We assign the Prosense project a ‘Positive’ rating. We recommend participating in the ICO to long-term and medium-term investors, who are aware of the risks identified in this review. We do not recommend participating in the ICO with the expectation of speculative profit in case there is no significant excess of demand from investors over the supply of tokens.
The Prosense team is developing a decentralized platform for live video broadcasting in the virtual reality (VR) format, which allows users to "attend" various sports, music and educational events. The service circumvents any intermediaries, such as TV channels and other communication operators, in purchase of virtual tickets.
We believe that the project has significant potential, since the project team includes professionals with relevant experience in the pay-TV industry, in content production, development of large-scale distributed high-load platforms, mass marketing, sales, organization and in business with a turnover of hundreds of millions dollars a year on an international scale. Some of the founders have MBAs. Another strong point is that the market in which the project will operate is in the initial stage of growth, as a result of which current players can benefit from the "low base" effect. In addition, we have had a series of interviews with the founders and we can conclude that the projections underlying the financial model are perfectly justified and quite feasible.
Nevertheless, despite the already existing VR broadcasting business, which allows the use of live viewing services in VR right now, the product offered in the white paper will be significantly refined to integrate decentralized technologies; this is a risk for potential investors, which in the end prevents us assigning a higher rating to the project.
General information about the Project and ICO
PROSENSE is a well-known company in the market that uses modern equipment and its own engineering solutions for filming and broadcasting in the virtual reality format, guaranteeing the highest video quality. The team consists of highly qualified professionals who have participated in VR development from an early stage, and whose developments are recognized by the market.
Prosense was founded in 2015 and is a currently active business. One of its business lines is a unique production studio, specializing in creating high-quality VR video materials. The main product of the company is a cloud service for broadcasting sports and entertainment events in real time. Prosense is uniquely a provider of the entire range of VR broadcast services, including its Prosense application, already available for the most common helmets and VRs in the market (for example, Oculus or HTC).
Currently the team is developing additional functionality for the ProsenseLive ™ platform for streaming VR content, providing guaranteed collection of payments to content providers directly from users in automatic mode, thanks to the use of blockchain technology and smart contracts, as well as optimizing costs for VR content broadcasters, thanks to the organization of the Partner Nodes distributed network, dealing with processing, transcoding and video storage and receiving remuneration, also based on a smart contract. The development of this functionality will enable the solution of the most important problems of piracy in the business of pay-TV services, propriety and honesty regarding payments to content providers, and will help optimize technical costs for the organization of broadcasting.
The Pre-ICO will take place from 19 to 31 October 2017. The maximum amount of revenue in the pre-sale is $10M; at the same time, the minimum amount for participation is $20,000. There is a bonus program, depending on the amount invested:
from $20,000 to $50,000 - 15% bonus;
from $50,000 to $150,000 - 20% bonus;
from $150,000 - 25% bonus.
ICO start date: November 16th, 2017 8:00 AM PST
ICO end date: December 16th, 2017
Token: VRP, ERC20
Target cap on crowdsale: $30M
ICO price: 1 Token = 0.1 $
Minimum Buying Transaction: $50
Maximum Buying Transaction: no
Day 1 – 10% (white list only);
Day 2, 3 – 5%.
Accepted payment: ETH
Total emission: 720,000,000 VRP
60% - Crowdsale;
18% - Advisors and early backers;
12% - Team (vested for 365 days);
10% - Reserve.
Distribution of funds:
60% - development of additional platform functionality and integration of decentralized technologies;
25% - marketing;
10% - legal services;
5% - unforeseen expenses.
Token Issue Date: 14 days from the completion of the ICO
Escrow: Blockchain Law Group
All funds received during the ICO will be stored in a secure Escrow account provided by Blockchain Law Group. The funds will be transferred to Prosense only after the company meets their obligations to tokenholders.
Project services and their usage
The ProsenseLive platform can be used to stream both professional and amateur VR content: Online broadcast of sports events, concerts, shows, conferences, amateur activities or adult content. The quality of the technology used for Prosense VR live broadcasts gives the user the illusion of presence and enables participation in immersive adventures without leaving home.
One of the main advantages of VR is that it gives the viewer the ability to choose any viewing angle, freely controlling the viewing point. At the same time, panoramic video creates an immersive effect in this format. The viewer feels that he is physically present in the intangible world. This is something that media has not previously achieved.
The Prosense team notes in its documentation that the platform focuses on several types of content, both in real time and recorded:
- Sports events
PROSENSE.TV has extensive experience in working with sports events. The creators expect that VR streaming will become an integral part of the video content for sports events.
