Jeffrey Katzenberg and Meg Whitman, who first worked together decades ago at the Walt Disney Co., have re-teamed for one of the most lucrative fundraising efforts by a startup. They have secured an initial round of $1 billion for their mobile video network, NewTV, with an eye toward launching the subscription service by the end of 2019.
The raise had been reported last month, but NewTV is officially confirming it today. In an interview with Deadline, Katzenberg and Whitman discussed their strategy in the most detail they have offered publicly since Whitman came aboard the venture in March.
“Now the real fun begins,” Whitman joked. The company’s new focus is staffing up and managing a pipeline of episodic content optimized for mobile viewing — series with installments in the 15-minute ranging, at budgets of about $5 million a season.
Given the pedigree of the backers, quality will be expected from the venture. Investors from the studio realm include Disney, eOne, Fox, ITV, Lionsgate, MGM, NBCUniversal, Sony Pictures, Viacom, and WarnerMedia. Technology investors include e-commerce giant Alibaba. Strategic partner investors include Goldman Sachs, JPMorgan Chase, Liberty Global and Madrone Capital, the last of which led the round.
The service will be a two-tiered subscription model analagous to that of Hulu. The lower-priced version will have select advertising. Pricing has not been determined, but Whitman said the goal is to make it “affordable for a diverse group of viewers.” The target age is 30.
Katzenberg said getting the buy-in from the creative community and all of Hollywood was essential, even though there are a few other services trying to target viewers who watch an average of an hour a day of mobile video. The rush to implement 5G wireless technology should only increase the momentum.
NewTV has met with about 200 content creators since early 2017. “About 75 to 80% of top showrunning talent is controlled by eight studios and a couple of independent companies,” he said. “Having them enthusiastic and partners with us is a tremendous advantage.”
The company provided testimonials from high-level execs. Disney chairman and CEO Bob Iger called it a “promising venture that will serve audiences with high-quality, short-form content designed especially for mobile viewing.” Peter Rice, president of 21st Century Fox, said NewTV “is opening a significant growth opportunity for creators across Fox with an entirely new way of story-telling, designed to address the exploding market for mobile video consumption.”
After raising its initial funds, the company is now “tactically focused on building a creative team,,” Katzenberg said. He offered a reminder that NewTV is “not a producer,” but rather “more analogous to TV networks in the 1960s and ’70s.”
The collaboration between the two veteran executives took root about a year ago, they both recalled. Last summer, the launch “went from imagined to real or possible,” Katzenberg recalled. “The first thought I had was, ‘Oh my God, I can’t do this alone.’ I get about half of it, but at least half or more is not my competency or knowledge. The beauty of this is that for Meg it is.”
Whitman said the concept of pioneering both form and content drew her to the challenge. “We are as committed to making the view exp of watch content as innovative and unique as the content itself,” she said.