2018 Startup Trends: Next-Generation Interactive Live Video with Massive Mainstream Audiences

I remember when Tim Nostrand showed me Periscope back in 2015. He was using it to broadcast “messages of positivity” to the world and I was shocked at how many people were tuning in and chatting. Sure, most of them were trolls, but there was the spark of something important there.

The Current State of Live Video

Fast forward 3 years and Periscope failed to deliver on its promise of acting as a literal “periscope” into all of the world’s spaces. I hear it talked about in startup circles, but I don’t know anybody who uses it personally.

Three years ago, broadcasting and streaming live video required a wifi connection, and that’s still mostly true today, but the oncoming millimeter-wave technology that’s imminently approaching will really change things. This is one of those cases of mistimed market entry leading to failure. But you can never really know whether something is well-timed until you look back.

The surprise winner in the space of live video has been E-Sports, most notably Twitch, which was acquired by Amazon in 2016 for just barely not one billion dollars (why they didn’t round up, I’ll never know).

I’m still convinced that acquisition was primarily motivated by the captive audience in the video game community, who are likely to spend money at Amazon, but the cost synergies also made sense.

I became fascinated with Twitch and more broadly live video late last year, when I stumbled upon a website that aggregated channels of people playing online slots on Twitch, and they were each being viewed by hundreds or even thousands of people! What the hell is going on?

I personally don’t understand E-Sports, but it does make sense. It’s a natural substrate for live-streaming, and people seem to really enjoy it. But I think the potential market is much broader than that.

Broader Cultural Trends

I’ve been fascinated by Norway’s Slow Television trend, and I think at its root, there’s something there. I’ve done some Twitch broadcasting myself, and I would ask my viewers what they were doing. They would invariably tell me they were doing work, studying, crafting, but very rarely was watching me do whatever I was doing their primary task.

I think that deviates from the norm of produced and pre-recorded television. While I certainly have found myself leaving the TV on in the background while I do other things, it’s not the primary way I use television.

I think there’s room in the market for video content that’s actively produced with the intent of being consumed as a secondary attention vehicle. Imagine having a social gathering while in the background, when you find yourself in a conversational lull, there’s something mildly interesting happening on television to help you orient the conversation. It’s actually very appealing.

This is the energy that Norway’s Slow Television captures, and I think the United States market is ready for it.

Another important cultural trend is cord-cutting, with traditional cable subscribership plummeting in favor of on-demand platforms like Hulu, Netflix, and HBO Now. Even sports are now available on Youtube TV.

The Flaw with Existing Players

With the success of Twitch, every big video player and social network had board meetings, and decided they needed to build their own live video infrastructure. But the problem is twofold:

• Live isn’t in their DNA.
• They aren’t building communities around it.

While YouTube’s live video infrastructure is, from a technological point of view, far superior to Twitch, it is used primarily as means to publish low-production cost videos through YouTube’s normal video distribution network. There’s no way whatsoever to really discover quality live video content currently being broadcast.

The social networks have mostly focused on broadcasting to small groups, and have largely adopted Periscope’s ethos.

Twitch has ventured outside of video games with extreme trepidation. Every press release about features outside of video games reads almost as an apology and faces widespread outrage. Despite being fully stocked with competent engineers, their data model still classifies Knitting as a game called “Creativity” with the tag “Fibercrafts.”

While they have seen some growth in their IRL channels, I think it is just not in their DNA, and if I were them, I’d spin off an entirely different brand to try to venture out. But back to why Amazon bought Twitch, I don’t think they’re actually interested in winning live video for its own sake.

The Interface Problem

If you visit Twitch as an outsider, it takes lot of getting used to. Streamers use complex software to plaster their screen with widgets that blip and dance and scroll and sparkle. Their channels feature tacky graphics and confusing insider language.

The only interactivity is through chat and people have built chatbots to try to bridge the gap, but it’s all hacks. It’s eerily reminiscent of MySpace before the fall.

Enter a player of a totally different nature, HQ Trivia. HQ Trivia is really something massive, I believe. It’s a fundamentally new format of video content. It’s fun, it’s sticky, it’s popular, and despite being founded by a psychotic lunatic, it’s worthy of its success.

I know from insider sources that they’re expanding their platform, and we’ll likely see them spinning out a wide array of trivia shows, being broadcast 24 hours a day. If they’re smart, they’ll expand even further to more general game shows.

The Strengths of Live Video

As reader charlie kubal (who also has an excellent post on live video) points out, live video get its strengths particularly from two situations:

• When knowing the outcome of a broadcast negatively impacts the enjoyment of viewing it.
• When interactivity can drive the content in a meaningful way.

When neither of these conditions is met, then it’s probably better distributed as normal, pre-recorded video.

I would add another situation in which live video is valuable:

• When community participation substantially enhances the experience. This includes things like discussing an important show at the water cooler the next day.

For the most part, video that we consume does not satisfy these conditions. Arguably, the traditional model of cable television distribution is in some sense live, even when the content itself is pre-recorded, since everybody was forced to tune in to the content being broadcast at that moment.

While there are some benefits to that, from a participatory and community standpoint, it was not driven by intentional planning, but rather technological limitations that have held over since the days of airwave radio broadcasting.

In order for a new live video concept to be successful, it needs to really tap into one of these core strengths of live video, rather than simply be nominally adopting new technology for its own sake. People are starting to realize this, and we’re starting to see some really cool new developments leveraging these strengths in a real and innovative way.

What to Expect

Expect massive innovation on the live video front, specifically in the field of interactivity. Expect to see new video standards capable of lower-latency broadcasting in order to support that.

Expect to see game developers bridging the gap between HQ Trivia and Twitch, creating massively multiplayer casual video games specially designed to be emceed by a charismatic host, who can also impact the way the game plays out in real time. Expect to be able to join both as a participant and a spectator.

Expect an explosion of laser-focused, deeply-rooted live video communities dedicated to specific niches, like crafting, programming, daily work, and everything under the sun. Some will fail, but many will succeed, and form the basis for a consolidation spree under Amazon/Twitch or YouTube.

Expect to see toolsets developed for adding truly interactive elements to live videos, rather than just being overlayed and sent through the stream. Expect to see the maturation of live video platforms, and the removal of the overly-customizable cruft that leads to tacky and inconsistent user interfaces.

If you’re looking for a venture to jump into with good acquisition prospects, I think you’ve found it. Because live video requires community-building of such a unique and uncharted territory, the big players will want to buy their way into the market.

Expect to see maturation and proliferation of new broadcasting tools capable of achieving higher production values, aided by Artificial Intelligence based editing capabilities. Expect to see even more improvement in the availability of low-cost, lightweight, high-resolution cameras and expect for 5G to open up new bandwidth for both broadcasting and streaming.

Expect to see more mainstream big players like Elon Musk leveraging live video as a PR gimmick. Everybody is going to want in. Expect to see even smaller players starting to release regular live video content as they start to realize that, counter-intuitively, since the quality bar is lower, they can reduce the costs of video content production by shooting live.

Finally, expect to see HQ fly too close to the sun and crumble despite its promise. They’ll probably reject an acquisition offer for some absurd number out of hubris, and then have a disappointing IPO and fade away into mediocrity.