap way to stream local TV channels.
But Locast’s sudden collapse may have created an opportunity for LocalBTV, another service promising free streaming access to local channels without an antenna. The service is currently live in 16 U.S. markets, with an app that users can download on Roku, Fire TV, Apple TV, and Android TV devices. James Long, the CEO of Didja, the company that operates LocalBTV, says he’s hoping to expand the service to 100 markets by the end of next year.
“We just use the public internet to connect to the public airwaves,” Long says. “We’re basically an antenna.”
There is one crucial difference between Locast and LocalBTV, though: Whereas Locast operated without the blessing of TV networks—which led to its legal woes—LocalBTV is getting permission to stream every channel it carries. That means it offers PBS, rerun-centric digital subnetworks, such as Cozi and Buzzr, and lots of foreign language stations. But it doesn’t carry major networks, such as ABC, CBS, NBC, and Fox, which have mostly been averse to unbundling their local channels from cable.
Long hopes those networks will come around—and presumably, so would everyone who’s missing Locast. Whether they actually do ties into the biggest question in cord-cutting right now: As the pay-TV business model crumbles, at what point should the networks stop protecting it and bring their content elsewhere?
The broadcast TV boom
Long isn’t new to the streaming and media businesses. In the early 1990s, he cofounded Starlight Networks, which became one of the first companies to work on streaming video over the internet. He later served as CEO of RioPort, whose MP3 download store was a precursor to Apple’s iTunes music store.
In 2014, Long joined Didja, which, at the time, was developing an app for creating and sharing web video clips. That app, called Clippit, is still available today, but Long eventually concluded that it would never become a significant business on its own. Seeing an opportunity in streaming local TV channels, the company pivoted in 2017.
“We successfully predicted a resurgence of broadcast TV, which has been happening for three to four years,” Long says.
Indeed, antenna use has boomed in conjunction with the decline of traditional pay TV bundles. According to Nielsen, 15.5% of U.S. homes are now “broadcast only,” meaning they use an antenna in lieu of cable or satellite-TV service. That’s up from 9.7% in October 2013.
Still, an antenna isn’t always feasible for a variety of reasons. Some viewers may be too far away from their local stations or live in area with too many surrounding obstructions. Others may not want to hang an antenna inside their homes or deal with a roof or attic mount for more distant stations.
In much the same way that Locast did, LocalBTV takes that antenna signal and streams it over the internet. In six of LocalBTV’s markets, it finds a data center with strong antenna reception, then sets up an antenna on the roof and servers inside, allowing it to process the video. LocalBTV also has three markets where it merely captures the signal and sends it to an existing data center in another city for processing. If a station already happens to be streaming its content, LocalBTV can add that stream to its channel guide as well.
All of this means that LocalBTV doesn’t have to spend money bringing every individual channel online. Once it pays for equipment and rent in each city, it can instantly add any over-the-air channel to its lineup.
“We’re really an infrastructure company,” Long says. “We’re plumbers. We’re the fastest, simplest, lowest-cost way to get a local video to a local home.”
A lifeline for locals
For TV watchers, LocalBTV provides livestreaming plus a 1TB cloud DVR for free. And though Didja’s business model involves partnerships with local stations, it doesn’t charge them anything up-front. Instead, the company allows stations to insert digital targeted ads into their live video streams, then takes a cut of any revenue those ads generate.
That setup turned out to be a lifeline for Sky Link TV, a longtime broadcaster of Chinese-language news and entertainment. Earlier this year, Sky Link’s San Francisco station moved from a subnetwork of MyNetworkTV affiliate KRON to another channel further down the dial. Comcast, in turn, dropped Sky Link from its basic cable lineup, leaving thousands of subscribers without a round-the-clock Chinese-language channel.
Michael Moon, Sky Link TV’s head of business development, says spinning up its own live stream would have been too expensive, with developers quoting anywhere from $80,000 to $500,000. The station instead started encouraging viewers to download the LocalBTV app, and by the time Comcast stopped carrying the channel, 80% of its viewers had moved over to the live stream.
“LocalBTV became extremely valuable to us at that time,” Moon says. “We saw it as an opportunity to go digital, to become part of a streaming platform without having to do any additional work.”
Network TV dreams
Long says foreign-language channels have turned out to be LocalBTV’s biggest sources of growth, noting that viewers tend to be both tech-savvy and value-conscious while providing great word of mouth for the service.
But, of course, he’d also like to bring major networks on board. To that end, he says claims to have deals in place with two major networks—one for its main broadcast channel and digital subnetworks, another for just the subnets—but he declined to get into more specifics.
The main issue right now is the consolidated nature of the media business. ABC, for instance, is owned by Disney, which also owns ESPN and a slew of other cable channels. Comcast’s NBCUniversal offers not just the NBC broadcast channel, but several regional sports networks and cable channels, such as SyFy and Bravo. Fox has its broadcast channel along with Fox News and the national FS1 and FS2 sports channels. The networks prefer to bundle those channels together, so that every subscriber pays for every channel. (ViacomCBS, which offers local channel streams as part of Paramount+, is the sole exception.)
“The networks have been really scared about cord-cutting because, not only do they lose revenue for ABC, they lose revenue for the Disney Channel, ESPN, and all that other stuff,” Long says.
Eventually, though, a tipping point will come. Local station owners—companies like Sinclair, Hearst, and Scripps—don’t want to keep losing viewers in the great unbundling. Along with the networks, they’ve managed to keep revenues afloat through price hikes for pay-TV subscribers, but that strategy won’t work forever as more viewers cut the cord.
Long believes that LocalBTV could offer those channels for an additional subscription fee. And by bundling them all into one app, with dozens of other local stations and a cloud-based DVR, the channels could start to win back the subscribers they’ve been losing. That makes more sense, he says, than trying to establish yet another direct-to-consumer streaming app.
“People are not going to start using Pluto and Peacock and stuff to get their local channels,” he says. “That’s just not how people watch TV.”
Even so, Didja isn’t solely betting on the idea of TV networks unbundling their broadcast channels. The same technology that powers LocalBTV, Long says, could also provide local channels to other streaming services at lower costs and with less latency. (He floats the idea, for instance, of streaming bundles, such as YouTube TV using Didja to bring in local stations.)
Long also says Didja can get by just fine without the likes of ABC and Fox. The company operates at break even, he says, and so far it’s put little effort into marketing the service. That would presumably change as it expands to more markets. In addition to cities where it operates now, Long says LocalBTV has another five “around the corner” and is contracted with 15 more. Didja will likely raise money next year to pursue its goal of 100 markets by the end of 2022.
None of that hinges on major network support, which as Locast painfully learned already, is not something that will come easily.
“We’re running our business as if we’re not counting on it,” Long says.
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