At the end of November, Theta Labs announced the Theta Network – a new decentralized video infrastructure for the web that has the potential to shake the streaming video industry to its core.
The Theta Network is a live video compatible, torrent style peer-to-peer network with a twist: content sharers can earn tokens, which can then be exchanged for cash.
During our interview, Theta Labs CEO Mitch Liu revealed that Theta-powered content creators of the future will be able to distribute their content around the world without having to go through any big name platforms like YouTube or Netflix. Theta’s technology essentially allows content creators to set up their own YouTube style video services with their own rules and advertiser relationships.
Since the Theta personalities of the future (Thetans? Thetateers?) won’t have to pay a “middle man,” they could reel in even more dough – and operate much more freely – than today’s big name YouTubers. Instead of telling their viewers to “smash the subscribe button,” YouTubers might soon start begging their followers to go download their Theta Network DApp (decentralized app, or applications that are built on top of Theta’s infrastructure).
Other types of content creators could also benefit from Theta. Liu says that even comic book makers can create their own independent DApps. Indie film studios, video game developers, comedians and others could do the same. The network is free and open source, so anyone who wants to jump into it, can. Liu describes Theta as a “turnkey” way to build a democratized content distribution service.
“Let’s say for example that you have a bunch of guys that want to sell the next generation of comic book content. They can do it right off of Theta DApps. Its open source code and apps will be shared on our public GitHub account.”
In addition to empowering independent creators to distribute their own content, Theta’s distributed network – which draws power from ordinary home computers – will provide video delivery to any streaming service willing to adopt the technology, all for free. Once streaming services team up, they can begin to reduce their reliance on Akamai and other expensive CDNs (Content Delivery Networks).
Today’s internet video services are expensive and slow down when too many people try to connect to them, but the distributed power of Theta Network will eliminate the bottleneck by harnessing an untapped resource: the millions of internet-connected PCs and laptops that are currently sitting idle on the web. Rather than connecting to a server from a CDN such as Akamai, Theta Labs will pay users to share video streams with users around the world. This means potentially faster streaming speeds for bandwidth intensive 4K and VR content. Whatever CPU power and bandwidth you aren’t using, you can contribute to Theta Network in exchange for Theta tokens – a cryptocurrency that’s similar to bitcoin.
Additionally, Theta Network will let you earn extra dough for watching commercials.. Just as today’s mobile games allow you to earn in-game rewards, you’ll be able to earn extra Theta tokens and make money just for watching and/or interacting with ads. This will make it easier for content creators to thrive without annoying their fan bases with ads or begging them for donations.
The end result of all these innovative features: more and better internet video content for all and commercials you’ll have an incentive to sit through.
Big money investors have recently taken notice of what Theta Network is up to – and they want in. Institutional investors like Danhua Capital, Sierra Ventures, Heuristic Capital, ZP Capital, Sparkland, renowned crypto expert Roger Lim and others have helped make Theta Network’s recent token presale a huge success. In just a few short weeks, the company has already pre-sold $12 million in tokens.
In addition to Theta Labs, CEO Mitch Liu is a co-founder of the very first 3D live streaming platform for watching esports, SLIVER.tv. Along with partner Jieyi Long, they hold two patents and they have two pending patents for 360 degree VR video streaming technologies. Additionally, the duo pioneered new algorithms for generating highly efficient live spherical video streams.
The new Theta Labs project is shaping up to be Liu’s most groundbreaking endeavor to date. Liu recently discussed the future of the Theta Network with Flixed. Here’s the full interview.
Related: Newly Unveiled Theta Network Will Let Video Viewers Earn Money
Flixed: How will the Theta Network benefit subscribers of YouTube, Netflix and other popular video platforms?
Mitch Liu:So Theta is an open source protocol and blockchain. That means that any partner can build DApps – or decentralized apps – that are on top of the superstructure. So, certainly YouTube and Netflix could be, and we would love for them to be our partners. Whereby they can extend their existing website or mobile app or web app to support the Theta protocol. What that would essentially mean is today they deliver their video stream to their users via their own CDNs (Content Delivery Networks). Their app can then be adapted by – let’s say – they can first try to load the stream through the Theta Network, and if it doesn’t load within 30 milliseconds then it can default back to their existing infrastructure. So from the end user’s perspective, nothing has really changed. It’s all behind the scenes. But if the stream is pulled from Theta, it’s a huge cost savings, right? Theta is essentially for free to all the partners including YouTube and Netflix. And when more content flows through Theta, they’ll save hundreds of millions of dollars.
