Why Blab Is Dying

Firstly, let me start by saying I absolutely dig what Blab has achieved to date: They took off-the-shelf products and technologies, and rolled them into a realtime streaming video social network that at it’s peak, was one of THE hottest marketing SaaS products of 2015.

Hotness though, doesn’t always equate into longevity or even profitability, and sadly, I see at the the time of writing this article (April, 2016), Blab dying on the vine.

Remember Ello, for example?

Nor does anyone else: Blab is heading down the same direction – especially as Facebook has released it’s Facebook Live video streaming for groups feature.

Some background on Blab and Live Streaming

Video live streaming apps are everywhere now: You have Periscope, UStream (shudder) and of course, Blab. In the face of parent company Twitter giving an unlimited budget for R&D and marketing for Periscope, Meerkat sadly called it a day and have since pivoted.

Meerkat realised this simple fact:

It costs a LOT of money to run a live streaming social service like Blab.

A heeaaaaap of dough cash moneys.

Let me deep dive into what I mean, as I want to highlight the fundamental flaw in Blab’s business plan – for no reason other than make you the Reader, aware of investing into a platform – where at any stage in the future, your time and energy investment can (and I believe WILL) be scuttled when the platform experiences the cold light of day and has to be profitable.

Stick with me on this – I won’t be too technical as I know people’s eyes glaze over.

At the heart of Blab, lies an off-the-shelf product called TokBox. It’s an incredibly cool piece of video streaming technology that gives Blab it’s realtime video we all watch and interact with. Tok is based around the open webRTC protocol, which allows this video to be distributed in near real time AND by unlimited viewers. Traditional webRTC products out there, such as Appear.in allow for a closed room of a certain amount of video participants, but crucially – these free webRTC products do NOT send that video out to thousands (or even millions) of viewers: That one feature is pretty unique to TokBox and gives it the market edge.

This real time multicasting of 4 people on the screen, out to millions of people, live, is the core technology on what Blab was built on.

And it works brilliantly!

The Problem With Scaling

So now, after some quick tech stuff, comes the maths stuff – and really, it’s the juicy stuff – the stuff that is the foundation of what this article is about.

Remember earlier I said it costs a LOT of money to run such a service as Blab?

Well, stick with me here as I show you what I mean..

Now Tok charges by the viewable minute or the viewable hour. This is their business model, and it works for them to help app builders monetize their products where live video streaming is required. If I was an app builder, and I knew I needed to use video streaming across multiple devices with the maximum amount of features – it’s a no-brainer to use TokBox. End of.

HOWEVER, Tok’s billing was never designed for the social networking model. It’s billing method of per viewable hour, was designed for a limited amount of users in a limited amount of streaming settings, so you’d never be consuming thousands of hours.

That of course, all changes when you have thousands of people watching a Blab of a popular (infamous?) broadcaster like Martin Shkreli. Yup, the “Pharma Bro” who brought the rights to a medication and promptly bumped the price up to over 5000x it’s original price, because, you know, that was a great thing to do..

So back to the maths:

Tok from it’s pricing public page on it’s site, charges USD 0.004c per minute of broadcast.

If you want to record your Blab, as everyone does, then Tok handles that part at USD 0.04c per minute too.

Martin Shkreli has 2000 viewers on his Blab

And he broadcasts AND records for his usual 3 hours

Ready to have your jaw on the floor?

2001 (Martin and his 2000 viewers) X 0.04c (per minute recording cost) x 180 minutes (his 3 hour blab) = USD 1,447.02 for the three hours.

Let’s say he DIDN’T record, so it was X 0.004c per minute – that’s still USD 1,440.72 for those 3 hours (hey, keep the 7 bucks change)

“But only Martin Shkreli is broadcasting out – we’re all watching, Nathan!”. I know that, but Tok bills out per viewable hour, which means they bill for the VIEWER number watching. I know this, as have built apps using TokBox before, and I produce software for marketing.

Now, pick your jaw up off the floor, and tell me if you can see how Blab has a monetisation strategy based around either of those figures? To run an ad platform to inject ads like Facebook or Twitter, you need something called a network effect. It’s also widely-accepted in tech startup circles, that a startup need to get their first 100 MILLION Users before the network effect can be monetized using ads.

