Talking TV: Ambient TV Comes To FAST

You’re in a bar, waiting on a friend. Where do your eyes go? The muted TV above you with captions running across it or the comforting phone cradled in your hand?

If Blake Sabatinelli has his way, it’s the TV, though he knows it will take something other than a muted broadcast to hold your eyes on it.

Sabatinelli is the newly made CEO of Atmosphere TV, a company that produces a network of over 50 FAST channels designed to run with the sound off and grab your attention in an ambient fashion. Atmosphere recalibrates news, sports and myriad other content types into sound-free iterations, monetizing exclusively with ads that do the same thing.

In this Talking TV conversation, Sabatinelli explains what makes for good ambient TV, how his business model works and how the company justifies its $1 billion valuation in a current funding round.

Episode transcript below, edited for clarity.

Michael Depp: Atmosphere TV is an interesting startup in the world of streaming TV. It’s a streaming service that functions as a kind of ambient TV, something you might see in the background, in a bar or restaurant at the game’s not on, for instance. In all, it has over 60 original and partner channels.

I’m Michael Depp, editor of TVNewsCheck, and this is Talking TV. Today, a conversation with Blake Sabatinelli, the newly minted CEO of Atmosphere TV. Atmosphere is in the midst of a $65 million series D funding round, and we’ll talk about that, its business model and how the service works, along with what makes for good background TV. We’ll be right back with that conversation.

Welcome, Blake Sabatinelli, to Talking TV.

Blake Sabatinelli: Thanks for having me, Michael.

It’s good to see you again.

Likewise.

Blake, why does Atmosphere TV exist? Why can’t a business just flip on a local station and turn off the sound, if background TV ambiance is all that they’re looking for?

If you’ve ever been to a bar or restaurant, doctor’s office or anywhere else that’s doing exactly what you’re saying, you’ve probably noticed the same thing that our founders noticed in 2016: that it’s a terrible, terrible viewing experience because the content that they’re delivering or a cable provider to an establishment is meant for someone sitting on their couch with the volume on. So, if you’re sitting, you know, at your favorite bar having a beer and you’re watching a television that’s 20 feet away and it’s on, in many instances, you get something like Judge Judy on mute with captions. And that’s probably the least engaging content experience of all time.

So, our founders, as they were sitting at a bar in 2016 and saw Judge Judy on mute, Stephen Smith on mute and CNN on mute, they said, we have to be able to do something better. And that’s how Atmosphere was born, to create content that’s fun and engaging to watch with your eyes instead of relying on the crutch of your ear. So, it’s a little bit different than our traditional TV model, but we’re really just here trying to make television that’s exciting for people no matter where they are.

So, what distinguishes good ambient background television and what are its hallmarks?

The thing that’s actually really fun about our business is we’ve taken the best of what you have on here. We’ve curated everything that you already do enjoy in a sound-off capacity, and we’ve brought that to the big screen instead of relying on, you know, your traditional talk tracks or local news or local programing that has, you know, a heavy audio component.

We’re taking things that are big and bold and bright and exciting. So, people jumping out of airplanes, people doing amazing tricks, you know, amazing and funny videos that you’re probably watching on TikTok or YouTube or Instagram already and reprograming those with our team of 75 people to get people to look up from their phones and look away from this endless, you know, information trap that people have all day long so that the programing that we create is it’s highly visual, highly impactful. It has absolutely no need for sound. So, it’s a little different. That’s a little bit distinct, but we think it works really well.

But it does have sound. You have a sound option, right?

We do have a sound option, but it’s really just a backing track. What we’re really doing is creating content that’s 100% focused on what you can consume with your eyes, instead of with your ears and listening.

So, this really is about getting people to put the phone down, right? Because that’s what we do in situations where if we’re waiting for a friend at the bar, for instance, or we’re in a doctor’s waiting room, we do have that phone in our hands most of the time, don’t we?

One hundred percent, and it really is about creating that communal experience. And I can’t tell you how many times I walk into an establishment that has Atmosphere and I see exactly what I want to see. Someone tapping their body on the shoulder, pointing up at the screen groups and families, looking up at the television together, sharing a fun, communal experience instead of doing what my 14-year-old son would prefer to do — look down and watch TikTok all day long.

