Ficto's Plan to Test its Way Toward a Mobile Streaming Content Strategy

Sam Blake

Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

Ficto's Plan to Test its Way Toward a Mobile Streaming Content Strategy

Fiction Riot, the L.A.-based entertainment company behind mobile streaming app Ficto, raised $250,000 this week. Chief executive Mike Esola says the company has intentionally grown slowly, eschewing venture capital in favor of incremental fundraising from family offices, institutions and friends and family.


In total, the company has raised $3.5 million, according to an internal document.

Ficto is free to download on iOS and Android, but is currently in a testing phase, says Esola, a former agent at WME and UTA. He and his team – which includes Jeff Mayo (employee #80 at YouTube and #300 at LinkedIn) and Nick Mitchell (former head of engineering at Technicolor) – plan to launch the fully fledged service in Q4 of this year. That will receive a boost from distribution partnerships that will guarantee them 1.3 million automatic downloads of the Ficto app, according to Esola and the document.

Courtesy Ficto

The company's business model is based on advertising and providing white label streaming technology to third parties such as festivals, conferences and broadcasters, Esola says.

Ficto aims to leverage mobile-oriented tech to offer a unique user experience. In the future its shows will include features like interactive choice-based storytelling; content that is unlocked if a user goes to a specific location; and real-time chats. The tech stack is also built to provide unique opportunities to advertisers and financial transparency to creators.

dot.LA caught up with Esola to talk about his plans for the Q4 launch, what short-form video competitor Quibi got wrong, and how Ficto will do it differently.

How did Ficto come about?

It started out as one primary thing but it has evolved. The original focus was on backend compensation for artists. I was an agent for about 16 years and I made 95% of my revenue on 5% of my deals; it's the same with most artists. And most of the time that comes from the backend.

But when streaming came along it eradicated the backend. Everything's going to streaming. Consumers love it, but like many tech companies they don't reveal their metrics – it's inherent in the tech culture.

I was really impressed with Netflix; they basically invented streaming, and production is up because of them. But I love this industry and I didn't like what I was seeing for the creators. If you take away content performance metrics, it changes everything. So that was my inspiration. I couldn't sit around.

Mike Esola is Fiction Riot's CEO

Where is Ficto headed from here?

Q4 will be significant for us. The last couple months have been a beta period; we're testing, not spending money on marketing. We'll have 10 original shows coming in Q4, but we can't premier those now because we can't shoot them.

The filming moratorium looks like it'll lift soon and we'll go back into production. These shows will give users more empowerment and engagement than the shows that are on our beta version.

Those are good shows, too, and there's an element of empowerment there, since we accepted several of them through a submission portal; and also some engagement, with micro-donations from viewers. But we'll take all of that to the next level. To be able to do that how we want, you have to bake it in from the start.

We also have a number of great distribution deals coming in Q4, which will come with automatic pre-downloads that will allow us to exceed the downloads that Quibi got.

What will you do with the money you've just raised?

That was almost all convertible debt, and it will go to content, marketing, and operating expenses – which includes technology development.

We're not opposed to VC money but it's got to be the right moment and the right value proposition for them. We don't want to rush the valuation. And it seems lately there's been a bit of a reckoning in VC because of overvaluations and a have-or-have not mentality. VCs are really smart but like everyone they spread themselves thin. These are generalizations but I think there needs to be a more diverse approach to how VCs invest.

What do you think Quibi got wrong?

It's very simple: their value proposition is not correct. What problem are they trying to solve? They're aware there's an amazing amount of people, especially young people, watching on mobile. But content on mobile and content on normal streaming is not apples to apples, and they didn't adequately adjust their approach to production or programming. You've got to do the other things that people expect on mobile, and the way we think about that is it's all about empowerment and engagement.

Quibi raised and spent all this capital and assumed people would adopt their product, without hardly testing it – they just went straight into a big launch. If you do that in any industry the odds are against you. Every other app is built how we've built, but Quibi didn't care about history. (They figured) this is what people will accept — that they'll like what we make. It's not the first time this has happened to (Quibi chairman and founder Jeffrey) Katzenberg. Look atpop.com – it didn't launch. Dreamworks' live-action business sold for pennies on the dollar.

