The Company Has a Wildly Ambitious Goal to Re-Invent Cable - But Can it Work?
Wired recently released a piece detailing a "crazy" plan by Denver-based Layer3 TV to build "the next Comcast". While most video startups are taking aim at pure streaming / over-the-top services, Layer3 is taking a different, and very ambitious approach.
The simplest way to think of Layer3 TV's offering is, in fact, to think of it as a replacement for your current cable box. Instead of another OTT set-top box which relies on an internet signal (typically from a company like Comcast or Time Warner), Layer3 has built out their own infrastructure. This includes a massive server farm, a satellite antenna array, and a lease on their own 12,000 mile fiber backbone. The promise, of course, is that by having their own infrastructure Layer3 can ensure a level of performance and reliability that OTT solutions simply cannot guarantee.
Their service, which has been test in two upscale Texas neighborhoods under the name Umio, will offfer more than 300 channels. These traditional offerings will be placed into a sleek, unified guide right alongside dozens of internet TV options such as Netflix and Amazon Prime. No more switching sources and fumbling with apps to find what you want. It's all there. Expect the service to run $80-$150 a month, depending on the number of TV's in the home.
Jeff Binder, Layer3's CEO, is a successful entrepreneur who sold his video-on-demand startup Broadbus Technologies to Motorola for $200M back in 2006. His CTO, Dave Fellows, is a cable industry legend, known mainly for his instrumental role in orchestrating Comcast's "Triple Play" bundling strategy during his time as CTO the company. Layer3 is well funded and by all accounts have assembled a very experienced management team.
Layer3's approach to service in the test markets was interesting, if difficult to scale. Service technicians arrive for scheduled installation appointments on-time (what a novel concept) and in a BMW. Yes, a BMW. And while the type of vehicle my tech arrives in strikes me as unimportant, it's clearly a move by the company to differentiate on high-levels of service. Only time will tell if they can keep that up at scale.
The bigger question is whether or not millennials will be willing to pay for a service that looks, in terms of pricing at least, an awful lot like the pay TV services they're currently revolting against. On that point Layer3 doesn't seem too concerned. According to the Wired article the company estimates that they can run a very profitable business with just 1% of the pay TV market, which equates to just less than 1 million subscribers.
What is clear is that consumers are tired of the status quo, and that current OTT offerings are falling short in a number of key areas. Layer3's novel approach to the problem is fascinating, and certainly one we'll be keeping our eyes on.
Read the whole Wired write-up here...
- Jason Griffing