BIG NEWS: End of “Disney v VidAngel” Lawsuit

Legal Battle, New Releases, VidAngel Studios

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Friends of VidAngel,

 

We emerged from bankruptcy today after settling a 4+ year lawsuit with Disney and Warner Bros. 

While we are thrilled for what’s ahead, we need a moment to unplug, recharge, and take care of some important updates behind the scenes (so Netflix and Amazon content will be offline for a bit but will be returning hour by hour for the new few days).

 

The past four years have felt like a marathon, and a water break is long overdue. We will be back soon ready to hit the ground running.

No need to fret though. All of our original content is still accessible, you can check out some of our new up-and-coming projects, and potentially partner with the creators of said projects. We have learned a lot over the years, and have grown in more ways than one. We would love your feedback!

BACKGROUND

Thank you for supporting a few Idaho brothers as we’ve pursued a shared dream over the past seven years. You are part of a story that matters.

 

Shortly after the founding of America, John Quincy Adams truthfully quipped, “Whoever tells the best story wins.”

 

In the early 1900s, a small group of filmmakers, frustrated at the oppressive restrictions imposed by the then movie cartel, fled West and started making movies in Hollywood, California. They were sued and pushed out of the mainstream movie business.

 

The creators voted with their feet and left New Jersey for California.

 

They then made a hundred years of movies that helped the world navigate the great depression, two world wars, the civil rights movement, and more. Hollywood not only captured our hearts and imaginations, it shaped how we saw ourselves and what we consider right and wrong. It has become the #1 export of the world’s largest economy. We are grateful for much of what those pioneers created.

 

Most people don’t even know the movie business ever resided in New Jersey because Hollywood won in telling the best story. They locked down production, distribution, and copyright so you had to come through their door to reach the audience. But the best story to the Hollywood elite and best story to normal people, in their homes, slowly drifted apart. 

 

One hundred years later, a family of Idaho farm boys protested what Hollywood has become by making a video about the decline of values in content published by Hollywood and launching a new service, VidAngel. 

 

 

 

Those like us thought to solve the problem with a bandaid: skipping the offensive Hollywood bits in our homes. As a community, we used CleanFlicks and a dozen other companies who were sued out of existence. 

 

We brothers started VidAngel to solve the problem for streaming, believing we could attract an audience who wanted better stories for their homes. We tried every way we could conceive to pay Hollywood: Chromecast, YouTube, Google Play, DVDs, Streaming, and DVR. 

 

We were shut down, pulled, rejected, sued, treated like pirates, and even opposed in bankruptcy. What was our crime in trying to figure out how to pay Hollywood while giving the individual homes the ability to skip stuff they found offensive?

 

When we lost the lawsuit in Los Angeles, we even tried to pay off the entire judgment with interest. “Not so fast,” said the studios. They didn’t want to be paid. They wanted control. 

 

The studios know, like Adams, that: “Whoever tells the best story wins.” And they want complete control of how their story is told. 

 

Faced with continuing the legal battle to the supreme court or settling with the studios, we recently held a vote with the 8,000 homes who invested in VidAngel, and in a landslide we investors decided it’s time to tell a better story. 

 

We are done trying to make money for studios who abhor that we’re doing it. Those who mock us for doing it. Those who sue us for doing it. Talk about a lose-lose proposition.

 

Instead, we, meaning you and I, are going to tell the best story. And as we do, we win.

 

Case in point, since the launch of The Chosen last November, season 1 has over 8 million app downloads in more than 180 countries and 50 languages. With 55 million views and counting, it’s a phenomenal success and by season seven, we believe we’ll reach over a billion people with its message. 

 

 

For its audience (19,000 of whom funded season one), The Chosen is the best story. There are many more best stories to be told for countless communities who are underserved by the Hollywood elite.

 

We believe these principles, which we’ve followed to make The Chosen, will continue to produce the best stories for their audiences over time:

 

  1. Audiences choose the best story. The crowd will pick winners more often than the elites in Hollywood. The audience is far more important than the executive producer. If the crowd funds the story, it should be made.
  2. You should interact with the creators. When the creators have a direct connection with the audience, they will tell the best stories for their audience.
  3. Feedback loops > Rules based systems. MPAA ratings and Disney mandated standards are yesterday’s system of accountability. Data from skips (applied by individual homes) give the creators the information they need to make the best stories.  