Streaming concerts and other entertainment in real time can significantly benefit from the development of VR technology. Artists will be able to receive additional income, and users will be able to attend a concert by their beloved group in virtual reality whilst saving on tickets.
- Adult content
The presence effect makes adult content in VR format very attractive. ProsenseLive will make available 18+ content only for the proper audience. Forbidden content, for example, with elements of violence, etc., will be blocked by network nodes, as well as complaints from platform users.
- Video and user content
The creators believe that as consumers use VR professional level to watch sports events and music broadcasts, they will also inevitably want to create their own content. Instead of sending ordinary photos to friends and relatives, they will share immersive photos and/or videos that will create a sense of presence. It will also be possible to implement these in the ProsenseLive™ ecosystem.
VR can create completely new methods of teaching and learning, and there are many studies that have proven that new technologies can help make the learning process much more effective. Transferring existing content to VR formats will not only provide excellent viewing quality, but will also create many new interactive and personalized features.
- Video games
Currently, this segment is leading content worldwide with the use of virtual reality helmets.
Despite frequent discussions of filming full-length movies in VR, the Prosense team believes that their time will come a little later. In the medium term, the virtual reality market will continue to be dominated by familiar video content formats, such as sports and entertainment VR streams.
At the same time, the additional functionality developed by the platform will allow any manufacturer of VR-content, whether professional studio or amateur, to deliver content to users in real time. Encryption, transcoding and delivery of content will be implemented by a decentralized network of Prosense Nodes partners, receiving remuneration tokens. Copyright and payments to content providers are guaranteed and reliably protected through the use of blockchain technology. The ProsenseView application, adapted for all common types of VR equipment, enables everyone to participate in breathtaking adventures, get new experience moving around inside a broadcast (for example, to see a goal through the eyes of the goalkeeper), watch and discuss what is happening with friends and create their own virtual space.
In addition, the use of blockchain technologies will facilitate the creation of a platform "without censorship" as well as the exclusion of intermediaries, such as TV channels and operators, video networks, content aggregators etc. The platform will also permit
moderation of content to restrict the display of certain types of content for audiences of 18+ only, as well as to remove prohibited content.
Development strategy and Roadmap
Prosense.tv has been operating since 2015. Nevertheless, in early 2017, its creators decided to expand the possibilities of their business idea by developing a similar product to that which already exists, but using the capabilities of the blockchain system.
The documentation includes a roadmap for the project:
Thus, by Q1 2018 the team is planning to implement the project within the cloud system, and to launch a completely decentralized platform by 2019.
Unfortunately, the white paper does not discuss different scenarios depending on the amount of funds collected, while the target amount for collection is $30 million. How the creators would proceed if much smaller amounts are raised is not specified. The lack of this information does not enable us to analyze how the team is prepared for various scenarios possible after completion of the ICO.
Most analytical publications agree that within the next decade VR industry will seriously progress within the digital economy.
Development of the first virtual reality glasses began in the 1960s. In the late 1990s, game developers such as Nintendo Virtual Boy first talked about VR. But technical constraints and lack of available content eventually stopped the development of this industry. However, in recent years technical progress, especially in the field of smartphone technology, has increased opportunities for a real breakthrough in the virtual reality segment.
There is a common belief that virtual reality can lead to a revolution in the consumption of content. Facebook, Google, Samsung, Sony, HTC and many other technical giants have already taken steps in this direction. The first major investments in this sphere were Facebook, which bought Oculus in March 2014 for 2.3 billion dollars, despite the fact that Oculus was not even profitable.
The Statista diagram1 shows global shipments of equipment for VR/AR in the first half of 2017 by major market players:
According to statistics provided by various sources2, about 30 million virtual reality helmets will be sold by 2020; the market for VR equipment alone will reach $2.8 billion:
These data in our opinion are very understated, since the market has developed substantially over a very short time.
According to Statista portal, VR is one of the fastest growing segments. As Oculus VR, HTC, Sony, Samsung and Google will offer more affordable mass VR products in the near future, it is expected that the total number of active users of virtual reality will reach 171 million by 2018. According to forecasts, by this time revenues from VR products will reach $5 billion worldwide.
However, the VR industry continues to experience difficulties with slow playback of content. At the same time, it should be noted that the discussion in the community for this technology remains hyperactive. The sphere of video games and entertainment offers VR developers great opportunities, but the technology still appears not fully thought out and is still quite far from its fullest potential3.
According to estimates by Statista4, the sale of VR helmets will earn about $5 billion in 2017. At the same time, software sales for virtual reality will amount to about $2 billion in the same year. By 2020, the VR software market is projected to be worth almost $25 billion.