All right, so you have more than 60 different FAST channels as part of the service. What are some of those channels? What sort of categories and content types are we seeing?

You’ll find interesting and humorous channels like Chive TV, which is the foundation of our business, how we got started. Superhuman TV, people doing amazing things. I saw people jumping out of airplanes earlier a lot out there. We also have news and information channels. So, when I came on board two years ago, my first task was to spin up a channel called Atmosphere News, which is a news programing channel, something that’s a little bit different flipped on its head from the traditional model and Atmosphere Sports.

Atmosphere Sports is our sound-off SportsCenter because I was saying earlier, you have Stephen Smith screaming at a cloud. He’s on mute. We really wanted to get back to the basics and bring programing that was fun and exciting. So, it’s the best shots, the best highlights, scores, betting lines all brought into that sound-off capacity and delivering to people in real time.

Let me just jump into one of those — the news example, for instance. How do you do soundless news without barraging people with text?

There is a lot of text. I’m not going to tell you there’s not a lot of text. But one thing that we did start off with was hire someone who really understood how to tell stories in that nontraditional text format. We brought in a gentleman named Micah Grimes. He was an executive overseeing all social at NBC News and asked him, how would you create a news channel all over again, focusing significantly on automation, but the output has to be done with no sound. So, we can’t have the crutch of someone reading a V.O. over some B-roll. We have to make sure people understand the story in 45 seconds or less. And it can only be done with video and text. So, there’s definitely a text component to it, but a lot of visuals, a lot of graphics and a lot of strong use of video.

You really want to distill that text down to like a haiku, absolute minimal distillation, right?

That’s right. We want to be able to have an audience member stop, look at the screen and from 30 feet away, be able to understand what’s happened, why it happened and what they’re, you know, what the outcomes are, what the impact of the story is going to be. And that really, really short, distilled time frame. So, yeah, it’s all about ultra-dense, ultra-condensed news.

How does a business sign on to this? If you’re a restaurant, a bar, an office, what do you do?

You can go to Atmosphere.TV or you’re probably going to hear from one of our sales associate members. We have a large outbound sales team here based in Austin, one in Chicago, one in L.A., one in New York as well. And they’re dialing and getting ahold of business owners and explaining the value of this free service, why it matters, how it can help increase their net promoter score.

So, the business, if you’re a bar restaurant, how can get someone to stay longer, order another drink, increase that check size, and then we ship those devices out. We have a warehouse facility here about 26,000 square feet, and we get those devices sent out second day. So, you can always have that inbound traffic. But we have a huge sales team and that’s how we drive a lot of the now 52,000 sign ups and businesses that we have on board with us.

And how do those businesses break down? Is it mostly bars and restaurants or what’s represented there?

It’s about 50% bars and restaurants. And then the rest of it is kind of a smorgasbord of categories, but we see significant penetration in gyms and in aftermarket auto facilities. So, you think you know your Jiffy Lube, where people have that captive wait time, in doctors’ offices and bowling alleys. Honestly, if it’s a place that you can think of that has a television, we most likely have several hundred screens in those locations. And that growth has really been all driven by the fact that it’s now cheaper to hang a TV on the walls than a piece of art. So, you know, every place you walk into today has a TV. We want to make sure that Atmosphere content is playing there.

That depends on the art, Blake. It depends on the art.

About any good art, any good art these days.

Your most recent press release says that this company has $1 billion valuation. Now, I’ve got to be honest with you, that really sort of smacks of tech company overconfidence there. Why do you think the company has that sort of value?

Because we’re a multitude of different things, Michael. We’re a tech company. Sure. And we have probably some of the best tech on the market. We’re also an infrastructure business. I mean, we own the devices, we own the output, we own the delivery. So, in the 52,000 locations that we do have, we control what happens there. And our investors definitely see the value in that.

We’re also a media company. You know, you said we have over 60 channels, either we power or are powered by our partners and that reaches more than 100 million people a month. So, if you look at the power of our aggregate network and the size of our audience, especially audiences between 18 and 49, now we’re up there in size and scale with networks like Snapchat, TikTok, who has, you know, 150 million users here domestically. It’s a big audience. It’s a big network.