 

We know, like Adams, that “Whoever tells the best story wins.”

 

A little imagination went a long way for Roy and Walt’s little company, Disney Brothers (later Disney). How far can it go for over 8,000 homes backing a few farm boys from Idaho and the creators of the future? 

Be part of a story that matters:

 

  1. Back stories you want made by investing.
  2. Support creators you want to see more from by paying it forward.

 

And may the best stories win!

 

Sincerely,

Neal and Jeffrey Harmon

VidAngel Co-founders

 

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Full Roku App is Back! (BETA)

Legal Battle, Platform Support, Technology

To our loyal VidAngel customers,

 

I am coming to the end of my 7th year working on the engineering side of VidAngel, and to say it’s been a difficult road would be putting it mildly. But I don’t need to tell that to  any of you. I know from the hundreds of films and television episodes I’ve watched with my family that the technical experience of finding and viewing content on VidAngel always seems to trend somewhere between glitchy and impossible.

We are on the 6th iteration of trying to make families and the studios happy! We want to focus less on litigation and more on our customers.

Even with the herculean efforts of our technical teams, we realize that over the past few months things have changed for the worse, and it’s because we’ve failed on a couple fundamental tasks:

 

1)    We lost our focus on the transparency you need in order to trust us, and

2)    We have given your feedback about the direction our products are going far less weight than  we should have. 

 

So, as we try to right the ship as an engineering company, I thought it would be helpful to first give a bit of background. We often get questions asking how our technology works, and while every detail is publicly available, it isn’t an easy follow. So let’s change that.

 

For example, in order to watch a Netflix or Amazon title on VidAngel, we have to verify you have the rights, through one of those services, to view it. And in order to verify those rights, our systems need to “talk” with the systems from Amazon or Netflix. This works just like a web browser … in fact, it is a web browser. When you hit the “play” button in VidAngel, we create a web browser in the cloud that uses your specific Netflix or Amazon account to navigate to that title. From there we verify that your subscription is still active,  you’ve paid your rental/purchase fee, you’re in the right geographic location, or any other requirement that might be in place for you to legally be able to watch Amazon and Netflix content (and thus filter it).

 

Neither Amazon or Netflix is in the filtering business, and they have a vested interest in building their apps in ways that work for their goals, needs, and customers, without regard for what effects changes might have on a system like I described above. Changes to their websites may have adverse effects on how VidAngel’s systems communicate with those of Netflix or Amazon.

 

This would not be an issue if we did not always ask Amazon and Netflix if you have access to watch the content. We have taken enormous and continual care to prevent people from watching any title with VidAngel filters when these verifications aren’t rock solid. We know that, if we want the media industry to believe we are fighting for the individual and family right to watch however works best for them, we need to respect the decisions they make about their products and content as well. And this is one of the major reasons why the VidAngel playback experience is often so up-and-down. 

 

This brings us to the middle of March, just several months ago when we were at the onset of the COVID-19 pandemic. At some point early in that month, Amazon Prime Video deployed a change to their systems that fundamentally altered our ability to verify our customers’ rights to legally watch and filter a title from Amazon’s services. This in no way means that we had been doing anything improper or untoward, or even that we’d been using our cloud browsers to navigate their site incorrectly.It was just a change they needed to make, and we were faced with a choice. We could turn off our Amazon filtering services until we had adjusted them to work with their changes (given that choosing to operate and serve Amazon content without verifying every single user ownership was never an option we would consider), or we could accelerate the rollout of a new product we’d been working on, one that communicated with Amazon and Netflix’s apps through your mobile phone rather than through a browser in the cloud.

 

Out of expediency, we chose the latter option. We had been working on the prototypes for several months already, and we wanted to get it into the hands of our customers as quickly as possible. Our new app is different in many ways, but one of the most crucial differences is that, by using your phone and your home wifi network, we can communicate even more clearly with Netflix and Amazon as to who is requesting to watch and filter a given title. It also opens the door for a wide range of your most requested  features to be developed, like community-based filters, closed caption and multilingual filtering, profile-based “allow/block” lists, and offline, “DVR-like” viewing/filtering. 

