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12 May 2022

Wyplay Community: Being ahead of the curve is a blessing and a curse

A calendar mix-up at NAB 2022 left Faultline with unfished business at Wyplay – as our five-minute cameo raised more questions than answers about the French firm’s new blockchain-based façade.

A follow-up call with co-founder and CMO Dominique Feral this week set our mind at ease about why Wyplay is making this potentially perilous pivot into cryptocurrency, and what actually constitutes the platform, called Community.

However, our confidence in the business model – whether Wyplay can actually make any money from minting non-fungible tokens (NFTs) and peddling decentralized infrastructure – is more skeptical than ever.

Wyplay Community has three pillars – Wyplay P2P, Wyplay Distributed DRM, and Wyplay Blockchain. Just by looking at these, before diving into the technical details and assessing the business case, you can see the problems.

No one makes money from DRM anymore, while creating decentralized networks, where users share compute resources in return for rewards, is certainly not a cash cow for a company like Wyplay, nor its traditional operator customer base.

Decentralizing infrastructure can reduce overheads from transcoding and delivery networks, although this is minimal in the grand scheme of things. Feral admits that delivery makes up less than 10% of the total cost of delivery content, so reducing delivery costs is not a core selling point of Wyplay Community.

So, we are in agreement that the first two pillars can’t make any money, but what about the final structural Blockchain pillar? It leaves NFTs as the only monetizable component of Wyplay Community, through revenue sharing agreements with operators selling exclusive NFTs. As expected, Feral admits that Wyplay’s share will be minimal.

We press for an estimate. Less than 10%? Less than 5%? He smirks awkwardly, telling us he isn’t going to reveal numbers, as Wyplay’s slice of the pie remains a detail yet to be ironed out with operators. Of course, Community doesn’t have any live customers yet, although with all the positive feedback Wyplay has supposedly received from the marketplace, some must have expressed a ballpark estimate of what they would be willing to pay Wyplay for each NFT transaction.

Whatever it might be, it’s small, really small, so Wyplay is relying on huge scale NFT transactions for Community to become profitable.

Similarly, Feral isn’t budging with how much Wyplay has invested upfront in Community. It took a dedicated team of 15 people a full year to develop Wyplay Community, and it still isn’t finished. Our estimate is at least $1 million to date, potentially doubling as the platform adds more business rules to its smart contracts from one customer to another, adapting its blockchain connectors to existing back-end systems (see image).

For us, this is the most significant technical aspect of Wyplay Community. It has to plug-in to existing back-end systems with zero disruption to an operator’s video technology stack or network infrastructure.

Wyplay’s roots in middleware have taught it a lot about David versus Goliath situations. Its flagship Frog middleware jumped into the market around 2014 with early success, but was battered by the arrival of Android TV Operator Tier and RDK that took pay TV platforms by storm, through standardizing functions in the video software stack, including middleware.

Frog couldn’t compete, but it could use these new technologies to its advantage, implementing elements of Frog within these standardized stacks for operators – becoming agnostic while guiding customers to take the best of both worlds.

Wyplay has done that pretty successfully since, with Frog accounting for around 70% of total revenues today.

Returning to the blockchain discussion, our patience begins to wear thin. Wyplay Community is primarily targeted at large pay TV operators with millions of customers (Feral pulls an average of 4 million from nowhere), most of which are of a certain age (Canal+ has an average viewership of 53 years old, for example).

Wyplay’s thinking is that pay TV operators need to differentiate and attract younger viewers in order to continue operating profitable TV businesses, and that NFTs are the way to do that. We argue that most operators can’t even successfully transition from cable/satellite TV delivery to IP-delivered video to attract younger generations away from cheaper, or free, alternatives – let alone springboard into monetizing cryptocurrencies.

It hinges entirely on an operator’s individual rewards scheme. If the rewards are compelling enough, then you will have a credible business model. If not, you will be laughed out of the blockchain. Feral provides a handful of examples.

If a subscriber agrees to reshare NFTs to increase royalties, they will receive a coin-based reward. If they promote it on socials, they get coin. If they help to bring in new subscribers = coin.

Ultimately, Wyplay Community has to become more customizable around an operator’s needs. From where we’re sitting, the issue is that operators don’t know the first thing about what young people want – throwing money at walls and hoping it sticks for more than six months at a time.

It is all well and good preaching about reducing carbon footprints using decentralized infrastructure, but the business models we are hearing from the industry are murky at best.

Wyplay is so focused on NFTs, where merchandise and live events are the primary pull, that it hasn’t even considered how to monetize ads in the blockchain, which for many video clients looks to be a more promising opportunity.

It’s a big gamble from Wyplay, despite Feral’s protestations that his company has made the right choices, followed up with the ominous caveat of, “We’ll see how it progresses.”