We own the infrastructure, we’re a distributed platform. And so, we’ve been able to command a pretty significant valuation and did that in the midst of a very challenging environment for fundraising. So, it’s a huge valuation, big growth, but we did it at a time when it’s hard to raise money and we think we can justify the valuation.

I think you just said 100 million reach. How do you come to that figure? How do you count that?

Yeah, so we work with a company called the People Platform, and the People Platform was just acquired by a company called Stag World, but People Platform is actually composed of the former Nielsen out-of-home team. So, Nielsen used to have an out-of-home measurement platform and when they sunsetted that, a large majority of these people went over to this company, Epicenter.

And what they do for us is create a ratings book that looks very similar to what you would see from a Nielsen diary. So, we geofence every single one of our locations and then we retarget those audience members who are in a location and ask them a series of questions answered. You know, where were they sitting, how many people were in the way? Did they notice our screens? You know, what was the sentiment around the screens?

And we use that in an extrapolation of foot traffic data from that third-party provider to create our ratings book and then report that ratings data and the Nielsen media impacts so that our advertising partners can best understand the impact of our advertising, the impact of using our platform. And if they wanted to shift 5% of our budget, what that additional reach is going to be.

Speaking of geofencing and localization, are you moving towards having regional or city-based versions of channels into this ecosystem?

It’s definitely on the roadmap. It’s something we’ve been talking about for a long time. I think you’ll see it from us within the next 24 months. But first and foremost, we really believe in trying to get that broad penetration and growth across the country and then start to circle back around on ensuring that we have perfect product market fit in every single major metro. So, it’s on the roadmap as we’ve built, as we brought all of our delivery infrastructure in-house, it’s become closer and closer to being a reality. I would expect to hear something about it shortly.

And on that local site, would you have local partners like a TV news station in a market, for instance? Where would that content originate from?

If the local TV partners could actually understand the format. One of the biggest challenges that we’ve had is we’ve talked to content partners over the past couple of years is they simply don’t understand the concept of delivering content with no audio, especially in local television, which is so driven by, you know, by audio and B-roll, How can we create something that’s compelling, that’s visually driven, that doesn’t require audio and do it on a limited budget? It’s going to be a challenge. So, I would expect early channels from us are probably going to be powered by our own journalists, and that will maybe expand a little bit further out.

With your outside partners, is the content that they’re creating for you bespoke for Atmosphere or is that repurposed from some other original iteration?

Almost all of its bespoke for us. We do work with partners. I trust the media brands who have channels like Fail Army, which is on our platform now, but that content already fits well within the format that we operate in. So, every piece of content, every channel that we look at is really focused on that eye, not ear, and we’re really always making the judgment of whether or not this is going to work for us.

So other channels, like we just launched a channel with the Guinness Book of World Records, it’s actually their first channel ever, that’s completely bespoke for our platform. And it’s absolutely incredible.

This is monetized as 100% by ad revenue or are the businesses paying something for the equipment?

It’s 100% ad supported. Our goal is to give people a platform that’s both compelling for the viewers and exciting for the people who are sitting in their location, but also a valuable tool for the business owner. So, that means free digital signage, which digital signage, if you know anything about that business, is usually very fast driven business and comes with high fees. We give away that for free. Our ad managers, our ad creators, all of the different tools that we have in our tool kit, we give it all away for free because our sales team is doing a great job of monetizing on the other side.

Are the ads sold programmatically, direct sold or is it a combination?

It’s a mixture of both and probably a typical mixture to what you would see in any other TV sector. So, no significant amount of work on the direct IO side of the business, but also a lot of programmatic deals, a lot of P&Ps and PG deals and then some open exchange as well.

This is basically it’s 100% streaming-based advertising right now. The CPMs there are not great, obviously, relative to television news, local and local TV news. But have you figured something out there? If a company got this kind of valuation, you’re doing this fundraising, I mean, streaming is not working out as a huge revenue-driver for media companies right now. What different for you?

