We live in an exciting time. The JOBS Act allows regular people to invest into startups with the potential to become the next Facebook / Google / Apple / Time Warner / Disney. Through a platform like Start Engine we can potentially raise $1.07 million from the general public and use that money to catapult our Zenither app into the market with features that both viewers and content creators deserve and which no other platform is providing.
So let’s get into the nuts and bolts about what the overall vision is for MBS, Inc. It’s critical for success that the founder of an ambitious company have a detailed plan for what they want to accomplish with that company. This article is my way of sharing that vision with the public.
All businesses are rooted in solving a problem. If you don’t solve a problem for someone you really don’t have a business at all. So let’s talk about what the core problem we’re trying to solve at MBS, Inc.
The Problem
The video streaming ecosystem currently has major problems. There’s no way to avoid the elephant in the room so let’s just dive into it.
The market leader is YouTube, who operates the platform with a business model where Google sells the ad inventory for videos on the platform and takes a cut of 45% of the money from every sale. They sell the ad inventory at wholesale rates and worse, there are too many ad inventory spots available because there are billions of video views every day. Not every YouTube video view goes monetized because even if ads are enabled on the video there isn’t enough ad purchases to place on every view. So YouTube creators end up making about $1 per thousand views their channel receives, even if the CPM of the “monetized views” may be $6 or greater. If only 60% of your views get monetized your CPM isn’t really $6, is it? Of course not.
Worse if creators are in a multi-channel network (which the vast majority of them are) the network might be taking anywhere from 10% to 50% of the ad revenue after YouTube gets its cut.
What this all means is YouTube channel creators do not make enough money to fund the production of high quality television programming,. This is why the vast majority of channel creators produce 5 to 10 minute video blogs and shy away from scripted long form content.
Even if you were a major TV network uploading videos to YouTube, you could never do a daily soap opera like General Hospital on YouTube nor could you produce a 24 hr news network like CNN on YouTube because channel owners can’t determine the price for their ad inventory. YouTube keeps the price low because they use AdWords for Video to do the placements and the AdWords business model specializes in cheap wholesale ad purchases because they want advertisers to do video ad placements with them instead of a TV network.
On top of this enormous monetization problem, YouTube has implemented many kinds of machine learning algorithms to automate functions on the site such as determining if videos violate their policies. Because machine learning is poor at understanding context this has resulted in millions of videos becoming blocked from monetization if YouTube’s ridiculous AI script can’t locate an ad to display on those videos. It also is systematically demonetizing any videos featuring firearms, even if it is video game footage or a news program that is reporting on anything about firearms. It is also demonetizing religious programming.
The biggest problem with YouTube is that content creators invest a lot of time and money into producing videos but have no guarantee their videos will even make any money to recoup the investments they have made. This is not like how television works, where ad inventory can be pre-sold well in advance by the TV networks for airing against content they have not even produced yet and thereby guarantee a return on investment. In the traditional TV industry the price of ad inventory is set by the networks to ensure they recoup their investments. This is absolutely impossible to do on YouTube if you are a channel creator.
This ill conceived business model where content creators have no control over their own finances is why YouTube has failed to attract significant development of high quality content from third parties and is instead primarily a platform for hosting cheaply produced video blogs. Some people do become highly wealthy by producing these video blogs, but this is done at serious risk because YouTube can suddenly decide to demonetize for any reason.
Unfortunately because YouTube is the market leader and this is their business model, practically every video streaming site adopts their model. And it is not a fair model.
- It is a model built on controlling the ad inventory of all content creators and taking about half of that money.
- It is a model that is the very opposite of traditional television broadcasting, where the carrier (like Comcast, Time Warner Cable or DirecTV) receives none of the ad revenue from third party stations and instead pays these partners a % of the subscription money that the carrier collects from subscribers to the service.
We here at Martell Broadcasting Systems, Inc believe the traditional TV model where content owners determine the price of their ad revenue and get paid carriage fees is how online video streaming platforms should operate and we have designed Zenither to make this a reality.
What We Are Doing
As a company Martell Broadcasting Systems is engaged in three primary business endeavors;
- Developing and operating the Zenither platform to merge the business of television with the features of internet based video streaming platforms.
- Providing tools and promotion for third party content providers so they can use Zenither to operate their own internet based TV Stations.