Flixed: So Theta and streaming services like Netflix will exist alongside each other, right?
Mitch Liu: Yes. Actually to be honest, we’re looking to replace and disrupt the CDNs themselves – the content delivery networks that were around for 15 years or more. The big servers, the hosting datacenters and all that. But YouTube, Netflix and Twitch, they’re all our partners in this ecosystem.
Flixed: How did you hook up with Steve Chen Co-Founder of YouTube and Justin Kan Co-Founder of Twitch and can you expand on how they are helping you? Do they only point out potential problems or do they help in other ways as well?
Mitch Liu: So you know the Silicon Valley area is actually a pretty small community and all three of us belong to a little meetup group, if you will, of entrepreneurs and founders that build various technologies and platforms. The group gets together every month and that adds to that social element. So that’s how we all originally met. We just sat down with them and tried to explain to them what we were working on and they said holy smokes, wow! Back when YouTube was starting, if there was a blockchain-based approach it would be a huge cost savings. Particularly in the early days, like back in 2005, during very early days of video streaming. And even today as content gets to 4K quality, higher definition quality, more data flows through and you already have these issues [lagging] that get worse. Certainly both Justin and Steven understood the pain point. And the opportunity. This is a huge market, with potential disruption. Both of them are pretty busy, they’re working on a bunch of different projects. And we – as soon as our token sale is over – we’ll be developing the underlying technology. It’s a new blockchain, a new protocol, so there’s a lot of low level technology at work. Steve is more technical than Justin. Justin is much more on the marketing and business side. I think they’ll be engaged and they’ll be helping us. Steve more from a technology standpoint, particularly around video and some of the challenges of how you go about taking these puzzles and splice them into a thousand pieces and embed them into video data packets at that level. It’s quite challenging from a technology standpoint. And Justin has great relationships, whereas we’re trying to form partnerships with the Twitches of the world.
Flixed: So going forward it’s likely that we will will see partnerships between Theta and YouTube and Twitch?
Mitch Liu: Yeah, that’s our hope. We haven’t engaged with them yet, so I don’t want to misrepresent that. But after our token sale is done and our technology development has started we’ll reach out and engage with them.
Flixed: What will the Theta Network look like 5 years from now? In 10 years? It seems so much more efficient, especially if large numbers of people join the network. Do you think Theta will replace CDNs like Akamai and Amazon AWS at some point?
Mitch Liu: Yeah, that’s really our vision. It’s really about building on top of the blockchain technology and democratizing video streaming and making it such that end users – each individual user – is in control. That’s really powerful, but it’s more than that. It’s being able to take that PC that you just spent, whatever, two thousand dollars, let’s say, for a high-end PC or a laptop even. And you have unlimited internet bandwidth at the home or office or anywhere. And computers are sitting idle. And so you can do something that is very functional, and earn Theta tokens. You’re mining, right? You’re mining Theta tokens, so that’s giving something back to the end user, to the viewer. And then what they do with those tokens is up to them. Our vision is that the tokens will flow right back into the ecosystem. If you’re watching your favorite streamer, let’s say her name is Fandy – and you like her because she’s so funny, then wouldn’t it be great to be able to gift those [Theta tokens] back to her and she’ll obviously appreciate that, or maybe you can buy her a virtual rose. Or maybe you can take those tokens and – instead of charging $5 to your credit card – you can rent a movie on some paid movie site, or buy a premium service or you can save your tokens. So there are bunch of potential uses. That’s sort of the ecosystem that we’re envisioning over the next 5 years. Building that out so that we become the defacto standard for all things that are video related.
Flixed: Can you explain what a Theta Network DApp is and what it does? Do DApps have to combine with SLIVER.tv, YouTube or some other streaming service? Or can there also be independent DApps that run directly on the Theta Network?
Mitch Liu: DApps can have two forms. One is that there’s an existing service, like a Netflix or a Twitch or a YouTube. Obviously you have millions of users that use their existing website and mobile app and what not. They can certainly update their app to support the Theta protocol and it’s all behind the scenes. That’s the first flavor. The second flavor is where you have a new startup or new company that wants to build a video-based app, they can build the decentralized app right on top of the Theta protocol so that everything is flowing through the Theta infrastructure. It’s sort of a turnkey solution almost and everything flows through the network.
Flixed: So it can work with an existing streaming service, but then developers can also just make an app that runs entirely on the Theta Network.
