Modius Networks: Paving the way for TV banner ads

Television will soon become a computerized home entertainment center. The big question is whether consumers will buy big split-screen televisions. Modius Networks 2000 says the answer is no, and looks for dead space on the screens instead.

A revolution is underway now. The television is changing from the passive viewing device we have known for decades into a computerized home entertainment center. Television will provide communications services, including unified messaging, e-mails, faxes, and video-phones.

The combination of all these services on the television screen creates a problem that Israeli start-up Modius Networks 2000is eager to tackle: the problem of television screen real estate management. In other words, there is no room on the screen to display information boxes without disrupting regular broadcasts.

An example of one of the many problems iswhere to put cable companies' ad banners that are concealing the gun the movie's hero is hiding behind his back, ruining the movie experience. In other words, the viewers enjoyment is negativelyaffected, to an unacceptable extent.

Modius has solutions. It claims it can identify dead space on the broadcast picture and automatically direct the banner to it. An example of dead space is the area above a news anchors shoulder. Pictures and illustrations enhancing a story are already directed to this space.

Modius Networks 2000 was founded by VP Marketing Daniel Saar and CTO Uri Brizon in 2001. Saar says that existing screen management solutions are inadequate. The screen can be split, says Saar, which is quite nice, but not commercially feasible, since no-one buys a big-screen TV to reduce the size of the picture. CNN pushes pictures and text to the corners and the editor moves the logo from side to side. A smarter interface is needed for more important content and video material. There's a need for proper screen space management, since the screen is going to become more crowded.

Brizon says, We've seta precise technological target for ourselves - to divide the video pictures into two areas, the essential and the non-essential, without bothering about all types of other areas. After many experiments and tests, we obtained better-than-expected results. We didn't go in the direction of over-sophisticated artificial intelligence, because of the complexity of the calculations and massive computing power necessary. We want to appeal to the masses who will not pay for major applications in addition to what they already pay for.

A new ad concept

Modius is offering cable companies a server that analyzes all the channels in real time, andextracts the information needed for various applications. Modiuss managers emphasize that they allow application developers to dowhat they want with the air-time, size, etc, of banners. They do not determine the developers options, instead they provide a tool-set that enables the developers to exploit the screens.

Modius had several possible markets, and chose the current hot market of digital television. Brizon thinks the company will enter the emerging Personal Video Recorder market in a couple of years. The Personal Video Recorderis a device placed in the customers home that orders television programs and movies for viewing at leisure,allowing people to go out without suffering the distress of missing a favorite show.

What particularly worries the entertainment and advertising industriesabout this development is that viewers can skip advertisements, costing the broadcasters revenue. A new ad model is consequently needed, and one of them is broadcasting banner adsduring the movie itself.

Another solution is airing ad messages in the context of the show, as FedEx (NYSE: FDX) did in the movie Castaway. Saar says, The experience must be delicate so as to avoid annoying the viewer. We're preparing a sub-service that doesn't need to be touched by people, but isn't too bothersome.

In 2004, Modius plans to launcha second product that will provide a solutionfor the television broadcasters new ad concept. The product will use the same technology, but integrate itwith the broadcasters systems differently.

Development of Modiuss present product will be completed this quarter, and beta testing is scheduled for the second quarter. The transition to other systems willtake place in the second and third quarters. Saar believes new customers will join in almost immediately, if Modius wins a written contract with a large European cable company.

Modius hopes to win customers through one of the worlds leading television equipment suppliers, OpenTV (Nasdaq: OPTV). Modiuss managers claim OpenTV has expressed great interest in the companys technology. OpenTV controls the bulk of the cable television equipment market, followed by Canal+ Technologies, Liberate Technologies (Nasdaq: LBRT) Microsoft TV (Nasdaq: MSFT), and NDS Group plc (Nasdaq: NNDS). Brizon believes Modius will begin cooperating with other giants in the industry next year.

Modius is currently recruiting a new CEO and raising $2.5 million. Saar and Brizon sat in a garage for 18 months before raising $1 million in seed capital in January 2001. Company owners include Matav-Cable Systems Media (Nasdaq: MATV), which will probably run the companys beta test, Genius Internet Technologies (1999), and POC TechnoStart.

Modius is modest about hiring, and has opted to work with outside consultantson its technology,allowing it to employ fewer than ten workers.

Name: Modius Networks 2000

Founded: 2001

Founders: Daniel Saar and Uri Brizon

Product: Technology for broadcasting banners for interactive television.

Financing rounds: $1 million at $3 million company value, after money.

Ownership: Matav Cable Systems, POC Technostart.

Employees: 10.


Published by Israel's Business Arena on 15 January 2002

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