(Group 11) | Stars Align for Mobile Live Streaming
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The Stars Finally Align for Mobile Live Streaming

Dovi Frances, Q2 2015

In February of 2014, live streaming video social network Justin.tv pivoted into Twitch, which focuses solely on gamers [1]. The company, founded in 2006, built their network of live streamers on a desktop computer. Eventually, the switch to gaming made sense because gamers are tied to a desktop. Six months after becoming Twitch, the company sold to Amazon for $1BN, Amazon’s second largest acquisition to date [2]. Almost a year after Twitch’s sale, names like Periscope, Meerkat and YouNow are igniting a firestorm of discussion on the future of social live streaming. Why now?

Vatican City Announces a New Pope: 2005 vs. 2013
Slow Start:

Apple once blocked all iOS apps recording live video, because initially the apps had to take advantage of a restricted screen capture API in order to function. AT&T, the iPhone’s exclusive carrier at the time, also did not want live video “clogging up” its slow and unreliable 3G network [3]. This was in 2009, when mobile technology and communications infrastructure were clearly not ready for the type of live streaming video adoption seen at the time with services like Skype on desktop computers with wired connections.

Smartphone and networks’ evolution changed the game for live streaming:

Justin.tv emerged pre-smartphone abundance. “The reason (for current live streaming success) is the rise of iOS and Android,” Emmett Shear, the CEO of Twitch told The Verge in March of this year. “Smartphones provide all the critical pieces for these new services. They take care of distribution through the app store, monetization through in-app purchases, incredible video quality through cameras and microphones, and connectivity everywhere with LTE internet.” The growth and ubiquity of social networks is also “creating an amplifier effect for good consumer products.” [4]

11 years before Justin.tv became Twitch, a group of five European entrepreneurs and developers came together to build Skype, which would eventually bring live video chatting to the masses. Apple’s Facetime and Google’s Hangouts have followed suit to put video calling – an idea that was once science fiction – into our pockets and browsers. In the process, these services have offered consumer education and familiarity with live streaming video on a personal level.

Since 2009, the cost of mobile data per megabyte has plummeted, mobile data transmitted is about to skyrocket, and mobile penetration around the world is on its way to reaching 100% (see below). Given the advances in mobile computing power, communications infrastructure, and optics over the past 10-15 years, live streaming video on a smartphone via a social network has finally become a reality.

Chart via The Economist

Companies such as Periscope, Meerkat and YouNow are capitalizing on these recent technological advances by bringing to life an entirely new space bound for evolution and growth. Today, networked mobile live streaming is in its infancy, but Cisco predicts that by 2018, 84% of all Internet traffic will be video. [5]

On YouNow, for example, the average mobile broadcast length is about 18 minutes. Multiply this by the 150,000 (current) daily broadcasts and it adds up to 35,000 hours worth of live streamed video being broadcast on YouNow every day [6].

What is interesting about YouNow is that 90% of user sessions happen via iOS and Android apps. This percentage of YouNow mobile broadcasts wouldn’t have seen the light of day had it not been for the technological advances witnessed in the last 10 years. This new network has capitalized off of the reciprocal relationship between major advances in technology and youthful adoption of a familiar medium.

The human factor ripens for live streaming: an always-connected, often-recorded generation

Screen Shot 2015-05-07 at 2.39.38 PM
Mashable Broadcasts on Meerkat 3/27/15

In differing forms, the live streaming market has been around for over a decade. But unlocking its full socially networked potential has not yet been realized. In 2013, when CEO Dick Costolo was asked about Twitter’s total addressable market, his response was: “the entirety of the world of connected people” [7]. Bringing the entirety of the world to a live streaming social network hinges not only on the unavoidable progression of mobile technology and infrastructure, but also people’s willingness to adopt new applications for it.

Today, 73% of U.S. teens have a smartphone, 24% of teens are using the Internet “almost constantly”, and 47% of teens are streaming video [8]. It is the children who grew up video chatting with their grandparents on an iPhone who are driving a social networking sea change towards live video. Twitter has pushed social live streaming into mainstream conversation with their acquisition of Periscope, Meerkat debuted at SXSW and was the talk of the conference with celebrity broadcasters. YouNow has seen explosive growth over the past year with a young community of early adopters.

A combination of technological advances, youthful adoption, and familiarity with live video has allowed a new form of social networking to emerge, and today’s pioneering players in the space are showing why the time is now for the growth of live streamed mobile video on a social network.

Another trend is evident here as all social media interactions move to real time. As people are “always” connected the communication form becomes more immediate and frictionless. Photo sharing and text became more real-time with Instagram and messaging apps, now video is becoming real time as well.

Graysan Rogers broadcasts with her mom on YouNow

Diego eats Pizza with his friend while viewers comment

On YouNow, viewers are competing to be your ‘#1 Fan’, emojis are popping up constantly, new friends from around the world are reaching out to broadcasters, fans are being invited, you’re leveling up in the process. It is a gamified experience, focused on user engagement. While this can be an overwhelming experience at times, the constant options for viewers and broadcasters to stay engaged makes YouNow more about entertainment and social interaction and less about information. YouNow fosters long broadcasts and engaged viewers that are likely to stick around and connect in a meaningful way that also generates revenue.

Chart via The Economist

The experience targets young people, who spend significantly more time on their smartphones than middle- aged adults (left chart).

