Esquire Theme by Matthew Buchanan
Social icons by Tim van Damme

24

Sep

DEV Adds Veteran Entrepreneurs and Investors as Advisors; Welcomes Val Katayev and John Ason

New York, September 24, 2012 – DEV (Digital Entertainment Ventures) announces the addition of Val Katayev and John Ason as Advisors to its early stage media and entertainment fund. In this role, they will participate in assessing prospective portfolio company opportunities and building DEV’s overall business.

“Val and John will add investment savvy and hands-on operational experience to the DEV team,” said DEV Managing Director Alan McGlade. “Their extensive network of contacts will further establish DEV as a growing force in New York’s blossoming digital media and entertainment industry.”

Val Katayev is a digital pioneer and entrepreneur, who has created and led three successful start-up companies to hyper-growth. At just 30 years old, Katayev currently oversees a portfolio that reaches over 300 million consumers, centered around entertainment and music. His fourth and most recent company is ToneMedia, which focuses specifically on the evolving music content space and meaningful consumer engagements, and for which he is the creator of patent pending ToneTargeting. Reaching over 120 million visitors globally, and 55 million in the United States, ToneMedia is the leader in audience targeting and premium media distribution among music enthusiasts around the world.

John Ason has been an angel investor in the New York area for the past 15 years. He has made over 40 professional investments in an eclectic range of industries. For many of these, he has been the lead investor.  Prior to investing, Ason worked for over 25 years at AT&T, both in engineering and international business. He has travelled extensively to the Far East and worked on “bleeding edge” technology- something he found to be useful when he transitioned into angel investing.

About DEV (Digital Entertainment Ventures)

DEV provides guidance, seed and early stage capital to companies building the next generation of digital services that are transforming media and entertainment. DEV is managed by seasoned media and venture executives Alan McGlade and Michael Yang, and its initial investments include Open Air Publishing, Stageit, Mad Humans and Sonic Notify.  It is headquartered in New York City.  Visit DEV on the web at www.devny.vc. 

# # #

(Source: businesswire.ca)

15

Jun

Defensive Innovation in the TV Business

Nick Bilton recently wrote a piece in the NY Times about the HBO hit series, Game of Thrones. In summary, his friends advised him to watch the series and since he had “cut the cord” with his cable provider two years ago, he downloaded the first season from iTunes. He was quickly hooked and discovered, to his dismay, that the second season was only available on HBO GO and only if you are a cable subscriber. Apparently many people had a similar experience which prompted one enterprising web designer to build a website called, “Take My Money HBO”.

This story perfectly encapsulates what we at DEV have been saying for the last year about the state of the TV industry. Sure there is innovation within the cable and broadcast industry but much of it is centered on defending the existing business model. There is no better example of this than “authentication” which is the pay television industry’s way of trying to exclude content from non-subscribers. Here is a quick history.

Cable networks have traditionally worked through MSO’s (Multi System Operators) and satellite providers who aggregate their channels and distribute them to consumers. As high speed broadband penetration increased (also mostly provided by cable operators), cable networks such as the History Channel began offering consumers the ability to stream replays of their shows directly from their websites. This was great for the consumer because it meant they could watch their favorite shows at their convenience if they missed the original television airing. It was good for the network because it allowed them to touch the consumer directly, promote their shows and their network brand, and deliver incremental advertising impressions.

It was not so good for the MSO. It leapfrogged their role as intermediary between programmer and consumer. The cable operators have enormous leverage since they pay billions of dollars in programming fees to the networks every year and they decided to use it. They mandated in their contracts that programmers could only make a minimal amount of their shows available through on-demand streaming in a non-HD format for promotional purposes. To access and stream a comprehensive selection, the consumer would have to “authenticate” that they were a subscriber to the local cable system. As a consequence, the comprehensive selection of shows previously available to the general public on network websites quickly disappeared. It also created the odd situation where thousands of people like Nick Bilton want to give HBO money to watch Game of Thrones, but can’t.