- Developing content for our own Stations, to include news programming that does real investigative journalism. This includes feature film and TV serial developments, and we want to be able to someday provide funding for premium original content the way Netflix and Amazon are doing today.
We’ve modeled our business after cable / satellite TV carriers such as Comcast and DirecTV; business models that have proven to work since the model was first created in the 1960s. This model is built around multi-channel video programming distributors (MVPDs) operating as a service provider for independently owned television networks that delivers their broadcast signals to consumers. Zenither’s business model is rooted in the same fundamental business qualities of MVPDs; we operate as a virtual MVPD using internet-based delivery and scheduling of content rather than using satellite broadcasts.
As part of the Zenither service MBS is operating Stations we own and list in our television service and in addition to the % of subscription money we collect on premium Station bundles, these stations we own generate ad revenue for our company.
This means unlike YouTube we’re not trying to monetize solely by take a cut of everyone’s ad revenue but instead also offering our own content alongside that of third party Station owners. We’re operating more similar to DirecTV, DISH, Time Warner Cable and Comcast Xfinity.
Our business model is therefore much more in line with traditional industry norms and we’re not over-reaching the way these other Silicon Valley startups do. We’re trying to create a business model that is sustainable for our content partners and allows them to scale to become major television networks — which is simply not possible to achieve when YouTube is taking 45% of their ad revenue and then an MCN takes an additional 10-50% of their ad revenue, and the ads are selling for $2 to $10 CPMs to begin with.
With Zenither our content partners can set the price for their inventory so they can charge whatever CPMs they need in order to recover the investments they make into producing or acquiring content.
We believe you shouldn’t need billions of monthly views on YouTube in order to fund high quality content and you should be able to make decent money operating niche channels that may only receive hundreds of thousands of daily watches, just like local TV stations do.
Like Netflix does, MBS can license movies and TV shows for featuring on the Stations that MBS directly operates. At launch we plan to operate a music station (similar to old-school MTV), a gaming station (similar to G4), a “classic” station (similar to ME TV). We have content lined up for these stations already, and by the time you read this article, you’ll be able to watch those Stations in Zenither right now. We want to be able to license additional programming that isn’t currently available to us from sources like YouTube and which we can make available for viewing on our “free to watch” stations in Zenither.
Investing into Martell Broadcasting Systems, Inc. means you’re investing into a startup that is not only developing the innovative technology to make internet based cable TV a reality, but is also operating its own television networks alongside our third party content providers. And we’re empowering the YouTube stars of today to become the television network owners of tomorrow.
Why Stream Older Content?
You don’t need brand new first run content to build a television network, or even a video streaming platform. What you need is content that people want to watch.
I’ve been a life-long student of the television industry. The rise of Netflix’s video streaming service was predictable to me because they specialized in offering a large library of second and third run TV shows and classic movies. That’s how the service began; they didn’t have the newest releases but they had a good library. And it was obvious to me this was going to succeed because Ted Turner used a similar content strategy to launch his first cable network back in 1976. The Atlanta based WTCG station owned by Ted Turner only broadcast older TV shows and movies yet it became the most viewed cable station and received wide coverage on many carrier networks. We still see cable TV networks using this model — as a solid example Me TV specializes only in third run content.
It doesn’t matter how old content is if people want to watch it. It might have been made years, or even decades ago but it could be “new” to people who haven’t seen it before. There is lots of outstanding content available for us to stream. We can build financially successful virtual TV stations by selling advertising against this content. We’re doing it right now.
As the service grows we do intend to produce original content. This is because a slate of shows that can only be watched exclusively on your network is a valuable selling point for people to watch your station. It attracts loyal viewers and it drives up the price of ad inventory sold against that show. If HBO and Showtime didn’t produce original TV series nobody would subscribe to these stations anymore. Netflix may not still be the market leader without original content, and Amazon wouldn’t be competing either.
You need original content to sustain audience interests in your stations and give them cause to pay a monthly subscription fee.
We’re different from these other services in that we’ll end up with exclusive content in Zenither that is produced by third party Station owners. As an example, we might have an independent film company start a station so they can directly broadcast their library of indie films to audiences and they won’t sell the rights to these films to NA based distributors. They could become a “mini-HBO” and use the carriage fees they receive to develop original TV shows the same way HBO uses theirs to make Game of Thrones and Silicon Valley. All these things are possible with this business model we’ve adopted — a business model that other competitors like YouTube do not allow.
