TV2- The next leg up, page-783

TV2U is a long term proposition. Thats how I see it. The upfront capital to secure capital is a hurdle that small cap companies will struggle to overcome in the short term. Hence OTT opportunities with minimum guarantees and Vubiquity style fees make it hard for TV2U with its current cash position, and cash burn rate, to land a typical bread and butter deal they would dearly want.

Their technology is fine and when money hurdles upfront are not present to the deal, as in the case with Sunfly who already own song content for TV2U to use and deploy, TV2U can focus on creating a karaoke app product that is well received by the market.

Content costs are a killer in this market. Look at Netflix this last week who has reported ballooning content costs and also a plateau in their market share as they may be choosing titles not aligned to the market demand. Operators and their streaming partner(such as TV2U) often have argy bargy around who will underwrite minimum guarantees on monthly revenue such as that demanded by the studios and Vubiquity.

I have personally been in conversations with Vubiquity on this issue and how to close out a deal for all stakeholders but its not a win-win model and each party looks to offload risk onto the other. I have long predicted TV2U will get its legs either through deals where content has already been secured and so costs are off the table, or where the client agrees to take on all these costs and guarantees and just let TV2U get on with the streaming.

TV2U are not acting like a startup with their costs such as salaries in my opinion. The executive team is thought to travel business class. Startups need to run lean and mean till they get the revenue stream pumping else we the shareholders must put up with cap raises which dilutes our equity.

TV2U is therefore a potential worth holding. My family have already sold 10 million of 30 million we hold and have reduced our exposure to almost nothing so I can afford to hold and not sweat.

New investors to this stock are still holding out for some old stale deals to eventuate but Vector and Humax are dead, and I should know as I have dealt with both these companies in the last year. Asian companies do not put out announcements when deals fail as they do not want to lose face. They simply move on which I assume is what TV2U do as well.

The market needs what TV2U has to offer so technically they have a sellable commodity. But that means they need to sell themselves in a certain way to gain trust. I am not sure I would have Tom in that role given he is a broker and not technical in OTT, so I hope the two new execs, who have broadcasting industry backgrounds, will create the credibility and know how to and are able to, close a deal.

I am not expecting any significant revenue before Xmas and so the end of year report will be the one that informs me as to what traction they have gained in the market. Meanwhile I expect to continue to cross paths with entities also in TV2U's world as gaming and broadcasting are close cousins in many ways and that gives me insight that helps me to understand why deals seem to slip deadlines etc.