TaTaTu is a Netflix competitor which rewards viewers with TTU cryptotokens for watching premium content, with the cost of the tokens covered by advertising revenue. Unlike Netflix, there’s no monthly subscription fee, which should make it highly attractive to certain demographics, assuming the content is rich and compelling.
TaTaTu rose to prominence in 2018 after raising US$575m via Initial Coin Offering (ICO), the fourth largest for the year after EOS (US$4.2b), Telegram (US$1.7b) and Venezuela’s Petro (US$735m). European royalty and nobility invested in the ICO, including Prince Felix of Luxembourg, second in line for the throne, and Lady Monika Bacardi, of the famous liquor company. TaTaTu even famously disclosed Lady Bacardi’s pledge, an estimated US$100 million. In addition, BlockTower Capital invested and Lvna Capital acted as a strategic advisor, giving the ICO additional credibility.
Around the time of the ICO, TaTaTu launched their app, which for the most part provided a horrifyingly poor user experience. The sign-up process was one of the worst I’ve encountered in many years of joining hundreds of loyalty programs and subscriptions services. No less than seven consent requests were required for all manner of permissions. The user interface and features were rudimentary as best, and the viewable content mostly unappealing.
That being said, US$575m is a lot of money and I assumed TaTaTu would rapidly redevelop the app to a standard approaching other streaming services to improve their competitive position. Interested to see what they’d achieved, I dived back into TaTaTu recently to see how they’d spent their money.
The developers have released version 1.5, but it is difficult to ascertain the improvements they’ve made on earlier versions. The user interface is still shockingly poor. At one stage I even found myself wondering if TaTaTu was actually a giant hoax, a situation where the company’s owners had raised a large amount of money and put out a product at the lowest cost possible so they could say ,’There you go. Bye, now.’ There’s no evidence to suggest my paranoia is founded, although after watching Netflix’s Fyre documentary I can’t help but view TaTaTu’s user experience akin to a sad cheese sandwich served up on a desert island with no clean water to wash it down.
The content selection is limited and mostly undesirable for viewing. On slower Wi-Fi, the streaming stops and starts as it buffers, rather than automatically adjusting picture quality to maintain flow. The layout of categories makes browsing difficult and clunky. If a film has been partially watched, when the viewer starts again the system defaults to the beginning rather than continue from the point where the viewer left off.
While all these poor features are highly concerning considering the amount of cash at their disposal, it is a wider review of the industry in which TaTaTu is competing that makes me concerned that they could soon be TaTaToast.
Making a streaming company work at a global level is an expensive business. CNBC recently reported that Disney, who are planning Disney+, a streaming service to compete with Netflix, is already losing over US$1bn per annum on existing streaming operations Hulu and BAMTech.
Meanwhile, Netflix has announced a price hike of 13-18 per cent for United States subscribers, a move which will boost its revenue by hundreds of millions of much-needed dollars, while likely losing them very few customers. Netflix has been spending billions to bolster its original content, which boasts award-winning shows such as ‘The Crown’ and ‘Bird Box’. The revenue boost from Netflix’s price hike is required to fight off increasing competition from Amazon Prime Video and the coming of Disney+. Aggressive spending of $US8 billion in 2018 led to a surge in subscriber growth, but its debt seems to be doubling each year ($US3.36bn in 2016, US $6.5bn in 2017 and a forecast US$13bn in 2018).
All this makes TaTaTu’s ICO raise of US$575m seem absolutely miniscule. Plus, unlike Netflix and other streaming services, who can increase fees to boost their coffers, TaTaTu doesn’t charge fees.
TaTaTu’s model relies on cryptoeconomics. A finite number (10bn) of TTU cryptotokens were created at the time of the ICO, and TaTaTu’s ambition is to generate enormous demand for those tokens by convincing advertisers to buy them to reward viewers for watching their content; a blockchain marketing strategy. Theoretically, the subsequent increase in price would generate a multiplier on TaTaTu’s holdings of TTU, which they could then sell into the market at an enormous profit to generate further funds to build the business model. Next step, world domination.
So how is this business model working out for them? If the TTU value charts are anything to go by, not so great. Launching at US60c on exchanges HitBTC and Liquid in July 2018, the price rose to US 80c a month later, before plummeting to less than US2c today. I’m glad that wasn’t my US$100m, Lady Bacardi, because your investment is now worth approximately US$1.7m. Stiff drink, anyone?
So while Netflix, with a superior product and loyal, obsessed, addicted customer base can raise hundreds of millions of dollars with a simple fee rise, TaTaTu appears stuck. They can’t sell more TaTaTu into the market, as their trading volume is less than US$1,000 per day. Their paltry $575m war chest isn’t nearly enough to secure attractive content to battle against their heavyweight opposition. And their UX sucks.
For an industry still in its infancy, there have already been a substantial number of spectacular failures, with most cryptocurrencies and cryptotokens dropping over 98% from their 2018 peaks. Most have failed due to poorly designed business models that were overly reliant on ever increasing growth in the value of their tokens, which failed to eventuate.
Et tu, TaTaTu, et tu?
Philip Shelper is a loyalty management consultant based in Sydney, Australia who obsesses about everything to do with loyalty and rewards. His company Loyalty & Reward Co are a leading loyalty consulting firm.
Phil is the author of Blockchain Loyalty: Disrupting loyalty and reinventing marketing using cryptocurrencies. Buy the book.
www.blockchainloyalty.io is a global resource centre for everything blockchain loyalty.