Scale. Scale is what really matters. So, if you look at the streaming ecosystem today and Netflix, for instance, today came out and said they have one million ad-supported subscribers, that’s not going to make up a big difference in the erosion of linear TV ratings. And even the biggest platforms in the free, ad-supported space are 30 to 50 million unique viewers.

We’re at 100 million unique viewers today. We do see strong CPMs. They are not as strong as traditional linear broadcast, but what we do deliver is scale. And if you’re a TV buyer today and you want to reach a large swath of the U.S. population with television advertising, you’re either going to have to piece together 70 different platforms to get 50% of the audience that you used to or you can come buy from a platform like ours that reaches, I believe, 44% of 18-to-34 year-olds in the entire country. So, I think that’s a big differentiator for us and a key driver for why we’re seeing success.

But the challenge for the advertisers is the same challenge that the content creators have, which is soundless, and so is that whole new creative each time that they have to bring to bear?

We keep our creative team very busy. There is a significant, you know, bespoke, creative angle that we have to deal with. But there’s also a kind of creative that exists that works really well in our environment. So, if you’re an advertiser and you come to our platform and your ad works well in our format, or if you’ve worked in a format that doesn’t require sound like traditional out of home, we can use that creative. Or if you’re an advertiser, that doesn’t have something like that, the whole host of creative is sitting out in front of my office right now. We’ll make you something spectacular.

And do they often start with elements, preexisting elements, from other ads, or are they beginning whole cloth with a new ad for the platform?

In most instances, it’s taking assets and elements that are from other ads and then bringing them to a format, whether it’s an L bar format that we operate or a trivia format or something like that and bringing an ad and creating something new for the platform.

So, you’re not working with traditional ad servers here? You’ve got your own entirely proprietary system?

We do have our own mediation layer because we have to talk between two different ecosystems that connect the TV ecosystem that we sit in and the digital out-of-home ecosystem that we also sit in. And so, we’ve built a mediation layer to handle all that. And then on either side of that mediation layer, we work with an ad server and another ad server in Springserve to help deliver the demand that we have and work and facilitate the sales with all of our partners.

You and I have talked many times in the past about ad technology, and I’ve always kind of gotten the temperature on how things are developing with you in terms of progress because it’s such a frustrating user experience so often to be on the receiving end of ad tech and streaming. What’s your general assessment right now about how ad tech is performing? Is it significant leaps and bounds in the last year or so that that are demonstrable finally?

I believe so. So, you know, we partner with Springserve because of their ability to do creative separation, deduplication. And if you’re a publisher and you actually want to have a good user experience, the tools are available now, but you have to want to make that experience available and you have to there’s a revenue impact associated with it. And I think a lot of what you’re seeing is publishers not taking that revenue impact, especially as we’re in a challenged environment and instead taking the money off the table and making that UX significantly more challenging.

You mentioned localization sometime maybe in the next 12 or so months, seeing some local iterations of this. What else is in the roadmap for Atmosphere?

Just continued growth for us. I mean, our goal is to reach two thirds of the U.S. population here within the next 12 to 18 months, and you’re going to see continued product innovation from us, everything from, you know, interactive, you know, multi-platform trivia all the way through. Just continuing our tech innovations and, you know, enhancements in performance. We’ll also be deploying a piece of custom hardware to the market, which will give us more capabilities as well. So, excited to talk about that when we start rolling that out as well.

1. Well, any clue about what that hardware might be?

It’s going to be a custom piece of Android hardware that will now give us significantly more insights and control in the environments that we operate in. So, you know, everything from better understanding, you know, who is in a location or how many people are in a location all the way through, you know, more granular TV control.

All right. Well, I have seen it myself in a bar or two in the past, so I can certainly attest anecdotally to the fact that it is disseminating out there. Well, Blake, it’s good talking with you. Always good to talk to you. Thanks so much for coming today. I appreciate it.

Always a pleasure. Thanks for having me.

Thanks to all of you for watching and listening. You can catch past episodes of Talking TV on TV NewsCheck.com and on our YouTube channel. And either way, you better leave the sound on because we do not pass muster for atmospheric TV. Thanks, and see you next time.