Startup Aiming to Be Pay TV’s ‘Next Generation’

LAYER3 TV IS FLUSH WITH CASH, CABLE VETERANS
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Armed with cash and a cadre of cable vets, Layer3 TV broke from stealth mode to reveal part of a cryptic plan to launch an Internet protocol-delivered video service that won’t affect traditional pay TV companies.

Layer3 TV officials left much to speculation as the company aims to become a “virtual” MSO that will deliver subscription-video products over-the-top and possibly compete with cable operators, satellite-TV companies and telco-TV providers head-to-head on a regional or national basis.

Flying low under the radar is part of the current strategy for Layer3 TV, a company founded in 2013 that has secured the help of Comcast’s former chief technology officer to pull off its vision.

What is known is that Layer3 TV has cash in the bank. Last week, it announced the initial closing of a $21 million “A” round led by North Bridge Venture Partners and Evolution Media Growth Partners. Indicating that more dollars should be dropping into Layer3 TV’s coffers soon, a Securities and Exchange Commission filing dated March 6 cited a total offering amount of $25.05 million.

Despite the Boston-based company’s low profile, people familiar with it said its platform would support a mix of live TV, on-demand content and possibly DVR services.

The company describes itself as a “technology platform” that will deliver “a differentiated video consumer experience while fitting squarely within today’s programming and distribution paradigm.” The company has not announced any deals with programmers. But its leadership has a solid cable pedigree, with executives hailing from the worlds of technology, programming and distribution, including former Broadbus Technologies CEO Jeff Binder and former Comcast CTO David Fellows.

‘ANTITHESIS OF AEREO’

Layer3 TV bills itself as a “next-generation cable provider” and carries the tagline, “Tomorrow’s Television Today.”

While that doesn’t explain a whole lot, people close to the company said its plan is not to mimic the ambitions originally set forth by Intel Media, which developed its own box and an OTT service that endeavored to compete with all forms of multichannel video programming distributors by delivering subscription video packages over-the-top. (Intel Media sold those assets to Verizon Communications.)

A person who is familiar with Layer3 TV said its concept, unlike what has been proposed by virtual MSOs, does not stray from the traditional programming business model. The source called it the “antithesis of Aereo,” referring to the subscription broadband TV/cloud DVR service that relies on an array of tiny antennas and is battling it out in the courts with the nation’s major broadcasters.

“They have a very different angle than others that might get put into that virtual MSO bucket,” a source said. “They are figuring out a new way of delivering a pay TV service.”

Layer3 TV also isn’t discussing its target market, though young, tech-savvy consumers who have either cut the cord or have never subscribed to pay TV would seem a likely group to pursue. It’s also not clear if Layer3 will compete directly with traditional cable operators, or if it will be open to MSO partnerships.

One source said traditional MSOs shouldn’t fret. “I don’t think it poses a threat” to cable operators, the person said, noting that Layer3 TV’s platform could give MSOs the ability to target “new customers for new or incremental services” and “reach a particular demographic.”

Layer3 TV is also entering the fray as distribution rights continue to loosen up. For example, Dish Network’s new carriage deal with The Walt Disney Co. gives Dish the option to sell over-the-top packages.

TAKEAWAY

A group of cable veterans has revealed some of its plan to launch an IP-delivered subscription video service it said won’t disrupt the traditional pay TV model.

Booting Up

Layer3 TV is booting up with a leadership group composed of cable industry vets:

Jeff Binder, CEO: Founded Broadbus Technologies, a video server startup that was sold to Motorola in 2006 for $200 million.

David Fellows, Chief Technology Officer: Most recently served as the CTO of Comcast and AT&T Broadband (sold to Comcast in 2002); Formed Genovation Capital in 2008 with Binder and former Broadbus chairman and CEO Vin Bisceglia.

Chuck Hasek, Head of Video Technology: Was most recently the principal architect of video systems for Time Warner Cable.

Eric Kuhn, Head of Marketing: Previously ran social media for the United Talent Agency and CNN.

Vic Odryna, Head of Product Development: A “serial entrepreneur” who most recently was CEO of Idea Arc and ZeeVee, a developer and supplier, respectively, of digital video distribution products.

—Jeff Baumgartner

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