Flipping through channels in a New York hotel room, former British Broadcasting Corp. executive Anthony Rose says he realized that “rarely do we lie on the sofa and watch TV. We always have an iPhone (AAPL) or iPad, and we’re always checking e-mail and Facebook (FB).” Numbers bear that out: Eighty-five percent of TV viewers with a smartphone or tablet use their mobile device while watching the tube at least once a month, and 40 percent do so daily, according to a 2012 Nielsen (NLSN) study.
Rose created Zeebox, an app he describes as “a next-generation TV Guide,” to provide TV viewers with information about shows, allow them to share their opinions, and market show-related merchandise. In the process, the company collects data on viewing and buying habits and sells advertising. Rose and co-founder Ernesto Schmitt, a former EMI Group music executive, launched Zeebox in December 2011; the free app has since been downloaded more than 5 million times. Rose declined to provide details on average daily use or total investment. Backers include Viacom (VIA), Comcast (CMCSA), NBCUniversal, and BSkyB (BSY).
With broadcaster cooperation, Zeebox aims to unify in one app the kind of second-screen tools they’ve begun using to attract eyeballs—online videos, polls, chat rooms, and games. That would eliminate the need for TV producers to build separate apps for each show. “There are hundreds of apps built by broadcasters that, once the show has finished, are derelict,” says Rose, whose 100-employee company has offices in New York, London, and Sydney.
Zeebox scans TV closed-captioning services (even when a viewer’s set isn’t using them) for words related to a program and searches the Internet for related material. A mention of “hollandaise” on a cooking show stocks the app with recipes, suggested cooking e-books, and Wikipedia entries about the sauce. Zeebox servers answer more than 1.5 million search requests daily, Rose says, covering 160 channels in the U.S., 120 in the U.K., and 60 in Australia. So far, Howie Mandel’s game show Take It All has racked up the most Zeebox users for a single program, with about 50,000 people signed in to the app at a given time, even more users than signed on during the Super Bowl, the Golden Globes, or the Grammys.
Rose declined to reveal how quickly sales are growing or how much revenue Zeebox is bringing in, but he says most of it comes from ads. Zeebox takes a cut when users buy related books and DVDs or download movies and songs. While the company may sell user data in the future, Rose says, for now that information is free to ad clients. Companies can arrange to time an ad on Zeebox to coincide with one on TV, or sponsor a show chat room or the information the app provides. An ad campaign with American Express (AXP) offered users a credit toward clothes featured on programs. Other early advertisers have included Taco Bell (YUM), AT&T (T), and Kraft Foods (KRFT).
“The real goal here is in the audience data that a service like Zeebox can collect,” says Adrian Drury, a media analyst at telecom consulting firm Ovum in London. Nick Thomas, an analyst at Informa Telecoms & Media in London, says Zeebox also offers broadcasters a shortcut in research and development. “It’s a really interesting sandbox for the TV industry to understand how it can engage viewers on a second screen,” Thomas says. “The rate of experimentation and innovation is faster than at large companies.”
Zeebox will soon add technology from Gracenote, an audio-recognition service owned by Sony (SNE), to identify sounds and songs in TV shows, Rose says. The company will also provide information for on-demand TV starting later this month, replaying background information and related tweets it showed when a program initially aired. Rose says that, like TV viewing, the app will continue to evolve. “We’re not the endgame by any means,” he says. “Zeebox is a small step toward a new kind of TV programming, one in which the viewer is and will remain fully engaged.”
The bottom line: TV networks are investing in an app that keeps viewers subsidizing the TV ad model even while glancing down at their phone.