HBO GO, like most of the original programming on its network, is an elegant well-executed product. It takes advantage of new technology to make viewing HBO shows more convenient. But fundamentally it is a defensive innovation. It is designed to reinforce and protect an old business model that relies on an intermediary to aggregate and sell large bundles of channels to television households. It is hard to see how this is sustainable in the long term but with so much revenue at stake, the logic of defensive innovation is undeniable.

That is why we have to look to the new ventures that are forming outside of traditional media companies to drive true innovation in television. They have nothing to protect and therefore, nothing to lose. They can build truly new business models, programming concepts and distribution methods without keeping an eye on the rearview mirror. DEV was specifically formed to nurture this kind of innovation in New York, which we believe will be the epicenter of transformation in the television industry.

In a future post - Sports Socialists: Why the Tea Party Should Hate ESPN - I will talk more about a key element of this transformation.

-   Alan McGlade is the Managing Director of DEV. He was formerly the CEO of a cable network and an MSO executive.

29

May

Never Underestimate New Yorkers - NYC Will Adapt and Spawn Successful Global Companies

New Start Up display, the history of the computer in New Mexico, at Albuquerque's Museum of Natural History

Yesterday the New York Times published a story about how New York City is becoming increasingly attractive to entrepreneurs as a place to launch new tech businesses.  It’s great to see the city’s paper of record covering the dramatic increase in startup activity here and how the singular characteristics of the city drive its energy.  But the story only touched on what we see as a major factor affecting the longevity of the NYC startup ecosystem – establishing the kind of capital and support infrastructure that sustains this kind of activity for the long haul.

John O’Farrell, partner at Andreesen Horowitz, a Bay Area VC firm, was quoted prominently in the story about his belief that no other city builds true global franchises like Silicon Valley.  The story reports that the firm sets the bar higher for its New York investments, “because it believes they are less likely to succeed.” 

Silicon Valley’s record speaks for itself.  Yet there is no doubt that New York is well-positioned to birth highly successful global companies, and in the media industry, we are at the beginning of what is a truly transformational phase.  The next disruptive media businesses are only in the early stages of conception, and they will need access to New York’s traditional media industry and its experts to thrive.  That means that headquartering in NYC is huge advantage for them.  What these young companies need is not a higher bar, but a robust support system.

It’s true that San Francisco already has this support system in place, which prompts many young companies to take a cross-country jaunt to the west coast to find financing for their ideas.  Ideally, these entrepreneurs should be forming relationships with local VCs early on.  But much of the NYC investment community has an “old school” culture and approach. Imagine a room of entrepreneurs in black t-shirts and Converse with financial players decked out in suits and gold cufflinks and you’ll get the picture.  New York investors are still less comfortable with entrepreneurs than the Silicon Valley VC community, and often tend to focus on projections and deal structure, rather than on the vision itself. 

That is changing.  New York investors and its startup community will benefit as investors take a page from Silicon Valley and better adapt their style – not in fashion but in mindset - to the creative intellects that are developing the next great business models. 

-Alan McGlade

24

May

The Deal: DEV's Alan McGlade on NYC's digital media scene

Alan spoke to The Deal “Pipeline” recently about NYC’s flourishing digital media scene and DEV’s investment in Stageit.  Check out the video.

07

May

Portfolio.com: VC Turns on Money Spigot for NYC Media

Portfolio.com interviews Alan McGlade: “It’s crystal clear now if it wasn’t a few years ago that media and entertainment is undergoing a massive change… We’re looking for companies that have done something transformational.”  Click on the headline above to read the whole story. 

03

May

TechCrunch: DEV, NYC’s New Seed Fund For Digital Media Startups, Announces First Investments

TechCrunch did a great write-up of our launch yesterday.  Click on the headline above to read the whole story. 

Here comes money for media startups: former MediaNet CEO Alan McGlade and VC Michael Yang are announcing the launch of a new NYC-based firm called DEV (Digital Entertainment Ventures) whose early stage capital fund which will invest in next-gen digital media companies. To kick off its launch, DEV is today revealing its first two investments, a live music platform called StageIt and mobile gaming company Mad Humans

(Source: TechCrunch)

02

May

DEV – Why Here, Why Now


Today we officially opened the doors of DEV (Digital Entertainment Ventures). Given all the disruption in one of New York’s core industries, media and entertainment, and the continued focus on Silicon Valley as the place for new ideas, our move begs the question, “Why here? and Why now?” Because with great disruption comes great opportunity and New York, the city of reinvention, is leading the way.