Mitch Liu: Right, so let’s say for example that you have a bunch of guys that want to sell the next generation of comic book content. They can do it right off of Theta DApps. It’s open source code that we’ll put up on our GitHub which will include templates and the starting elements of a decentralized app and it’ll guide them through those steps. There will still have to be a developer, of course, to write the app itself. But everything beneath it is taken care of. They don’t have to worry about questions like: Where do I host my video? Who do I need to work with? Is it this CDN or that CDN? There are a lot of moving pieces otherwise.
Flixed: So SLIVER.tv already has DApp integration?
Mitch Liu: Right, we just went live with our Theta ERC20-compliant tokens last week.
Flixed: And it’s all running behind the scenes, and everyone can just use SLIVER.tv just as they normally would and start earning Theta tokens?
Mitch Liu: Yeah. If you go to our SLIVER.tv website we have the concept of Theta tokens where it’s a daily reward so if they use our site for three days straight, seven days they earn some Theta tokens and they can turn around and gift that to their favorite streamers. So that functionality is already live and we’ve already had a couple hundred transactions in the last day or two. It’s all in the blockchain, it’s all recorded, it’s all public.
Flixed: Do you know of any other DApps that are currently in development?
Mitch Liu: I can’t disclose specific sites just yet, but we are beginning to work with partner sites that will be looking at implementing the Theta token over the next several months.
Flixed: We’re looking forward to seeing how that will develop. Do you think VR will change the way we watch movies dramatically in the same way that sound made silent films obsolete, or will VR have less of an impact? How do you think movies and VR will intersect?
Mitch Liu: VR is just another form factor. That’s how we think about it. A 360 video requires 10 to 20 times more bandwidth because it’s a 360 MP4 format. I think it all depends on the adoption of the hardware, the VR headset. 2018 will be a pretty important year for VR and AR. My personal view is that 2020 is going to be that critical year, the inflection point. You see many of the L.A. and Hollywood-based powerhouses are beginning to experiment or in many cases go beyond experimentation where they are actually releasing some of their shorts or free previews in a 360 degree format. It’s a whole next level engagement. I do think that the hardware has a way to go. It is a little uncomfortable. I think that will be solved. Those are simpler problems that will get ironed out over the next year or two.
Flixed: Will DApps be compatible with streaming devices like Amazon Fire TV, Roku, Nvidia Shield, etc?
Mitch Liu: That’s a terrific question. All of those devices are OTT and they’re consumer facing. To us, we view them as no different than a website, no different than a mobile device. It’s another way of consuming the video stream. Theta decentralized apps can in fact run on a Fire TV or on Apple TV or on Roku or whatnot. To us it really doesn’t make any difference. It’s the underlying backbone, where the video gets pulled from. We’d like Theta to be the backbone. Ultimately, the Rokus and the Amazons and the Nvidias could become our partners as well. If you think about how a lot of them are moving towards original content, that lends itself well to our application. It’s just extending their devices to support the Theta backend.
Theta Mining: How Does It Work?
Flixed: Can you give our readers a quick explanation of how Theta Network users can make money while watching video streams?
Mitch Liu: The easiest example is using a PC. If you have a PC and you’re watching your favorite stream – it could be a Twitch gaming stream or a YouTube live stream – and while you watch that there’s a little client app that runs on your PC or in the browser itself. And it’s completely known to you as the end user, so it’s not related to a lot of the other stuff that you read about where things are happening behind the scenes without you knowing it. So the end user understands that they are in fact running Theta so that they can help cache and relay video streams to other users nearby, to other nodes in the network. So they earn Theta tokens, they mine Theta tokens. Or you just leave your PC on overnight and it recognizes that your CPU and GPU are bandwidth are completely unutilized and then knowing you’re away from the computer, it will essentially push your processing unit to 90 percent, 100 percent and maximize the usage and mining potential. And you will wake up the next morning and you see: this is how much I earned overnight. People will benefit from that. And we want to build that sort of community outreach. By sharing my own bandwidth, my own PC hardware, this many people have benefited from that and I’ve been rewarded with X amount of tokens.
Flixed: So does a computer on Theta share the streams locally, or is it sort of like a torrent network where it doesn’t matter where you are located? Can anyone in the world can participate in the Theta “swarm?”
Mitch Liu: Exactly like that, it’s more of a mesh network. You could be anywhere in the world, although the streams that you’ll be caching and relaying will likely be to others geographically nearby. That’s the hard problem, that “last mile” problem. If you’re the first one to receive that stream and there are friends of yours or random people that are watching the same stream, they benefit from that. Because the stream first hits your node, you can then forward and share it with others.