What Original Content Will We Make in the Future?
What kind of original content would we develop? We’d accept submissions for projects from our investors of course, but MBS already owns rights to some content that could be developed into shows. For example through the Martell Books imprint we have the rights to Luther Darkmore’s Creep World novels. I think the stories could be developed into a modern “Are You Afraid of the Dark” children’s horror TV show. Perhaps we’ll adapt my fantasy novel Pandemonia Chronicles into an animated show? The point is we do have IP that can be adapted into video content for Stations, but we need an outlet for these shows to be monetized properly in ways platforms like YouTube do not allow. Launching Zenither and operating our own stations alongside those of other creators where we can control the cost of our ad inventory and charge premium subscriptions allows us to one day be able to develop original IP — which can provide new revenue streams themselves through merchandising and licensing deals.
Another thing we’d do which is different than Netflix is that we’d want to start an investigative news show. Investigative news has been pushed aside in favor of the pulpit formats favored these days by CNN and Fox News, but I honestly believe programming like 60 Minutes are more crucial for educating the public on the pressing issues facing the world. It occurs to me that Netflix could fund an entire year of quality news programming for the same price they spend developing their Adam Sandler movies — which I have to be honest, I just don’t think are very good and I typically enjoy Adam Sandler movies. Another example is the Death Note film they produced; man, that was awful! The concept was bad from the start and I would never have greenlit such a terribly unfaithful adaptation of a beloved manga.
I think Netflix is wasting money developing too many properties without any real quality control oversight and not diversifying enough into different content categories. So as a point of differentiation between Netflix and Zenither I would want to develop some original news programming as a public service for Stations that we own. As an example, I would like a short music related news program to air on our music station and I would like some gaming news related segments on our gaming channel. I would like our flagship variety Station, Martell TV, to feature a morning and evening news program every day.
Something I believe in very strongly is that the current generation of social media influencers should become the next generation of TV and movie stars. It’s something that Hollywood has done small tests with, but hasn’t really thrown it’s full weight behind. A couple years ago I wrote a blog article about ‘How to write a good pitch for a TV show‘ and created a fake project, a web series adaptation of Ghostbusters casting several prominent YouTube stars in the lead roles. Although this isn’t a real project it is an example of the kind of programming I’d want to greenlight for broadcast on MBS Inc. operated Stations in the Zenither app so check that link out if you want to understand how I think about developing original content. We may never get the rights to something like Ghostbusters or work with these example stars, but the content we will make is going to be developed with the same idea; casting well known social media influencers into roles suitable for them in the shows we produce.
Keep in mind, developing original content for our Stations isn’t something we’re going to be able to do much of at the beginning. First we’ll need to build our userbase and library of third party station providers. We need to prioritize the development of crucial features that Zenither is still missing. We need to develop mobile and smart TV apps to improve our distribution.
Above all, we need to have solid revenue growth on the second and third run TV shows we’re currently airing in Zenither before we’ll invest into producing any original content. And we’ll probably fund projects individually using equity crowdfunding campaigns specifically to raise capital for those film and TV projects to validate that people actually are interested in these projects. I believe this will ensure we only produce stuff people actually want to watch and if we do adaptations of existing media people will refuse to fund it if it’s not faithful to the source material.
The development of original content may not be something we do Year 1 of Zenither’s launch, but it’s on the plan for the future and I want people to know this is where we’re eventually heading. If we are successful in this seed round of funding I expect us to produce original programming in 2019. By then I expect all core features of Zenither to be developed and our viewership to have grown to support the development and promotion of original content.
What About Sports Content?
Sports content is some of the most crucial content for a television carrier to have and for major sports the rights to stream this content are held by major players. Chances are we aren’t going to stream the Superbowl or UFC matches on Zenither at launch, or maybe even in the first two years of operation. But I think as our model is demonstrated to be effective that we’ll get major sports games broadcast by third parties — sports network operators — and made available to our viewers.