It is difficult to overstate the radical transformation that is underway in the entertainment and media industries.  Music, film, TV, videogames, newspapers and magazines have all been profoundly affected by the explosion of new devices that enable the consumption of digital media. 

In the music industry, a generation has grown up acquiring and listening to music through digital downloads and streaming as CD sales rapidly declined.  Record companies long struggled to respond but have finally loosened the reins on licensing.  This has unleashed a new wave of innovative music services.

Last year Nielsen reported the first decline in TV homes in 20 years, and pay TV subscribers flattened as some consumers scaled back. At the same time, online availability of professionally produced content has increased dramatically. Mobile devices and Internet-enabled TVs that can stream video will support big winners in a new digital video ecosystem.

Video games have been one of the highest growth segments in entertainment with major titles tied to gaming consoles such as Playstation and Xbox.  That has changed now that mobile devices are portable game consoles.  New game studios such as Rovio (Angry Birds), GluMobile (Gun Bros.) and Zynga (Farmville) have emerged as major players.  Many more winners will surface by innovating game design and promotion for these platforms.

DVD sales, historically the most profitable segment of the film industry, have begun a downward slide that looks a lot like the decline in CD sales that preceded it.  Online streaming has struck a chord with consumers after years of indifference to cable pay-per-view offers, and services like Netflix and Hulu have attracted market and mind share with significant upside ahead.

Newspapers, magazines and book sales have declined across the board and in some cases physical versions have disappeared entirely.  Online publishers like the Huffington Post have rushed to fill the vacuum left behind. eReaders, tablets, and handsets are redefining the print experience and igniting new businesses.

Social media has become pervasive and has altered how consumers discover and enjoy entertainment.  It is the common thread that runs through the digital media user experience and the most efficient way for content providers to market to a large audience in a personalized manner.

We are in a period of concentrated change and innovation, a period that New York City and DEV stand to play a strong role in.  

New Media Investing Landscape

The Price Waterhouse Coopers Global Entertainment and Media Outlook report forecasts that U.S. digital industry revenue will cross the $100 billion mark on a gross basis this year and that nearly 60 percent of the worldwide industry growth over the next five years will be driven by digital products and services.  Over the next five years, PWC predicts that worldwide entertainment and media spending will grow at a compound annual rate of 5.7 percent from a projected $1.4 trillion in 2010 to $1.9 trillion in 2015.

Angel and VC funds are the force behind the companies driving this transformation.  In 2010 alone, angel investments in the US exceeded $20 billion and VCs clocked in slightly higher at $22 billion.  These investors are betting on the next generation of innovative companies, some of which will become household names in years to come.  And active investors with domain expertise can benefit these young companies in significant ways  — a recent study by the Harvard Business School Angels concluded that companies that receive early stage funding have a 30 to 50 percent improvement in web traffic and web site rankings, compared to similar ventures without such funding. 

Moreover, New York City, the reigning media capital, is spawning a number of successful start-ups that are displacing traditional media and entertainment companies.  Long time media executive Paul Vidich first talked about this trend two years ago in his excellent article, “Media-related Venture Activity is in Bloom in NYC.” According to Paul, over $100 billion per year in revenue from traditional media companies is vulnerable to smart web solutions. 

Ironically these same enterprises are helping to fuel start-up activity.  Employees from traditional media now complement the growing concentration of engineers, designers and programmers clustered in lower Manhattan and Brooklyn. Television, film, music and publishing companies spent $3 billion from 2007-2009 to acquire early stage companies. 