Flixed: So sharing usually happens in your local area, but you can share streams with other regions as well?
Mitch Liu: Yes, you can. Theoretically it’s actually possible that when you share that stream to the house down the street, it’s actually worse performance than actually taking that stream and routing it thousands of miles away. There are many variables there. Network congestion, bandwidth, backbones. It gets into highly technical stuff and that’s what we’ll be working on.
Flixed: Can you go into more detail about the factors that will affect reputation score on Theta? Will slow internet connections receive a reputation penalty, or is reputation more about weeding out people who abuse or cheat the system in some way?
Mitch Liu: Reputation means that if you’re a good actor, if you’re a node in the network and you are behaving in a very positive way then your score is higher therefore you’re closer to a score of 1. It’s a score between 0 and 1. It’s just a percentage. If you’re 0.9 that means that you have 9 times the chance to mine Theta versus someone who is 0.1. The variables that will link to that are, for example, the quality of streams that you are able to share with others in the network. It’s the amount of bandwidth you have that relates to that as well. How powerful your PC is. If you have a lower end laptop, you won’t be able to share as much compared to a higher end PC. So we take all that into account. The reputation score determines how much you are able to mine, and therefore how many tokens you are able to earn. This is an important factor because if you are familiar with bitcoin and other currencies, there are bitmining centers that set up, mining pools. In some sense, we’d like to democratize Theta where the end users will truly benefit. The reputation element actually discourages this big pool, in some sense. Because they may not necessarily benefit as much from it compared to just an individual with a PC.
Flixed: So if someone sets up a hub of computers just to mine Theta, then they won’t get as high of a score compared to an individual with a powerful PC and good bandwidth?
Mitch Liu: It depends. If they are setting up a hub in a 3rd world country, or in Poland or Russia or some place like that and it’s truly sharing the bit stream, I think they’ll do fine as well. What I’m saying is that throwing together 100 PCs and brute forcing through it, that won’t necessarily get them 100x. They have to behave as a positive node in our network.
Flixed: Can you tell us more about how Theta tokens can be exchanged for US dollars and other currencies? Is the process the same as bitcoin or is it different?
Mitch Liu: We have two flavors of tokens. Right now we’ve launched on the SLIVER side for instance our ERC20-compliant token, which is built on Ethereum. Many new tokens are built on top of that. But there are some issues there, some challenges. For instance, performance. It’s getting very expensive to transact these tokens. That’s why we’re developing a native token which is estimated to launch at the end of 2018. And at that point, they [ERC-20 tokens] will be 1:1 exchanged into the native token.
A New Way Forward for Content Creators
Flixed: You mentioned earlier that new types of startups can quickly and easily pop up and operate on top of Theta. That sounds exciting. Could you elaborate on what some of these new startups might look like?
“It’s taking the concept of a centralized space like Netflix or HBO or a premium content provider and sort of blowing it up into pieces.”
Mitch Liu: I think it’s again really coming down to the same concept of end user empowerment and democratization. Five years from now, hopefully – definitely 10 years from now – where you’ll no longer have this centralized, hierarchical structure of entertainment industry production where you have licensing companies, producers, distribution companies and all those dependencies and intermediaries. This is potentially disruptive to the entire entertainment industry by enabling end users and creators. 10 years ago there was no ability for someone to get on YouTube or Twitch and be so successful and have millions of followers. Here, I think it’s really the next level of it. It’s taking the concept of a centralized space like Netflix or HBO or a premium content provider and sort of blowing it up into pieces. A content creator, no matter how small you are, you can put your content out there and have an audience and in the long run they’ll be able to make even more money because they’ll have less intermediaries. That’s the opportunity.
Flixed: Intermediaries are a stumbling block for advertisers too, right? There’s a problem with visibility there. For example, advertisers can’t tell if they are getting real views on their ads. But with Theta Network, they’ll be able to tell for sure if someone watches the whole video clip and sees the ad.
Mitch Liu: Exactly, yeah. That’s what we describe as proof of engagement. As the video content flows through our decentralized network, we can get cryptographic proof that this content was in fact shown and that certain amount of ads ran. All that info is open to anyone and recorded in the public ledger.
Flixed: Content creators will be able to work directly with advertisers without an intermediary, correct? So they can have more authentic relationships with their sponsors.