Quibi also disregarded the importance to young people of a free service. It's not easy to get someone to pay for a service with no established brand or content, especially young people.

The people making decisions at streaming services are focused on a mature, established market — long-form, primarily over-the-top, in front of the TV. They're missing this explosion, this cultural gap of mobile viewing. Quibi caught onto that, but it's not just about the length of the content. That's where Quibi got it wrong — it's about empowerment and engagement.

It's a different type of offering and different type of expectation that comes along with the internet, with mobile, with social and lots of things that aren't necessarily obvious. But people have a different value proposition in mind when they pick up their mobile phones. With any offering, whether you're talking about movies or Dropbox, you've got to deliver to consumers' expectations; and if you're lucky, you've got to exceed them. So if you're going to create content for mobile you have to meet those mobile expectations.

What exactly do you mean by engagement and empowerment?

Engagement is a fancy word for interactivity. It's about making people feel like they're part of something. It could be a choice-based show, or a location-based show that you unlock based on your location. It could be livestream; livestream is the longest anyone spends on average on mobile by far – you know why? Because with livestream, you feel like you're part of something, since it's happening in real time. You can do live-chat functionality, commentary, opinion, social integration — it's easy to do that for our shows. Quibi completely cut all that out.

And empowerment is basically about allowing people to submit content or opinions. Polling is its most basic form, or clicking to donate. Beyond that you see people submitting a video to be a part of something – TikTok is the most successful at that. We haven't premiered it yet but we have an interactive dating show that will empower viewers to win a date with a celebrity. And we'll do other competitive shows where people will have to submit a 10-second video to win a prize.

Most of the services are focused on long-form content and they're ignoring the twenty-somethings and teens because they don't understand it. They scratch their heads at why Quibi doesn't work and why TikTok does, and they dismiss TikTok as crap user-generated content. But it doesn't have to be that. It can be a hybrid. And that's where we see ourselves.

This interview has been edited for brevity and clarity.

https://twitter.com/hisamblake
samblake@dot.la

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🏰 Disney's Epic Investment Stands Out Amidst Gaming Industry Layoffs

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

🔦 Spotlight

In the midst of widespread gaming industry layoffs, a glimmer of positive news emerges as Disney announces a significant move: a $1.5 billion investment in Epic Games. 🏰💰🐭

Image Source: Disney

Disney's $1.5 billion investment in Epic Games, disclosed late Wednesday, signals a strategic alignment aimed at expanding the success of "Fortnite." The deal enhances Epic's growth prospects after financial setbacks, including layoffs, and strengthens the partnership between the two companies. With Disney gaining a larger equity stake in Epic, the collaboration will broaden the integration of beloved Disney franchises like Marvel, Star Wars, Pixar, and Avatar into the game, potentially boosting its appeal and longevity. This significant investment underscores Disney's commitment to interactive entertainment and signifies a shift towards games as a primary revenue stream, aligning with the growing trend of digital engagement among younger demographics. Moreover, the potential for crossover sales of physical Disney products within "Fortnite" and the exploration of new content distribution channels are just some of the opportunities arising from this partnership.

For LA tech, the Disney-Epic Games partnership represents a validation of the region's burgeoning tech and gaming ecosystem. The substantial investment in Epic, who maintains a large Los Angeles office with 1,000+ employees (according to LinkedIn), reflects confidence in the LA’s talent pool and innovation potential. Additionally, this partnership between two industry giants fosters an environment for further collaboration, investment, and growth within LA's tech sector. As Disney and Epic Games deepen their ties and explore new avenues for content integration and distribution, it not only elevates the prominence of LA as a tech hub but also stimulates economic growth and job creation in the region. This partnership highlights LA's unique position as a hub where technology and entertainment converge. With its ability to integrate diverse industries, LA is driving innovation and expansion in digital entertainment. 🚀💸🎮

