• by Karlene Lukovitz  @KLmarketdaily, May 22, 2023

Telly — a startup that offers users a free smart TV in return for permission to collect vast amounts of personal data and run always-on advertising on a second screen below the 55” 4K HDR main screen — says it drew more than 100,000 users within 36 hours of posting its signup page last week.

The company, started by Pluto TV founder Ilya Pozin and backed by a roster of major players including LightShed Ventures analyst Rich Greenfield, Vanyer Media CEO Gary Vaynerchuck, and ad tech platform MNTN, plans by this summer to distribute 500,000 of the TVs, which it claims are worth $1,000 (although CNET estimated the value of TVs with similar specs at about $500).

The pitch: Smart TVs and other devices are already collecting your data, so you might as well get something out of it.

“For too long, consumers have not been an equal part of the advertising value exchange,” declared Pozin, in announcing the launch. “Companies are making billions of dollars from ads served on televisions, yet consumers have historically had to pay for both the TV and the content they watch… When I co-founded Pluto TV, we created an entirely new model that offered amazing TV content to viewers for free. Now, with Telly, we are providing the actual television for free as well." 

Telly’s hardware and other startup costs will be quickly recouped by the ability to monetize advertising and sponsorship opportunities that number in the hundreds, as well as the sale of data to third parties, according to Telly’s principals.

Advertising targeted through the device’s data collection — including ads that offer transactional abilities like food orders — will appear on the always-on, 9” second screen, next to customizable apps that include sports, news, weather and stock feeds. Users can use Zoom (a Telly partner), make online bets, or check sports stats by using their remote.  

The information gleaned from the sign-up form and ongoing collection of anonymized ACR data includes names, addresses, email addresses, phone numbers, age, dates of birth, zip codes, gender, ethnicity, geolocation, “cultural or social identifiers” (like favored sports teams and leisure activities), physical audio and video content watched, channels viewed, duration of viewing sessions, search queries, settings preferences, apps opened, purchases and other transactions made, buttons selected, and time/frequency/duration of activities.

There’s also a built-in microphone and camera, although the company says the camera is for use with features like Zoom or interactive apps like workouts, and camera data is not recorded or transmitted to the company.

In addition, thanks to a passive motion sensor that allows the TV to detect the physical presence of all individuals using the TV at any given time, advertisers and data licensors will have unprecedented, at-scale access to that information.

Telly’s continuous information source will be 10 times larger than Nielsen’s panel and hundreds of times larger than TVision’s once the 500 Telly homes are up and running — attractions that have already drawn several measurement companies as licensing customers and will generate an average revenue per user (ARPU) more than twice Roku’s, Dallas Lawrence, Telly’s chief strategy officer, told NextTV.

“With Telly and MNTN, brands will be able to seriously level up their performance marketing strategy" through improved targeting and performance measurement, said MNTN Ceo and founder Mark Douglas.

According to Pozin, Telly already has partnerships with the big agencies and buy-in from big brands, and will provide more details at next month's Cannes Lion festival.

Users get a cutting-edge smart TV that lets them consolidate their traditional cable or satellite TV provider and streaming apps in one place by connecting through a built-in tuner or HDMI ports, and get a 4K Android TV streaming stick, along with the interactive capabilities, a five-driver sound bar, an AI-based voice assistant, 40 free games, and other features. Users can also plug in connected devices including Roku, Amazon Fire TV and Apple TV.

“Don't be fooled by the free price,” said Pozin. “ This is by far the most advanced television ever developed. Consumers will never look at their television the same way again after Telly transforms the TV from a monitor on the wall into the most powerful and useful device in the home. Telly is the ultimate free upgrade that actually gets better month after month with over-the-air updates constantly innovating the living room experience. There has never been anything like it before." 

Telly also plans to add a program that will reward users who participate in interactive polls and other activities to get points toward free streaming subscriptions or gift cards.

While the ads are ever-present, the company insists that having them on a second screen means that they are not intrusive.

"Telly is a huge leap forward, leveraging the explosion of the connected TV ad market and the desire from consumers for greater control and interactivity that does not disrupt the TV viewing experience,” said LightShed Ventures’ Greenfield.

Consumers who sign up and then want to drop the service or its data collection capabilities will have to return the TV or pay Telly $500.

Some tech press critics have already warned that Telly could push consumers’ resignation toward data collection to new levels tantamount to continuous surveillance.

Other smart TVs include opt-out settings to turn off much of the data collection.

But Lawrence contends that the only differences between what Telly and other smart TV manufacturers are doing is that Telly asks consumers up front to share their data, and provides the free TV in exchange — a great deal for the many smart TV users who never bother to opt out of data sharing in any case.

Reasonably sophisticated 55” smart TVs can now be purchased for a few hundred dollars, but Telly is betting that the allure of “free” will trump many consumers’ concerns about privacy.