“That’s the ultimate vision. Being able to connect the original content creator with the advertiser directly. And then the flow of value is direct. There’s no middle man.”
Mitch Liu: That’s the ultimate vision. Being able to connect the original content creator with the advertiser directly. And then the flow of value is direct. There’s no middle man. Should the advertiser want to share some of those ad dollars with the end viewers as well as the content creator, the Theta protocol allows for that. That’s another element. We feel that although today if you look at Twitch, YouTube, or Facebook they have free streams but you are still forced to watch the ads. To the end viewers, there isn’t a whole lot of value that you gain from that. But what if a certain portion of that video ad budget goes to the viewer? When you watch a video, you could actually earn some tokens for it. How cool would that be? It’s kind of popular already with mobile games. You watch a video and get some coins at the end of it, for Candy Crush or whatever. Same type of concept but bigger scale.
Shifting the Paradigm
Flixed: Now that net neutrality laws have been repealed in the US, internet providers are free to invent all kinds of new internet usage tolls. For example, Comcast may force their customers to pay extra if they choose to stream video from Netflix or Amazon, rather than from NBC or Hulu, which Comcast part-owns. Will internet providers be able to track and charge extra for certain types of DApp / Theta Network usage as well? Or, will blockchain provide DApp users with anonymity, thereby making it impossible for to sort out who is doing what on the web, which will effectively bring back net neutrality?
In the long run, as the network is built out then it becomes much more anonymous, if you will. You don’t necessarily have all the content flowing through centralized platforms but rather through Theta Dapps – the content will be flowing directly into the Theta network. At that point, Comcast can’t distinguish that content source from anything else.
Mitch Liu: Initially Theta will [seek to] partner with Netflix, Amazon and YouTube and so on. So the content will still flow through those services. Technically Comcast can still track that and do whatever they want to do with it. In the long run, as the network is built out then it becomes much more anonymous, if you will. You don’t necessarily have all the content flowing through centralized platforms but rather through Theta Dapps – the content will be flowing directly into the Theta network. At that point, Comcast can’t distinguish that content source from anything else.
Flixed: So it’ll be a bit like a VPN from a privacy standpoint. When someone connects to a VPN, there’s no way for Comcast or others to see what you’re doing or where you’re going on the web.
Mitch Liu: That’s right. Because it is a completely decentralized world at that point. But like I said, that’s going to take time. End users and content creators centralize today. They gravitate toward the YouTubes and the Twitches and all these video platforms for a reason, because they do add value today.
Flixed: Could pirates build illegal DApps and use them to make money from copyrighted content?
Mitch Liu: That’s also a really tricky area. And the answer is yes. Because Theta can’t manage or govern the content that flows through it. It’s simply a pipe, or infrastructure. The network is essentially completely free. That’s part of the reason why we want to partner with these big platforms in the beginning because YouTube and Twitch already have systems in place where they keep track of copyrighted material and content and such. So we are still relying on them to be that front, if you will. But again in the long term that becomes more of an issue, I think. There will be different views on that. It’s decentralization versus control. It’s a fine line. That’s why I think it’s important for us to engage, build and collaborate with the stakeholders and that’ll get fleshed out 3 years into it, 5 years into it.
Flixed: So just to clarify, Theta is not really aiming to compete with other video platforms like YouTube and Netflix. It will actually help them expand and save money?
Mitch Liu: Right. Exactly. We expect to bring the cost of video stream delivery down to zero in the long-run, completely powered by the very community that you serve.
Flixed: It looks like the CDNs are the ones that will have to adapt, that will feel the pressure.
Mitch Liu: Yeah, I think the immediate concern from the industry would be from the content delivery networks. I mean, these are companies like Akamai that make billions of dollars in the industry. The next generation blockchain technology that is potentially concerning for their core business. You know, honestly I think they will adapt as well. We’d like nothing more than to have someone like Akamai work with us. I think they still could provide value in this new world, if you will, where some master nodes could still be there and Theta serves out the “last mile” optimization on their behalf. Potentially complementary.
Go Check It Out Yourself
Theta functionality is already up and running on SLIVER.tv.
When Theta went live last month, SLIVER.tv attracted over 2.7 million visitors from esports fans around the world.
Theta tokens can now be earned by fans of SLIVER.tv and can be used as gifts. Soon, SLIVER.tv users will be able to use Theta tokens to buy virtual goods for their favorite games and other premium services.
Additionally, Tokens can now be utilized by advertisers and brand sponsors to fund ad campaigns and support key content creators.