The diagram below shows the share of revenue from VR software worldwide for 2018, divided into segments:
Thus in 2018, revenue from entertainment software will be approximately 15 percent of the worldwide revenue from virtual reality software.
All these studies prove that technology does not stand still, and people are interested in new developments in their daily lives. Therefore, we believe this industry is very promising from the point of view of investing in medium term.
Engineering Features of the Project
In the documentation, the technical side of the developed platform is described rather superficially. Nevertheless, since the creators already have a similar business outside blockchain technology, the platform algorithm itself is quite clear to understand.
One of the most important steps in the development of the PROSENSE.TV blockchain platform will be the potential transformation of the ProsenseCloud platform, which allows processing the incoming signal through PROSENSE.TV cloud capabilities, into a decentralized model where signals are processed by independent nodes.
Schematically, the decentralized platform will look like this:
The team will strive to ensure that the quality of the transmitted signal and content does not reduce in the process of this transformation. In this case, the decentralized system will have increased security and will not be associated with one cloud server.
As part of Prosense decentralization the system will include nodes of conversion (Partner Nodes) and content delivery nodes. A Partner Node is a computer with the software installed, possessing sufficient resources for transcoding the video stream into the format required by the platform. Conversion nodes form a virtual network based on the Kademlia protocol. Since the project aims for a sufficiently high quality of content with minimal delay, connections between such nodes of the network will be constantly tested by developers.
The video stream from the broadcaster will be divided into segments, which will be distributed among Partner Nodes and recoded into formats requested by the broadcaster itself. Recoded formats will be stored in a decentralized network using Swarm and IPFS technologies. Payment for transcoding and saving segments will be made in VRP tokens. Information about the streams will also be stored in the blockchain.
The creators confirm that based on the distributed network of transcoding nodes, the blockchain algorithm will enable completely protected and transparent payments for content,the and the support for the functioning of the technical infrastructure.
In addition, the decentralized content delivery model excludes the possibility of full or partial blocking of content by a third party, which in fact makes the platform free of censorship.
The Prosense team has 34 members. The documentation highlights 14 key team members, 4 of whom are co-founders of the project and who own the original idea of the platform, as well as the existing Prosense business. In addition, 7 advisors from related fields are actively involved in optimizing and improving the effectiveness of the idea itself, and assisting in the implementation of the final product.
Information about the co-founders of Prosense is given below:
Stanislav Glukhoedov (LinkedIn) – CEO of the project, VR Evangelist. Has a higher education in the field of clinical psychology (St. Petersburg State University, further SPbSU), as well as work experience in the HR sector. Stanislav changed his field of activity in 2015, when he began to actively develop VR technologies.
Vladimir Bakuteyev (LinkedIn) – has a higher education in Business Administration (SPbSU). Vladimir has extensive management experience in various fields; currently he is the CEO of Livetex - Click to Chat/Click to Call solutions, whose portfolio includes more than 5,000 companies.
Natalia Kopylova (LinkedIn) – has a higher education in Sales and Marketing (Plekhanov Russian Economic University, Moscow), as well as an MBA degree in strategic marketing (California State University - Hayward). Currently, Natalia is the Sales Director for Arris, the world leader in entertainment and communications technology, according to her LinkedIn page. Previous work experience also includes the position of Sales Director at Motorola Mobility.
Grigory Vasinkevich (LinkedIn) – investor, entrepreneur. The founder of DengiOnline payment aggregator, as well as online Qasl smart cashier. Grigory has a higher education in management (Higher School of Management, St. Petersburg).
In addition to Russian-speaking professionals, the main team consists of:
Leonard Dick (LinkedIn) – Director for Strategic Partnerships (25 years of experience managing relationships with major telecommunications companies).
Roberto Pagano (LinkedIn) – Director for work with mobile operators and pay-TV (20 years of experience in the industry, including deals in major global telecom operators worth more than $250 million.).
Andrew Hooper (LinkedIn) – Director of cloud and service platforms (11 years of experience with Arris and Motorola as OSS product manager and billing, development manager of mobile commerce platform, etc.)).
Tobias Neumann (LinkedIn) - Director of Business Development in Western Europe and the Middle East Tobias has significant experience in broadcasting industry; he has worked as a consultant on digital media projects of the European Union, currently working in the industry, based in Munich and Dubai.
The advisors include the founders and/or CEO of Cryptonomus, ICORating, Keynote, Blockchain Law Group, Transform Group, REI Consulting, and the President of the Russian Federation of Basketball.
Competitive Advantages of the Project
Currently, several large companies already have or are creating platforms for users to receive Virtual Reality content at home. Examples include NBA VR, Netflix VR, Google Daydream, HBO GO VR and YouTube VR. Nevertheless, since we are talking about add-ons for already existing systems, it is much more difficult for such corporations to introduce something innovative in a short time, without losing their main users.