What we CAN do at launch is schedule indie sports videos, and you’ll see some of this playing in Zenither right now. We’ve got access to cool stuff like HEMA (historical European martial arts) matches and real-life Quidditch leagues. We’re scheduling whatever quality sports content we can obtain within our means and I’m confident that as our service grows in subscribers that we’ll attract the interest of the big sports networks who will want to stream things like NFL, NBA and MLBA games on Zenither. We’ll get professional wrestling, UFC and boxing matches. Right now Zenither’s scheduling software is already compatible with JW Player, which many of these companies use to live-stream games in their own apps. It doesn’t require much for them to start a station in Zenither and send those streams through us. We’ve made the scheduling software super easy to use so they could have one social media manager handle the scheduling of the streams.
Beyond this, I think Zenither will make a huge difference for restaurants and bars that display sports and news shows as part of their patron experience. Did you know that cable companies charge restaurants and bars more money for service than consumers pay? They charge businesses like restaurants and bars three times or more for those set top boxes tAND they only let the owners display on a handful of TV monitors per box. This means some owners of these establishments end up paying thousands of dollars a month in order to have all their TVs able to display the same game because the cable companies rip them off. Zenither can become a compelling alternative for them because we will allow restaurants and bars to stream to all their TV monitors for the same price as a regular user would pay. It’ll be cheaper and they’ll gravitate toward the cheaper offering, especially if we start getting major sports events on the service. It’s even better because we’ll be streaming e-sports competitions too, which is a growing market of demand. Maybe someday there will be sports bars that specialize just in e-sports and that will be possible because we carried e-sports games at a rate these startup restaurants can afford.
Why Will People Use Zenither Over Other Video Streaming Apps?
Let’s be honest here; everyone seems to be producing their own video streaming app. ESPN has an app, Netflix has an app, HBO has an app, Cartoon Network, WWE, and so many more all have apps. Disney is even producing their own app!
But here’s the problem friends; nobody wants 100 different video streaming apps on their phone or tablet they are each paying $10+ a month to access. They just want ONE app that allows them to watch hundreds of different free-to-watch channels, and they only want to pay around $30 a month in subscription fees for premium stations.
The market is getting over-saturated in stand alone video apps that all have different menus and layouts, and varying levels of quality. Nobody really wants to deal with all of that.
We believe what viewers want today is the cable TV experience in an app that loads on their mobile devices, laptops and smart TVs. They also want a consistently high quality watch experience. Nobody has yet done this effectively and that is what Zenither is doing now. We’re doing this the way it should be done and which nobody else has ever done.
Why has nobody succeeded at doing this yet? Because it’s hard. You have to design an app that takes into consideration the unique needs of each content provider. YouTube creators who want to start their own virtual TV networks have totally different needs than someone like Disney or Univision. As an example, the big cable companies can simply broadcast their existing TV feeds into an app using the proprietary multi-channel scheduling systems they use but YouTube creators don’t have the ability to do any of this. They need someone to create the software for them to use and let them use it for free. This is why we developed the Episode Container system and designed the TV guide the way it is designed. We knew the first users would be YouTube creators so the launch version of the Zenither web app is designed to make it super easy for these creators to build TV stations.
We chose to support both YouTube and JW Player because most indie creators use YouTube to host their videos and most big content providers use JW Player. But this is not where we’re stopping at. We’re going to build compatibility for other video platforms used by other content owners. We’re going to develop a proprietary video player so that people who can’t host videos somewhere like YouTube have the option to be hosted by us.
There are other points to consider. You have to merge a very traditional model with the internet based VOD model which has grown in popularity. It’s not an easy thing to plan. I think too many of our competitors have rushed to the market with ill-conceived plans. By contrast I have been thinking about this problem since I made my first YouTube videos back in 2006 — even back then I felt there could be a better way. I’ve spent the past twelve years of my life planning Zenither and how to solve all the problems in building a virtual cable carrier. I believe I have the answers and I founded Martell Broadcasting Systems to implement these solutions.
Lastly, you have to understand motivations. Amazon and Google want to control everyone’s content. They have zero interest in allowing content owners to operate the way traditional TV networks do, which is as fully independent entities. You can see this in the business models they have implemented into Amazon Prime Video and YouTube. Vimeo is no better, nor is any of these other companies like vid.me, PlutoTV and so on. Everyone wants to control your money. Nobody wants to pay you a carriage fee. They want to always do business from a position of overwhelming strength and they don’t want to have a genuine partnership with you.
