When the coronavirus pandemic hit, Ben Kusin and Ariel Horn knew they were going to have to change tack.
Kusin and Horn are the co-founders of VENN, a new free-to-view TV network that launches Wednesday with original shows that focus on video games and esports. VENN's output will be broadcast live on streaming platforms including Amazon's Twitch and Google's YouTube, which have become the most popular platforms for video game streaming.
To accommodate workers and content creators in the wake of the coronavirus outbreak, Kusin and Horn realized they would have to scale back operations in some way. For instance, while they had initially planned to open two studios in New York and Los Angeles, the entrepreneurs have now opted to launch in California's largest city first while its New York launch has been delayed.
"In Covid, you've got to keep everyone separate," Kusin told CNBC on a video call from VENN's LA studio. "It's really about best practices … it's going to be, for a while, our responsibility to take best in class measures every step of the way. Our team is the most important thing about what we do."
VENN is hoping to capitalize on the huge swell in demand for gaming and streaming services as consumers have been stuck indoors due to government-enforced lockdowns. According to American market intelligence firm Stream Hatchet, a record 7.6 billion hours of gaming content was watched on streaming platforms in the second quarter of 2020, while such services grew 97.9% from the same period last year.
"TV is in a crisis because of these legacy business models," Kusin said. "We have rethought the television business model."
Horn said VENN was tapping into the $150 billion gaming industry due to how much it resonates with younger audiences — according to the Entertainment Software Association, 65% of American adults play video games while the average age of a gamer is 33. But, he hinted that video games and esports wouldn't be VENN's only source of entertainment.
"We have now learned a lot about gamers as gaming becomes ubiquitous," Horn told CNBC. "We just want to continue to understand what young people want by using gaming as a lens, but not to only talk about gaming."
Analysts say that VENN's launch couldn't be better timed. With people spending more time than ever tuning into game livestreams, "the industry is ripe for this to work," Rod Breslau, an esports and gaming consultant, told CNBC. Although he added it would be "very difficult" for the company to gain traction.
"Games and consumption of games video is booming, so this is not a bad time to launch," Piers Harding-Rolls, research director of games at Ampere Analysis, told CNBC. "In the first place it is about building an audience and community of viewers — without that, there is no advertising revenue opportunity, so taking that step now is not the worst idea."
To take precautions against the virus, VENN has installed plexiglass partitions between work stations and is deep cleaning its LA studio every night, Kusin and Horn told CNBC. They added that all staff are required to wear masks, while VENN's performers will have to don face coverings as well as visors until they're on set. Performers will also have "talent bubble" rooms where they can get ready.
LA has the highest number of Covid-19 cases by county, according to data compiled by Johns Hopkins University data, with 193,877 confirmed cases in the region. It also has the fourth-highest death toll, with 4,702 deaths. Worldwide, the U.S. has recorded the highest number of cases (4.77 million) and related deaths (156,839).
It's a tough backdrop for a fresh media brand to launch against, as the $1.8 billion short-form video streaming app Quibi swiftly discovered when it rolled out earlier this year. However, VENN's founders are confident their offering will be successful, adding their model of launching a Cheddar-like TV network to broadcast on multiple platforms rather than on a single app is in "diametric opposition" to Quibi.
"As it turns out, what we're finding in the market right now is that many brands and strategic partners want to create meaningful connections for the Gen Z millennial demographic," said Kusin. "There's not a lot of opportunity to buy that in the form of television at the moment. We are busier now than we ever were before in the business at striking deals."
Kusin and Horn are veterans of the media and gaming industries. Kusin was formerly an executive at Vivendi Universal Games — which in 2007 merged with Activision to create what is now Activision Blizzard — while Horn has been credited with building out esports production at Tencent's Riot Games, known for its popular "League of Legends" game. Before that, he worked on NBC Universal's sports output.
The pair have caught the eyes of investors with deep pockets, who last year poured $17 million of seed funding into the company. VENN's backers include some of the gaming industry's biggest pioneers, including Riot Games co-founder Marc Merrill and Blizzard Entertainment co-founder Mike Morhaime.
Kusin and Horn declined to comment on whether they would need further financing to fuel the launch of VENN amid Covid-19.
Still, analysts said there will be challenges ahead as the company aims to expand its network to one that offers 24/7 live coverage, as it will have to convince more big-name streamers to join. It will also face some competition as G4, a former gaming-focused TV network, announced plans for a comeback.
"It is still going to be very difficult for VENN and G4 at this rate to capture the audience they need to run a 24/7 network livestream," Breslau said. "You have all of the fandom, all of the viewership tied directly to individual streamers."
The start-up is banking on a slate of original live programming with talent including the likes of former adult performer Sasha Grey and rapper Dumbfounded, whose real name is Jonathan Park. Grey and Park will host their own talk show called "Grey Area," while VENN will also broadcast a variety of other gaming and pop culture-related shows.
Its co-founders claim to have secured the "biggest and best talent," with more guests in the pipeline that have not yet been publicly disclosed. They pointed out that major rappers such as Post Malone and Logic are big gaming enthusiasts. In fact, Logic — whose real name is Sir Robert Bryson Hall II — recently announced his retirement from music to sign exclusively to Twitch.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC.