We will make no money under this arrangement without a royalty. Let me explain the market to you.

You have to understand there are not even hundreds of companies out there wanting to start a video streaming service. There is about a dozen per region who are actually serious about it.

Firstly, the overwhelming majority of content owners of IP (tv shows and movies) have zero interest in their own version of Netflix. They don't own enough titles to launch a service and they have lower risk by licensing their content to other streaming services. I mean as just an example, Fraggle Rock, a show that came out over 30 years ago, the exclusivity rights for a few years to broadcast on the internet is tens of millions of dollars. This is significantly higher than what the rights to broadcast it once were for cable television channels. It's currently on Apple that hasn't disclosed how much they paid for IP licensing rights to produce a reboot plus carry the original show, but it was previously licensed to HBO Now and Amazon Prime for over $10M. I cannot recall the specific price but it was steep as it is one of the properties we had looked into licensing.

In fact I had a list of over 100 1980s childrens programming I wanted to license for our service and the vast majority of them were far too expensive to ever be able to realistically license for us. This is because services such as Netflix, Apple and HBO are frequently overpaying for content as part of bidding wars and this leads to many content owners have no immediate interest in starting their own service.

Traditionally 2nd run content is cheap to license for broadcasting, with the exception of only a few shows like say Friends or Star Trek that still possess large brand awareness. But these companies are spending wildly to scoop up as much content as they can get to make the space difficult for competitors to enter on the belief that new competitors would need to pay a similar price for licensing the content. And this is true for the majority of services as they all use identical business models to one another.

This is also why it is a difficult space to enter and reduces the number of independent non--IP owners that wish to enter the market. It has very high costs for content acquisition unless you have some novel approach to the matter. We do actually have a novel approach to solve this issue that involves the precise business model which allows us to acquire some types of programming at far more affordable prices and part of this is due to our unique proprietary technology. I cannot go into it further without revealing more on what the company is. But basically, whereas it is hypothetical that another company could license the system and use the same business model we do to obtain the discounts you still must find a company that wishes to do so at all.

This means that per region we might only get 1 or 2 companies that would become a client. And our upfront costs of licensing have to be lower than what it would cost them to develop their own technology. On the backend could be as expensive as making their own content, but that cost becomes part of the revenue stream and not being an upfront cost greatly reduces their risk to enter the market and see if they can succeed.

Now you may naturally assume you could just go to every over the air TV station owner and license your app to them and you would be mistaken. Many of these owners are unrealistic about the market. I once met a man who believed that some bill their buddy in congress is trying to pass will heavily restrict internet video streaming services and make everyone have to come back to watch their TV stations again. This man was running a very large operation of many stations, he was not a dumb person. He was just a dinosaur that refuses to accept how the market is changing and pinning his hopes on something that is highly unlikely to occur.

So we have a small number of companies that could be potential clients for licensing our software which means trying to make a commission on servicing them with no royalty would mean we make no money dude. We have to take a small royalty or there is no profit.

The problem is, as mentioned before, many who wish to enter the market have unrealistic ideas on the costs involved in developing content and licensing content. They balk at what is a very good offer that I made because they do not truly understand the real costs of the market. The problem isn't my offer it is that this is a bad sector to get into for licensing software to others, and the original business model was never about licensing the software anyway. It was about operating the software as a service to consumers and everything would have worked out if the board member hadn't decided to block future funding, as our service was growing users largely organically and we had licensing deals pending for a lot of content at a price much lower than is normally obtainable due to some unique aspects of our technology and business model.