Ann: Brazilian OTT Update, page-144

I just read the update and its a bit of De Ja Vu happening for me personally.

Content and its acquisition has always been the achilles heel and the biggest risk item attached to TV2U IMO. I have banged on about it in the past.

In GAL days TV2U tried and failed to get a Vubiquity deal across the line for the supply of content of premium and legacy content catalogue that you would typically expect to see.

The initial RTO float of TV2U just fell over the line and gave the company just enough money to prospect for a commercial deal and tie it down if costs were contained. Ideally the first float cap raise should have been for $4 million IMO so $1.5 million approx for content rights could have been provisioned and locked away until required.

With minimum guarantees for content play out numbers, the insurance against breaching minimum guarantees, plus the actual cost of the content catalogue could easily burn $1.5 million Aus. That became problematic IMO as the culture of TV2U is not what you expect from a startup where senior staff operate at minimal wages till commercialization of first key contracts occurs.

IMO from day 1 TV2U has seen fit to pay itself salaries expected of a company in a high profit environment and as we have seen the Administration category of costs each quarter, as measured as a percentage of overall costs, has been eye brow raising high each quarter for little commercial return.

IMO a disciplined company would have cut its cloth so that content acquisition was possible when a deal landed. Now we are in a situation with high Administration costs now eating scarce Con Note capital that dilutes us all as shareholders but no-one seems to care but look the other way as we cash in another Con Note tranche?

I personally read the creative solutions now being attempted in South America as an attempt to get out of this Nexus TV2U has created by being in a contractual setting where it is unable to fund the content supply out of its own funding or cash reserves. We should never have got to this place IMO if this is the case.

I also have warned everyone that the fact that we all could see the SOLGO and Indonesian service content outside its content jurisdiction territory is a potential breach of content usage in a typical OTT scenario as it implies that Geo-locking and/or DRM is not in place or possibly working.

It might be useful to attract new shareholders who see the OTT service even though its should be for Brazil or Indonesian eyes only potentially legally speaking. What concerns me is what potential content suppliers might think of what might be construed as permissive use of content in this way if there is no legal basis to stream it outside Brazil or Indonesia.

Content usage in Test, Quality or Production environments has to be a disciplined process.
Maybe TV2U have permission with its content partners to do so but content usage is a touchy touchy issue in the broadcasting world so conservative best practice is always recommended.

I am personally wondering whether the Brazilian content distributor had concerns over content management? The stripping of English content and metadata and its replacement with Portugese Brazilian equivalent with announced interim approval for its usage is great but the catalogue now lacks that premium English Hollywood content and how long will content negotiations take till it be legally made available, and where does the money come from to fund it?

The LOI/MOU for the potential purchase of a content supply and distribution company IMO is part of their attempt to solve this problem. This means to me that we seem to be back to the original Nexus.

The TV2U OTT technology works fine but the supply of content to me remains the biggest commercial headache here and so the biggest risk factor to be sorted. TV2U have tried to get the operator client to pay for the content but it seems not to be a fully provisioned cost thus far with either client.

The lack of costs and numbers in TV2U announcements does not help one to understand how to quantify the situation and so the investor emotion and speculation will now replace the ability for logical debate on HC IMO.

Having no spell checking or perceived QA over announcements feeds into that perception that communications and governance is less than optimal at TV2U IMO.