Start-up of the Week / Vonetize Helps You Kick Your Cable Habit

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What makes a TV smart? Certainly not the reality shows that it beams into your living room. In TV land, intelligence apparently is marked by how many tricks you can perform. Smart TVs, therefore, are those that come with, among other apps, YouTube, Spotify, Twitter and Facebook as well as games and information services to update you on weather and stocks. Last October, Samsung, the world’s largest television manufacturer, sold over a million smart TVs in the United States alone. A new survey by top market research agency GFK predicts that smart TV sales will leap 30 percent in Europe in 2013.

Hand in hand with the rise of the intelligent boob tube is a trend called “cord cutting,” where people cut off their subscriptions to cable or satellite TV providers – about 292,000 households did so in the third quarter of 2012. Cable is an expensive habit – setting you back about NIS 200 a month – and why pay when you can get your content online from folks like Netflix, Hulu and Amazon, and (shhhh!) from illegal downloads, too?

The Israeli company Vonetize is riding on these two trends by organizing video on demand (VOD) for smart TVs, enabling customers to receive programs directly to their televisions without a cable or satellite subscriptions or a streaming player box such as Roku or Boxee.

“We started in 2008 with a dream of being a player in the smart TV field. We gambled on technology that hadn’t penetrated the market yet,” says Noam Josephides, the CEO of Vonetize. “What sets us apart is that we’re a technology company and a content company at the same time. We have our own servers – not in the cloud – for content, a customer management system and a billing system. We’re the only company in the world that can use a television to clear credit cards. We also sign contracts with content owners the world over.”

Vonetize’s product is geared mostly toward television manufacturers. Although its main partner is Samsung, it also works with LG and Sony.

In Israel, Vonetize just launched SmartVOD, a product that’s available to anyone with a smart TV made by Samsung. SmartVOD’s content includes dozens of films, children’s programming and live shows. Customers can subscribe to the service for NIS 30 per month or buy individual films for NIS 18 per month. “We’re quality freaks, so most of our programming is HD. We also have 3D channels,” says Josephides.

But alas, you won’t be able to catch the last episode of Mad Men with Vonetize. It isn’t trying to compete with the big studios. “We want to be the Netflix of the non-American world, so we’ve gone into niche services,” Josephides says. For example, the company’s catalog has content from Bollywood, DogTV and the Baby Channel – content that could be sold throughout the world.

Vonetize’s profit model is to charge for the installation of the service and then distribute the income. Fifty percent of the sale of every program goes to the content owner, and Vonetize and the television manufacturer share the rest. Vonetize has nine employees, three of them in the United States. Unlike most start-ups, Vonetize has never raised money from venture-capital funds or angels.

“We hope to be profitable within a year,” Josephides says.

What makes a TV smart? The number of tricks it can perform. A smart TV at a consumer electronics fair in Berlin.Credit: AP

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