🤝 Venture Deals

LA Companies

  • ProducePay, a financing and marketplace platform for the fresh produce market, raised a $38M Series D led by Syngenta Group Ventures joined by Commonfund, Highgate Private Equity, G2 Venture Partners, Anterra Capital, Astanor Ventures, Endeavor8, Avenue Venture Opportunities, Avenue Sustainable Solutions, and Red Bear Angels. - learn more
  • Blush, an invite-only dating app that drives users to local businesses on dates, raised a $7M Seed Round from individuals like Naval Ravikant. - learn more
  • Mogul, a startup founded last year that provides an overview of an artist's royalty earnings and identifies areas where money is owed but has not yet been collected, raised a $1.9 million seed round from Wonder Ventures, United Talent Agency, AmplifyLA, and Creator Partners. - learn more
  • Avnos, a hybrid direct air capture startup, raised a $36M Series A led by NextEra Energy and joined by Safran Corporate Ventures, Shell Ventures, Envisioning Partners, and Rusheen Capital Management. - learn more
  • AI.fashion, startup whose mission is to help retailers enhance the online shopping experience by providing consumers with virtual try-ons and personalized fashion recommendations, raised a $3.6M Seed Round led by Neo. - learn more
  • Suma Wealth, startup that aims to demystify financial topics and provide culturally relevant content, virtual experiences, and resources to help Latino users navigate financial challenges and opportunities, raised a $2.2M Seed Round . Radicle Impact led, and was joined by Vamos Ventures, OVO fund and the American Heart Association Impact Fund. - learn more
  • 222, a startup that helps users discover their city and meet new people through unique social experiences, raised a $2.5M Seed Round. Investors included 1517 Fund, General Catalyst, Best Nights VC, Scrum Ventures, and Upfront Ventures. - learn more
  • LimaCharlie, a security operations cloud platform, raised a $10.2M Series A led by Sands Capital. - learn more
  • Polycam, an app that uses a smartphone’s sensors to capture 3D scans of objects, raised an $18M Series A co-led by Left Lane Capital and Adjacent, and joined by Adobe Ventures and individuals like Chad Hurley and Shaun Maguire. -learn more.

LA Venture Funds

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a startup building software to decarbonize logistics for logistics businesses and goods business through a vetted marketplace and optimization software. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $1.5M Pre Seed Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

Venture Waves, Climate Tech Wins, and Silicon Beach's Ongoing Evolution

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Anduril Seeks $1.5B in VC Funds

Defense company Anduril Industries Inc., based in Costa Mesa and founded by Palmer Luckey, is seeking to raise $1.5 billion in fresh funds to boost its valuation to $12.5 billion or more, according to sources quoted by The Information. This fundraising effort, if successful, would mark one of the largest venture capital rounds of the year.

Image Source: Anduril

Anduril recently secured a contract to develop and test small unmanned fighter jet prototypes under the Air Force’s Collaborative Combat Aircraft (CCA) program, beating out major defense companies like Boeing, Lockheed Martin, and Northrop Grumman. Alongside General Atomics, Anduril will design, manufacture, and test these aircraft, with a final multibillion-dollar production decision expected in fiscal year 2026. This program aims to deliver at least 1,000 combat aircraft to fly in concert with manned platforms and is part of the Air Force’s Next Generation Air Dominance initiative. Central to Anduril’s success in this contract is the Fury autonomous air vehicle, acquired through the purchase of Blue Force Technologies. This victory underscores Anduril's rapid advancement in the defense sector, aligning with Luckey's vision of building faster and more cost-effective defense assets. - learn more

Los Angeles Ranks Number 1 in Emerging Climate Tech Hub

The 2024 Emerging Climate Tech Hubs Report by Revolution highlights Los Angeles as a burgeoning center for climate tech innovation. LA's growth in this sector is driven by its diverse talent pool, strong research institutions, and a culture of environmental consciousness. The city's unique mix of legacy industries, such as entertainment and aerospace, alongside emerging tech companies, positions it as a pivotal player in the climate tech landscape. This shift reflects a broader trend of decentralized climate tech funding across the U.S., reducing the historical dominance of California's traditional hubs. - learn more

