UPDATED 21:42 EDT / JUNE 24 2018

EMERGING TECH

Blockchain-based video startup TaTaTu claims to have raised $575M in initial coin offering

TaTaTu Enterprises Ltd., a blockchain-based video startup that rewards users for watching and sharing videos, claims it has raised $575 million via an initial coin offering of TTU, making it the third-largest ICO on record behind Telegram and Block.one.

The company, founded by Italian-Canadian film producer Andrea Iervolino, is difficult to describe because it is an amalgam of different ideas, not a “Blockchain Netflix” as some sites have described it.

At its base, it appears to be a combination of YouTube and Netflix in that it offers a platform for professional and amateur video content and sharing. But that’s where things start to seriously differ. The company is promoting itself as a place where users are finally “rewarded for their social entertainment activity in an open and decentralized way – earning tokens to watch movies and other content for free, and receive additional tokens from the movies and the content consumed by their friends.”

What that means is that users are rewarded with TTU tokens for undertaking activities on the site such as watching and uploading video. They can also earn additional tokens through what is essentially an affiliate program with ongoing recurring commissions.

While initially offering movies and video, TaTaTu claims that it “plans to also enlist music, sports and gaming content, becoming a 360-degree entertainment platform that will allow both consumers and content creators to monetize their content, and content viewing, transparently.”

In theory, transparency sounds great, but it’s not clear what the working business model is. On one hand, it says in its white paper that users will be able to watch content for free and yet at the same time it will also offer premium content from third-parties. But it’s not clear if users will have to pay for that.

Advertising is a recurring theme, indicating that free-to-watch videos will have ads, a la YouTube, allowing content creators to be paid. At the same time, the company is producing premium content itself, including an original documentary by Jeremy Renner and a movie starring Antonio Banderas and Alec Baldwin. That latter is important because that sort of content is costly and can rarely be supported by ads alone.

The key question: Will users be paid to watch some content and then pay to watch other content?

That aside, the company also makes some claims such as being the first provider to pay people to watch and share videos. but it’s not even remotely the first site and it won’t be the last. Of note, no sites with similar models in the past have ever really taken off.

TaTaTu does have some impressive names backing it, albeit impressive in terms of European royalty, with investors including Prince Felix of Luxembourg and Lady Monika Bacardi, second in succession of the liquor company Bacardi Ltd., who pledged to invest $100 million. Bacardi (the company) can make a decent drink, but does that qualify family members to identify great investments in the blockchain space?

That’s far from apparent yet. Competing against the likes of Netflix and YouTube is a very ambitious but risky undertaking.

Image: TaTaTu

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