Muzak has made a big business out of building catalogues of licensed audio content for commercial venues, and today a company that is aiming to do the same for video has picked up a big round of funding. Atmosphere, which creates and streams ad-supported, free licensed video channels for broadcast in public places like bars, restaurants and doctors' offices, has raised $100 million in a Series C and a further $20 million in debt.
The round is being led by Sageview Capital. Atmosphere raised $25 million in its Series B round in April, less than a year ago, and was led by the VC that has backed several media tech startups. The bridge bank is providing a debt facility.
The co-founder and CEO of Atmosphere tells me that the company is close to a valuation that is not quite a unicorn. In the high hundreds of millions.
This would be a big step up for Atmosphere, which has raised $140 million spinning out from Chive Media and was valued at $275 million in April 2021.
It is also coming on the heels of strong growth in what might have otherwise been challenging times for the company and its particular business model. Resig told me that it has doubled its customer footprint to 19,000, and that it now streams some 250,000 hours of content daily to some 20 million unique viewers. Resig said that it is getting 215,000 impressions per advertisement, which is comparable to a TV rating. The TV ad market is a $70 billion opportunity today.
Its mix of content is not comparable to what you might get from a cable subscription, it sources and selects video from third-parties, and it has one big name coming to its screens later this week. Most of it is captioned with summary text.
Resig said that one hundred percent of the content is audio optional. More than 99% of the venues that use its services have already been broadcasting TV with the sound off, so that is what it set out to create with its own channels: video content that can be engaging without the sound on. We find a problem and fix it.
The opportunity for Atmosphere is in tapping that gap in the market, with the belief that companies creating content want to find new users, and they will be willing to consider the Atmosphere format as part of that effort.
The company said that it is in talks with professional sports organizations to build channels of their own on the Atmosphere platform, in addition to a big social media brand that Atmosphere is announcing as a partner later this week.
There is an interesting disparity in how media is streamed. Video streaming requires specific licensing when it is used in commercial venues, and as such paid TV in those environments, when it is being used legally, works out as a more expensive subscription than it would be for a consumer using it in a private home.
Atmosphere had an opportunity to create TV content specifically for public venues, and price it significantly cheaper than basic paid TV, and package it up with hardware that it supplies. There is an activation fee when customers first sign on.
Atmosphere rethought what venues wanted in their spaces, too, and found that the lack of sound and keeping the content short and watchable without being distractive was perfect for how people watch media in public places.
Atmosphere initially wanted to sell to bars and restaurants, but has seen a lot of setbacks in the last two years with Covid-19. The company decided to sell to other places, such as doctors' and other offices, as well as other public places, such as gyms, where people might have to spend time waiting for something, or doing something that doesn't take all their concentration or needs. Atmosphere is a growing market, with some 60% of customers still bars and eateries, but the other 40% is a wide mix of other businesses. Burger King and Texas Roadhouse are current customers.
Atmosphere has a unique strategy for connecting advertisers with hyper-focused markets. Dean Nelson said in a statement that they believe their capabilities will be well-received by advertisers and businesses that adopt the service. We are excited to partner with Atmosphere at a time when scaling its operation is most critical.
Atmosphere provides hardware and programming to businesses for a one-time $99 activation fee, then monetizes it through its proprietary advertising platform and paid digital signage program which allow venues to run their own advertising between content. The company offers attractive unit economics by owning the customer relationship, device, content channels, product delivery, and ad tech.