 

And this is how we found ourselves, VidAngelists, in a situation where we were offering a beta mobile app, a web app that only worked with Netflix, and some broken television apps that my 6-year-old daughter whined about whenever she discovered, every morning, that she could no longer watch Shrek on her “Rokuangel” (as I force her to call it).

 

We are committed to keeping you as informed as we can about our company’s direction. We also need your feedback to help guide that direction, which leads me to address a second question in my final few paragraphs: how can we at VidAngel take our fingers out of our ears and better listen to our customers?

 

Our television casting feature, a core feature of our new mobile apps, is something I’m very passionate about. Casting was what brought me to VidAngel, and after 6 and a half years, when we rolled out our new casting technology that can  talk to any family’s devices, I remember saying to myself, “This is incredible. Why would anyone ever want to install an app on their Roku or Apple TV again? You can do it all from your phone!” Yet now, with hindsight that’s 20/20, I realize I wasn’t really seeing the forest for the trees. Many of you don’t want to use the phone as your remote. Whether it’s because you’re like me and have younger kids who want to start their own shows, or you have teenagers who you can’t trust to set their filters properly, or you just want to relax on the couch, distraction free while your phone is in the other room, we hear your complaints. Thank you for your feedback over the past few months and telling us how important your specific VidAngel viewing experience is.

 

With that said, we’ve made a monumental push over the past few weeks and are now able to release two significant new(ish) products:

 

1)    An updated, still-a-work-in-progress-but-getting-there, version of the VidAngel Roku app that can work with your mobile device. This way you can, after a one-time sync between the two devices, browse, search, and watch on Roku the way you’ve always done in the past, with full access sans your mobile phone, you can find out more details at https://www.vidangel.com/roku and 

2)  A new chrome extension that will restore full access to enable your computer to connect to streaming services (no mobile syncing required!) and watch right in a browser.

 

Additionally, we are already hard at work to bring the same new features to the AppleTVs, FireTVs, and Android TVs out there.

 

Your patience is much appreciated, but even more so we appreciate your trust. We want to continue to make entertainment good for your home, and we can only do that once we’ve proven we deserve a place in  your home in the first place. 

 

Jarom McDonald

VP of Research and Innovation

VidAngel

Letter to Shareholders

Filtering, Legal Battle, Platform Support, Press, tagging, Technology, VidAngel Studios

May 5, 2020

 

Friends of VidAngel,

VidAngel exists to help you make entertainment good for your home. 

What is good for each of our homes is a personal choice. We’ve long known the motto “Be our guest.” At VidAngel, we believe “We’re your guest.” 

After all, it’s your home.

You choose how to watch. In 2013, we started developing software that was essentially a pre-programmed streaming remote. We have now gone through 6 successive attempts to build your skipping software. In each iteration, we hit a wall. We were sued over iteration number four, struggled through bankruptcy, and today Disney continues to oppose iteration number 6. We’re continuing to push through that for you, and in the meantime, we’re providing access to arguably the most exciting content of the COVID-19 era, produced by Netflix, Amazon and other streaming services. Watch however the BLEEP you want.

You choose what we make. In 2017, armed with the data around the skip choices families are making, we launched Dry Bar Comedy. Over 300 comedians have now performed, fine-tuning their sets to the audience and receiving  bonuses for better serving you. Additionally, with the help of 19,000 of you, we funded, produced, and distributed the award-winning dramatic series The Chosen. 

And you have responded. In April 2020, our business generated 5X the revenue of our skipping software pre-injunction. Dry Bar has over 2 billion views. The Chosen is offered globally, in dozens of languages, has tens of millions of views, and millions of dollars in revenue via its own app. It has been the #1 series on VidAngel for months. 

We hear you. 

Five. Times. Revenue.

 

So what’s next?

After emerging from bankruptcy (we hope during the June 18, 2020 confirmation hearing), we plan to raise up to $50 million to grow VidAngel. 

