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A start-up that's Wal-Mart's secret weapon in streaming war

Wal-Mart's secret start-up weapon in streaming content war
Wal-Mart's secret start-up weapon in streaming content war

Imagine partnering with one of the biggest movie studios in Los Angeles and the world's largest retailer for your first deal ever. Sounds like a Hollywood story come to life, right?

Adam Johnson, founder and CEO of Los Angeles-based start-up Toggle, is living that reality. The company manufactures streaming-enabled devices, called dongles, for retailers to deliver content.

The idea was born out of Warner Bros. Media Camp, an accelerator program aimed at helping media entrepreneurs launch new ventures.

Their first product, called the VUDU Spark, is made exclusively for Wal-Mart Stores. A tiny video stick that plugs into a high-definition TV, it allows consumers to access VUDU—Wal-Mart's video-on-demand service—so they can browse, rent or buy more than 100,000 movie and television shows.

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"What makes us different is that we're not a business-to-consumer company; we're a business-to-business company," he said. "We offer the custom devices to big companies that already have the distribution deals, so it's a unique tool for them to allow their customers access to services that may otherwise not be available."

The VUDU Spark stick costs $25. They've sold 100,000 so far in 2015. Wal-Mart hopes the Spark will convert its DVD customers into VUDU subscribers.

Adam Johnson, founder and CEO of Toggle, displaying the VUDU Spark
Brad Quick | CNBC

Johnson launched Toggle in August 2013 after working as a consultant for another company that was participating in Media Camp. He moved his team out from Chicago, where he was previously located, and Toggle participated in Media Camp in 2014. Warner Bros. led the seed investment round for Toggle, but the company won't say how much it's invested. They've raised just under $1 million in total so far. The company has manufacturing facilities in South Korea, China and Vietnam.

"We moved the entire team out here so we could experience and go through the process of learning all that's going on in the movie industry," Johnson said of relocating to the house they operate out of in the Hollywood Hills. "We couldn't take advantage of this opportunity in Chicago."

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The company's biggest competitors would be Chromecast, Roku or Amazon Fire Stick, all of which are "competing for the HDMI ports on your television," he said. But since the product is made for retailers with distribution deals, the content is already there on Toggle devices, Johnson explained.

"We're very simple, so instead of having to ask yourself which service is featuring the movie you want tonight, whether it's Netflix, Hulu or YouTube, we make available those releases in one place," he said.

Johnson claims they have three deals in the works this year, which they can't yet reveal full details on. However, he did say that one will feature innovative gaming, music and television content.

And as the streaming wars heat up, as a business-to-business platform, Toggle will no doubt be well positioned to compete.

"We're a different solution. And because we partner with retailers, we can be featured really prominently in stores," Johnson said.

Join America's most influential entrepreneurs, such as Bob Parsons, founder of GoDaddy; and CNBC's The Profit Marcus Lemonis, in person at iCONIC in LA on June 23.