Silicon Beach: Looking Back, Moving Forward

Assessing the overall health of the startup market is challenging, especially as venture capital funding has decreased by an average of 61% from 2021 to 2023 across the top VC markets in the US. Markets with robust ecosystems in AI, SaaS, Biotech, Healthtech, and Fintech appear to be weathering the downturn better than those focused on Consumer and Gaming industries, areas where Los Angeles traditionally excels.

Percent Change In VC Funding By Region

CB Insights

LA Times paints a rather bleak outlook on the Los Angeles tech scene noting venture capital funding in Greater Los Angeles plummeted 73% from 2021 to 2022. Silicon Beach, once a vibrant tech corridor, currently faces high vacancy rates and lacks late-stage financiers, especially in the AI sector. However, there are positive signs, including growth in aerospace startups and increased venture capital investment in early 2024, suggesting a potential rebound for LA's tech ecosystem.

While LA may not be exceeding expectations during this period, its tech ecosystem warrants a nuanced evaluation, given the broader market dynamics and its strong performance in specific sectors. Reach out to us with your thoughts.

🚀 SpaceX gears up for another stellar year, active raises, and more

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Happy Friday Los Angeles! You made it through the first week of 2024!

🔦 Spotlight

Elon Musk may be a divisive (albeit entertaining) figure, but the continued success of SpaceX is pivotal for the aerospace industry in Los Angeles and more broadly around the world.

Image Source: SpaceX webcast

What happened with SpaceX in 2023?

  • Elon Musk challenged Facebook founder, Mark Zuckerberg to a cage fight.
  • SpaceX launched 96 successful missions with its Falcon series of rockets, a 57% increase over its previous annual record.
  • SpaceX conducted two test flights of the largest and most powerful rocket ever built, Starship.
  • Roughly two-thirds of SpaceX's launches in 2023 were devoted to building out Starlink, the company's satellite-internet megaconstellation.
  • Isaacson’s Elon Musk biography was published in September including everything from Musk’s tumultuous relationship with his father to his work ethic and “demon mode”.

Moving forward what can we expect from SpaceX and its controversial founder? Continued innovation pushing the aerospace industry to new limits? Yes. More drama? Without a doubt.

Here is some of what is to come in 2024:

🤝 Venture Deals

Just Announced

Check back next week!

LA Exits

  • CG Oncology, an Irvine, CA-based developer of immunotherapies for bladder cancer, filed for a $100M IPO. It plans to list on the Nasdaq (CGON) with Morgan Stanley as left lead underwriter, and has raised around $317m in VC funding. - learn more
  • McNally Capital agreed to sell Advanced Micro Instruments, a Costa Mesa, CA-based maker of gas analyzers and sensing technologies, to Enpro (NYSE: NPO). - learn more

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a hard-tech startup that is developing a technology for decarbonizing natural gas, is raising a $1.5M Seed Round. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $250K Angel Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

📅 LA Tech Calendar

Sunday, January 7th

Wednesday, January 10th

  • Startup Cafe: Networking with a Kick - Entrepreneurs, Startups, and Tech Enthusiasts join together to meet and connect with like-minded people, industry professionals and investors, while enjoying a nice cup of coffee in Venice at The KINN. This week’s interactive discussion about AI’s evolution in entertainment will feature Dr. Sam Khoze and Rachel Joy Victor.
  • Venice Tech Happy Hour- Join Startup Coil and FoundrHaus Wednesday evening and enjoy the sunset from the rooftop, grab a bite overlooking Abbot Kinney, and mingle with other tech enthusiasts and entrepreneurs by the bar on the patio.

Have an awesome event coming up? Reach out to be featured on next week’s Newsletter!

📙 What We’re Reading

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