Our goal with these funds will be:

  1. Give our loyal investors, without whom we would not exist today, a chance to liquidate some of their shares (some people may need cash due to COVID-19 and won’t be able to wait for a potentially larger return). 
  2. Back many more creator projects, like The Chosen and Dry Bar Comedy, by building creator tools for:
    • – daily financial reporting and monthly payments (currently quarterly)
    • – better audience interaction (e.g. live streams, merchandise, uploads, notifications)
    • – creator cross-promotion (i.e. a simple way for The Chosen and Dry Bar to promote new creators’ projects with their massive audiences)
  3. Build better control over more content, allowing you, for example, to:
    • – find the very best content to watch or the best future content to back (rather than the primary focus being on skipping objectionable content)
    • – say exactly what kids are allowed to browse (specific list of approved titles with pre-set skips)
    • – watch with skips without having to wait for us to tag it (say hello to SkipBot and community made skips)

Thank you for trusting VidAngel as a guest in your home. We aim to build an entertainment company that centers around your kingdom, not ours. The best days are yet ahead.

 

Onward,

Neal Harmon

Co-founder and CEO

 

Click here for VidAngel’s SEC Reports

An important call for hope. Please send your stories.

Parents, VidAngel Studios

Hello friends,

I’ve been feeling like I should share a little book that our family made to remember digging out of the 2008 market crash. As I thought this week about the tough times we’re in, and what potentially lies ahead, I recorded a quick video I would love you to check out.

I also invite you to share your own story with others to help others get through the difficult times.

If you have a story that would be a fit for our #NeverFailed series, please make a quick video and submit it here. The proceeds raised from your submission can be donated to the charity of your choice.

Thank you so much for your support.

Sincerely,

Neal Harmon
Co-Founder and CEO

No Joke: Two Exciting Announcements

Parents, Press, VidAngel Studios

Hi VidAngel Fans,

We know these past few weeks haven’t been easy. People all over the world are struggling under the weight of health concerns, changing work situations, helping their children with their education, and trying to find peace in this challenging time.

We want to help how we can, so I have two announcements I’m really excited about:

First, I’m happy to announce that VidAngel will continue to be free for the entire month of April. No credit card required, all we ask is that you agree to practice social distancing (and to give bigger hugs when all this is over).

Second, we’ve just launched a brand new show I think you’re going to love. The Riot and the Dance: Water is an absolutely gorgeous nature documentary that shows the beautiful and miraculous aspects of aquatic wildlife from a faith perspective. When I watched this show with my family, it had all of us in awe, from my seventeen-year-old down to my two-year-old.

We hope you’ll enjoy this free month of filtering with VidAngel. If you are in need of a laugh, I highly recommend our Dry Bar Comedy specials. If you could use a spiritual boost, I hope you’ll consider our fantastic original series, The Chosen. If you could use something educational for your kids while school is out, we think you’ll really enjoy Chasing American Legends and Beyond the Stars.

If you could use a little of all these things, you will love The Riot and the Dance: Water.

Thank you for enjoying VidAngel in your homes.

 

Sincerely,

Neal Harmon

Co-Founder & CEO

 

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#GenerosityChallenge Increases Our Growth Rate by 50x

Parents, Press

While the government debates over how to solve the medical and economic implications of what’s currently happening to our country, we at VidAngel instituted a company-wide work from home program last week, and Monday morning we invited our customers to help.

 

In exchange for an agreement to practice social distancing (and give bigger hugs when this is all over), we are providing access to our entire offering for free, without a credit card. It was the least we could do to help families out. 

 

It makes me uncomfortable to share these numbers, and I don’t want it to come across as bragging or taking advantage of this situation, but I am sharing these hoping other entrepreneurs are inspired to speed to a solution faster. Here’s the initial two day numbers:

 

 

Obviously, we’re just a few companies. Our impact today is small, but the percentage response rate is HUGE. And those who are doing this realize now that this is a mutually beneficial proposition. We’re helping people out and they’re helping us grow. That’s the way American entrepreneurship should work.

 

People are anxious. People are scared. The economy is tanking before our eyes. 

 

Social distancing is a scary prospect when people are worried about their jobs. Aside from health, fear in general is high across the country. People are worried about family members, income, and how to cope with kids being at home instead of in school. We have an opportunity to quell public concerns and replace fear with hope. 