A video-based real-time social forum with a network of peers broadcasting their day to day lives is arguably enough to entertain a teen with a short attention span. But YouNow has gone a step further by creating multiple layers of engagement, multiple discovery tools, and even the ability for prominent broadcasters to organically earn revenue via YouNow’s Partner Program. YouNow, Meerkat and Periscope represent a logical step in the next evolution of smartphone applications, where young users will demand a higher level of engagement to satiate their growing desire to be entertained by content via mobile video.

The Market is Growing Up

“The technology is not new — people used sites like Livestream and Ustream to broadcast during protests in Ferguson and elsewhere — but these new apps help to incorporate live streaming into the existing social media landscape, potentially bringing it to a much larger audience.” – Slate

Some newer participants:

Ustream has shifted from their initial strategy to target the live streaming market for enterprise customers. The firm has also recently opened up their API allowing ‘anyone’ to build their own live broadcasting app. Ustream also powers ‘Facebook Live’, a collaboration from 2012.

Livestream, a company headquartered in Brooklyn, targets media and entertainment with their “broadcaster mini” adapter which gives professional HD cameras live broadcasting abilities.

Chosen recently launched an app that further gamifies the social live streaming experience, acting as a platform for an American Idol-like performance competition.

Snapchat’s success has acted as evidence towards social networking’s evolution into mobile, real-time, and video-based interaction. While Snapchat’s primary function exists via one-to-one communication, their location and event-focused stories offer a glimpse into the future of contextually relevant social video.  Snapchat’s Discover product has introduced traditional media like CNN and Comedy Central to a younger, mobile, and social audience, but this product is initially a ‘top-down’ approach meant to bring traditional content to a young audience through a new medium. Snapchat Discover will surely evolve to incorporate their existing social network, and in doing so, Snapchat may be able to shape the real-time social video market.  But along with Facebook and Youtube, they aren’t there yet.

Yahoo Screen recently released ‘Live Events’.

Facebook, although not a platform centered around live media, has tinkered with live streaming since 2009 [9]. They recently released a video app called Riff, which allows participants to create a social chain of videos and added free VoIP video calls to Messenger. However, Facebook’s DNA is an aggregator of photos, videos and text-based status updates. This might explain why Facebook is not likely to acquire any of the competitors vying in the live-streaming arena (contrary to a recent ‘insider investor’ that insisted Facebook will acquire Meerkat in a response to Twitter’s acquisition of Periscope [10]).

Reasoning is simple: While video uploads on Facebook have grown by 4X y-o-y, to a staggering 1BN videos watched on the platform daily, (a real risk to YouTube’s dominance as the current king of online video), Facebook focus is on increasing the consumption of pre-recorded videos. 30% of Facebook’s users are a slightly older demographic (compared to lives streaming) of 25-34 year old who spend 20 minutes on average per visit [11]. Their video consumption habits are all about browsing through the platform when they have time. For these users, time and convenience is paramount. They gravitate to watching quality content already shared and validated by their friends rather than watching a live stream act of one of their peers or a potentially gifted stranger. Broadcasting is less likely from this cohort given their sensitivity towards appearance on social-media and their desire to control their online presence. Finally, there are also Facebook’s Advertisers (remember revenues?) who obviously prefer pre-recorded videos for placement, tracking, and performance.

YouTube has been unsuccessfully attempting to enter into live streaming video since 2010. The Google owned online video behemoth also tried (and failed) to acquire streaming giant Twitch last year. YouTube’s live streaming division hasn’t really lived up to early expectations, outside of a few marquee events. In early 2014, YouTube removed any mention of live events from its homepage. This, and the constant pressure from Facebook to replace YouTube, [12] pushes YouTube to make a radical moves: getting a younger audience hooked up before Facebook gets them, generating live content that can then be recorded and shared indefinitely on the platform, and lastly, helping generate more meaningful revenues. YouTube is poised to continue attempts to significantly enter the space in a form of an acquisition [13] and so they should given the inherent risk to their platform in its current state.

All of these services and players represent the convergence of social media with mobile live video and each will open up new possibilities and opportunities for user engagement. The recent swarm of attention for Periscope and Meerkat has verified that there is strong demand for this convergence to take place. Twitter is the first major social network to take a big step towards a live streamed future, but others – including Facebook, YouTube and Snapchat – have laid the groundwork for a similar investment.

Some of the names above are publically traded companies, while some have just recently been funded. The growth potential for this market is relatively unknown, but the facts are favorable: that mobile live streaming has just recently become possible with available technology, there is a clear demand in the market for the product, the product is shown to foster mobile engagement, and there are a range of new and established companies finding varying niches within the market.

The Future is Near

The world’s most used social networks will continue to reshape entertainment and communication by overlapping the two with live social video. Since televisions started entering into people’s homes in the 1950s, live entertainment has not had a feedback loop. Traditional movies and TV shows consist of one-way communication. The actor talks, the audience listens. With live video social apps, this dynamic shifts with the introduction of a feedback loop. Everyone has the power to broadcast live, and the audience has been given an immediate voice.

Attached to mobile phones, improved data connections, social networks, and engaged young people, live streaming has left the production line and is ready for massive network-based consumption.

Dovi Frances is the founder of SGVC, an Advisor to and an Investor in YouNow