Martell Broadcasting Systems Inc. is a virtual cable carrier founded by me — a guy who started out as a content creator and knows all the flaws with this kind of behavior. I want to be a partner with you and I’m prepared to put in the hard work that is necessary to be a partner to you.
My motivation for this is simple; I want to build the best multichannel video programming distributor in the world. I know that won’t be possible if I don’t have equally beneficial business relationships with third parties. The station operators need to be free to make their own choices in how they finance their operations so they can produce quality content that attracts viewers. MBS, Inc. taking half of what they earn and setting a low-ball price for ad inventory on their videos isn’t going to help them do that.
We can and will be protecting some of the innovative designs of the Zenither app with patents. But the best thing to do to make us competitive is to be the company that content owners trust and want to work with because they make the most money with us. That will be our #1 competitive edge.
We Do Have a Difficult Task
Zenither is a video streaming platform but it’s more than that. It’s intended to bring the business model of traditional television to the internet and put it into the hands of indies who could never have afforded broadcasting equipment. As part of our model we’re asking Publishers to use our platform in a way they may not be familiar with, because we are different than YouTube, Vimeo, Vine, etc. You can’t just upload single videos — you have to plan out your day schedule and release of content. Your channel schedule isn’t going to program itself; you have to do it.
So we have a learning curve for users to overcome, and it’s going to be a process of educating people in how to correctly use Zenither.
We’re also very much David going against Goliath here. We’re not just trying to compete with YouTube but also with Netflix, Crunchyroll, Vimeo and a host of other more established players in the market. We have limited resources so everything must be calculated with no wasteful spending. Our marketing of the app to new users must also serve to bring us investors.
Investing into a pre-IPO startup is inherently risky and you should be aware of that before investing into Martell Broadcasting Systems, Inc. We’re a very early stage company with an application that has just entered the market and while we believe we have a mega billion dollar idea with what we’re doing, we have no way to guarantee we’ll be successful. No one can guarantee something like that. The video streaming market — the television market — is very competitive and it’s possible we could fail. This has been true for every startup, whether it was Facebook, Netflix or even the Walt Disney Company back in the day. All new ventures have the potential to fail or succeed based on the founders’ ability to guide the company to success.
What we must do alone is beyond hard. It will require the assistance of those who believe in our goals and mission, and who will use Zenither responsibly to build Stations that provide useful content for viewers to watch. It will require people to step up and invest their money to help us fund our future development and operations. Without money we just can’t do this. But if we do get the money and our company is successful the return on your investment could be substantial.
Don’t invest any money you can’t afford to lose — we have no way to guarantee you will get a return. But if you can afford to risk some money purchasing our shares it will increase our probability of success, because the lifeblood of a company is its capital. We need a war chest in order to take on the established players of the market and funding that war chest is what we’re asking you to do alongside myself. The Zenither app has to date cost $75,000 in developmental and operational costs. I’m putting my career and reputation, and my money, on the line to make this vision a reality. I cannot guarantee that MBS, Inc. will be successful but I do guarantee I am and will continue to do everything in my power to make it a successful and profitable company, and the best investment you’ve ever made.
Invest Today to Benefit Tomorrow
Investing into MBS isn’t just buying shares in an app. It’s investing into a modern day television network which has developed an app as a necessity because the app we need for our business model simply did not exist. Our goal is to become a company the size of Time Warner, which operates our own television carrier network (Zenither) and our own TV stations in that carrier network. As part of running TV stations we’ll develop original programming to air on those stations. And we’ll promote the TV stations in our service operated by third parties the same way cable companies do. Maybe you’ll start the next HBO, Bravo, or History Channel that we’ll promote? It could be you if you invest today.
And the absolute best time to invest into MBS is right now, at the beginning, where even a few hundred dollars may someday be worth a million or more.
Join Us:
If you’re interested in making an investment into our company and be part of this revolution, we’d love to have you.
To get more information and purchase shares, please go to our funding portal: https://www.startengine.com/martell-broadcasting-systems
To learn about how Zenither will promote and protect the free speech rights of content creators, please read my statement, https://stagingcareey.wpengine.com/2017/09/zenither-video-streaming-platform-will-promote-free-speech/
To check out Zenither and watch some digital television, please go to : http://zenither.tv
Let’s do this!
Carey Martell
Founder & President
Martell Broadcasting Systems, Inc.