The gap between early, expansion and late stage ventures has narrowed considerably in the last ten years.  A one to two million dollar investment can take a company significantly further towards an exit due to much lower capital and operating costs entry for technology-based businesses. Storage, streaming and download delivery, and hosting have moved into the cloud with pay-as-you-go models.  Advanced software tools for other core business functions reduce internal development costs.  And an unprecedented talent pool is available globally for every skillset.  Early stage businesses can manage this workforce through virtual offices connected by mobile communication and video conferencing.

The DEV Advantage

DEV is focusing on early stage digital media companies in the New York region to take full advantage of the expertise of our principals and advisors, capitalize on synergies between portfolio companies, and provide frequent counsel to founders and managers.  DEV companies will develop new products in digital media and entertainment, encompassing music, publishing, TV/film, games and the social media applications that help to create their audiences.  Each company will have a significant presence in New York City, which has emerged as a major player in new media innovation. 

-Alan McGlade

Managing Director, DEV

Veteran Media Executive Alan McGlade Launches DEV to Promote Next Generation Digital Media Companies

Initial Investments in Stageit and Mad Humans

NEW YORK, May 2, 2012 – Longtime digital media executive Alan McGlade, along with partner, venture capitalist and attorney Michael Yang, today announced the launch of DEV (Digital Entertainment Ventures), a New York-based firm that will provide early stage capital and management counsel to the next generation of digital media companies.  DEV’s fund has made initial investments in several companies including web-based live music platform Stageit and mobile gaming company Mad Humans.

DEV will continue to build its portfolio with nascent companies focused on music, TV, film, games, publishing and social media that are based on new business models and devices such as internet-enabled TVs, tablets and handsets.  In some cases, DEV will develop and incubate businesses based on identified marketplace needs. And in addition to providing capital, DEV will take an active role in its portfolio companies, providing them with domain expertise and strategic relationships to take them to the next level.

DEV Managing Director McGlade has more than two decades of experience in taking companies from the conceptual stage to becoming significant market players. He was formerly CEO of MediaNet, a pioneer in providing legal digital music downloads, and of Video Jukebox Network (The Box), which he sold to MTV in 2001.  Yang, also Managing Director, is a senior venture/ funds attorney.  He was previously a venture capitalist for Divine Interventures and Sandbox Industries, and before that, was the co-founder and CTO of enterprise software company Redmind, Inc.

“The media industry is undergoing the most profound transformation in our history,” said McGlade.  “New York City, with its established media businesses, talent and burgeoning startup ecosystem, has all the right elements for these game-changing companies to emerge.  DEV will play a significant role in helping digital media start-ups succeed, not only with early stage investments but also by providing a leg up from our team’s collective experience and relationships.”

DEV offers investors the opportunity to participate in promising new companies vetted by its experienced team of entrepreneurs, investors and managers of media and entertainment ventures.   Its first portfolio investments show the diversity of its investment philosophy and approach.  Two of these companies include:

·         Stageit - A web-based platform created for musicians by musicians that empowers them to deliver and monetize interactive live experiences directly from their laptop. Offering intimacy and direct interaction with fans, Stageit gives artists the opportunity to offer unique online fan experiences that will not be archived or duplicated for distribution. Stageit was launched in March 2011 by CEO and music industry veteran Evan Lowenstein, who has nearly 20 years of experience as a recording artist, award-winning writer and executive. 

·         Mad Humans - A suite of mobile games that tap the American zeitgeist. It pits players against comically hostile celebrity humans and their minions from the worlds of politics and entertainment in easy to use, non-lethal shooting games.  Incubated by DEV, Mad Humans ELECTION 2012 is being introduced soon.

For more information about DEV, visit devny.vc.

About DEV (Digital Entertainment Ventures)

DEV (Digital Entertainment Ventures) provides guidance, seed and early stage capital to companies building the next generation of digital services that are transforming media and entertainment. DEV is managed by seasoned media and venture executives Alan McGlade and Michael Yang, and its initial investments include Stageit and Mad Humans.  It is headquartered in New York City.  Visit DEV on the web at devny.vc. 

# # #

CONTACT:

Cathy Halgas Nevins

chnevins@devny.vc

917-887-4140

Laurie Jakobsen

ljakobsen@devny.vc

646-484-6764