 

If enough of us collaborate together, at a faster rate than any governmental consensus can be reached, we can stave off the spread of disease, help calm the anxiety of those in need, and hopefully, prevent the debacle of our economic system.

 

With Forbes and the #GenerosityChallenge, we invite other companies to figure out how to help those stuck in their homes and beat COVID-19 the American way, through economic ingenuity. Linda.com, MasterClass, big streaming companies, and others, who will help conquer this? The mutual benefit is real, please help us scale this idea to as many web businesses as possible.

VidAngel Trustee Files Reorganization Plan with Bankruptcy Court

Legal Battle

Company Submits Plan to Meet All Financial Obligations and Move Forward from Lawsuit as Vibrant and Growing Business

 

(Los Angeles, CA—March 5, 2020) VidAngel is announcing today that due to rapid
growth over the last year, its Trustee has filed a plan of reorganization which outlines a
strategy for the company to move out of bankruptcy. The company’s operating results,
as reflected by monthly filings over the past months and last year, reflect growth in
gross revenues, emerging success of new lines of business and the stability of the
company’s core business.

 

VidAngel, Inc. Trustee, George Hofmann, has issued the following statement:

“Bankruptcy law was established by Congress to give companies a chance to rehabilitate, get back on their feet, pay their creditors, and continue to move forward.
VidAngel has a reorganization plan that does just that. After entry of an adverse judgment in an amount that, initially, seemed insurmountable, the company’s business and revenues are growing, and the company is expanding into new lines of business. According to third party financial experts hired to advise me in the reorganization process, VidAngel’s robust growth makes paying the judgment in full feasible. I look
forward to the court confirming a plan so that VidAngel can emerge from bankruptcy, pay its debts and focus on growing a great business.”

 

VidAngel, Inc. CEO Neal Harmon has issued the following statement:

“We would not be in this position today were it not for the support and loyalty of our customers, investors, and the resilient VidAngel team. We’ve gone from avoiding threats of a shutdown to being able to say, ‘just send us the bill’. VidAngel is turning a page in its history, and we believe that we now are moving forward stronger than we’ve ever been. VidAngel remains committed to helping you, the viewer, make entertainment good for your home.”

 

Reorganization Filing Facts

● In light of financial results reflecting VidAngel’s business growth and future
potential, VidAngel’s Trustee has decided to file a reorganization plan to pay the
adverse judgment in full.

● Third party experts have determined, given VidAngel’s financial results to date
and the anticipated stability and growth of its current lines of business, that it is
feasible to pay off the adverse judgment over a 14-year plan.

● Under the proposed plan, VidAngel’s appeal of the California court’s judgment
will continue, the shares of its investors will be preserved and VidAngel’s
management and board will control the company moving forward.

● The plan confirmation process is anticipated to take a minimum of 60 days.

 

What this means for VidAngel

Should the judge confirm the reorganization plan, VidAngel is moving out of bankruptcy and on from the lawsuit as a healthy company with exciting growth. 

 

What this means for the $62.4 Million Judgment 

This reorganization also means that we get to appeal both the summary judgment ruling and the $62.4 million judgment, and feel we have a strong case. But in the event that our appeal fails, the $62.4 million judgment is not a death sentence. Third party experts have opined that VidAngel can pay off the judgment over a 14 year period. That’s an unbiased third party who has looked at our financials and growth prospects and is saying that VidAngel can pay this off. All $62 million.

 

What this means for VidAngel Investors

We are especially happy to inform our investors that, if the Trustee’s plan is confirmed by the Bankruptcy Court, VidAngel investors will retain their equity in the company and have the opportunity to share the benefits of future success.

 

We would not be in this position today were it not for the support and loyalty of our customers, investors, and the resilient VidAngel team. We’ve gone from avoiding threats of a shut down to being able to say, ‘just send us the bill.’ 

VidAngel is turning a page in its history, and we believe that we now are moving forward stronger than we’ve ever been. VidAngel remains committed to helping you, the viewer, make entertainment good for your home.

Thank you. We are so excited for the days ahead.