Let’s do the maths again, and this time use a conservative estimation of just 1 THOUSAND Users broadcasting out to just 50 Viewers each for an hour (I know I said 100 MILLION before, but this is to prove a point that Blab doesn’t scale out on any known business plan)

1000 broadcasters (recording) X 0.04c X 50 = $14,340 for the hour (recording), and $12,240 (not recording)

Let’s do everybody’s favourite 10X Guy Grant Cardone’s favourite 10X method and run the figures on the above:

10,000 broadcasters still broadcasting to only 50 people each = $143,400 (recording) and $122,400 (not recording)

Remember, these are figures based for the HOUR.

And what happens if those 10,000 broadcasters have just 100 people watch them for the hour then? Well, I think this final calculation will drive home the point that Blab has no way way to monetize on larger audiences!

10,000 broadcasters recording their hour-long Blab to just 100 viewers each = $263,400 FOR THE HOUR. 

Quarter of a MILLION bucks for a free service for just a single solitary hour of broadcast. With no ads or revenue or monetization strategy in immediate sight. Welp.

And this is also without the hosting, salaries of their developers and other fixed costs associated with a leading-edge startup (I will give them the fact that I have not applied any possible discounts Blab may have negotiated with Tok – but even then, and at a ludicrous 75% discount applied to the last figure, you’re still looking at Blab’s costs of being $65,850 for the HOUR!)

Double AND triple welp.

What Happens Next To Blab?

Blab have publicly stated that they don’t need to make a single cent of profit for 24 months: They’re VC-funded and to my knowledge and to date, have done ZERO marketing via pay per click (PPC). Kudos to them – the initial word of mouth effect is strong in marketing circles, and Blab has done a great job at attracting early adopters (I was one of them)

I do see though, that most of these early business adopters have either massively reduced their Blab participation, OR they have abandoned the platform altogether. What’s left, is a mix of end users who are happy to consume but not generate the video content, and a few content creators broadcasting about mainly consumer-orientated topics, to smaller audiences. Tellingly, no younger users appear to be using Blab either. Snapchat Chat 2.0 has recently been released, and adoption of Snapchat by B2B and B2C seems anecdotally WAY higher than the uptake of both the younger users and the business user demographics.

There is simply too much noise to signal, and Blab haven’t provided any basic marketing tools to date, that a B2B or B2C User could easily use in order to justify their time building their audience on Blab over (say) Periscope; Where Periscope at least has the network effect I spoke about earlier, because it’s owned by Twitter and has the ability to inject live video streams into Twitter Users’ Twitter Newsfeeds.

Enter Facebook Live, too. The 900lb gorilla in the room now has the ability to tap it’s 1.4 billion users, and provide all the marketing tools a small business would need, in order to gain an audience. Further; Facebook will undoubtedly connect the audience viewers’ data into a Custom Audience for the savvy marketer to then retarget ads to.

Blab remains aloof – and certainly appears unambitious – in the quest to provide SME’s with any tools for the business market: A sure sign the platform is destined to be ignored by those who want an audience AND monetize it.

So what happens next?

I see only a few paths this scenario could play out:

Path 1

Blab build their own live video streaming “engine” and invest hundreds of millions of dollars into creating their own video content delivery network (vCDN) and license that out

Path 2

Blab pivots like Meerkat had to.

I was thinking maybe a TV Network would be attracted to buy Blab, but the network effect just isn’t there from the limited data we have on Blab’s Monthly Active Users (MAUs) – rumoured to be still less than 100,000 in over 12 months of Blab’s initial release. Blab’s appeal is further eroded by Facebook’s sheer numbers that are more attractive to marketers looking to tap this network effect for the best ROI on their efforts.

So there it is. No emotion or hyperbole: Just the facts laid bare for you the business owner to make your own choice on investing your time, energy and marketing budget into a platform that structurally, is broken. If it was a choice between Blab or Facebook ads, I’d be suggesting the Facebook Ad route as any sane Marketing Consultant would, as the ROI is proven and certainly 1.4 BILLION users compared with Blab’s limited user count, is obviously the winner for my ad dollars choice. Certainly the Facebook Live functionality – where Facebook Groups can now be leveraged – is already looking to eat the lunch of Periscope: Further eroding any reason for a business to invest time or energy into Blab as a result.

Look: I hope Blab make it, I really do.

But I won’t hold my breath. I’m not the brightest guy in the room, but I’m struggling to see how with just less than 100,000 users (and most of those are not ACTIVE users), Blab can get even their first 1 million users at the trajectory they have maintained to date – and with each passing minute, Facebook Live’s network effect grows stronger.

Feel free to comment on this as hopefully Blab and their VC will read this and do something great.

Thanks for reading.