According to the documentation, the founders rely on VR-specific video viewing functions such as the ability to navigate within a broadcast, integrate with social media, view and discuss broadcasts with friends (images of themselves or of friends are visualized as avatars that anyone can create and modify). Such specialized functions give an advantage over existing services for viewing conventional video, which along with a wide selection of conveniently structured Prosense applications provide a significant competitive advantage in the market. Unfortunately, the analysis of competitors in the white paper is limited to this aspect.
It should be noted that the Prosense team already has a functioning business, and its clients include companies such as IKEA, Bentley, Mercury, Samsung, Sberbank, MegaFon and sports organizations, for example KHL and the St. Petersburg Open. This fact strengthens the position of the project in comparison with other platforms, whose ideas are very difficult to assess in terms of their potential.
In fact, the main competitors for Prosense are Spectiv5 and Next VR6. Spectiv will be developed on the basis of an ecosystem with two kinds of tokens: where Specs tokens will be used as an internal platform currency, and Sigs, the signal tokens - as decentralized ERC20 tokens. The Spectiv team already has a demo version which is clearly a positive. However, their crowdsale was moved from August 14, 2017 to November 3, 2017, which is now raising some doubts among investors. The team itself can be seen as the main advantage of this project.
Next VR is a current competitor for the Prosense.tv business that does not use a blockchain algorithm. NextVR was the first to develop and patent the technology, and also launched a platform that can deliver live events to its customers in virtual reality without leaving home. This platform already works with such channels as FOX Sports, Live Nation, NBC Sports, HBO / Golden Boy, Turner Sports, and CNN, turning the usual viewing of sports matches and other TV programs into immersive shows.
Nevertheless, we believe that the Prosense project may become successful using a blockchain scheme that allows using a variety of content "without censorship" while using an efficient payment system without intermediaries.
Risks of the Project
The project indicates a number of risks, set forth in the white paper. In our opinion, the main risks are the following:
- competitors could take hold of the main market share, offering a wider range of services; in which case the project cannot be viable;
- international laws, as well as the regulation of cryptocurrencies in the international and Russian markets, may lead to the impossibility of implementing the idea;
- VRP tokens may suffer from the general instability of cryptocurrency.
In addition, there is the risk that for economic and/or technical reasons the implementation of the decentralized system may not take place and the platform will remain cloud-based. In this case, the project can suffer from periodic cloud outages, as has happened with Amazon Web Services, when millions of users and tens of thousands companies were left without data stored on one of the servers of this provider for 4 hours.
However, it should be recognized that currently there are no significant legal risks in terms of regulation for this project. VRP tokens are a utility, and most likely are not to be classified as investment tools. At the same time, more and more countries at this stage are declaring their desire to regulate the sphere of blockchain, and the further development of events related to state intervention in the field of cryptocurrency is rather vague.
Unlike other platforms that support several types of content, Prosense.tv is planning to focus on live VR content, which they believe will allow the development of the best product in the market. The team thinks that live streaming of sports events, music concerts and theatrical performances, as well as video games and 18+ content, is extremely attractive to users and will motivate them to buy VR helmets.
According to the documentation, various payment options will be provided after the launch of the platform, and content will be provided both in real time and as recordings. Thus the team is planning to attract its target audience via the possibility of visiting already completed events in VR format, as well as with flexibility of payment.
There is active promotion for the project ICO - several articles from leading thematic publications can be found in the media. The creators actively participate in international forums and events dedicated to the world of cryptocurrency and blockchain. The team participated in the World Blockchain Forum in London in late September 20177, as well as in the Blockchain Solutions Forum in Barcelona in early October 20178, while, according to the creators, receiving a good response from the community. In the near future, the project will also participate in the World Blockchain Summit in Dubai in October 24-25, 20179.
At the same time, the team decided to abandon its bounty program, the effectiveness of which has recently raised great doubts. According to market players, there are more and more defrauders among bounty campaign participants that use fake or invalid accounts on social media, creating the appearance of promotion of the project. In addition, bounty rewards in the form of project tokens have a negative impact on the coin rate after the ICO, since most of their recipients are not interested in long-term investment of funds, and sell them at the first opportunity.
As a result, at the time of writing this material there are almost 1000 participants in the channel for the project on Telegram, and about the same number of followers on Facebook page. It is almost 3 weeks before the start of the main stage of the ICO, so the team still has time to increase the interest of market participants in the project.
Economy of the Project
The business model for the project is quite simple - according to the white paper, the main source of the company's revenue (besides the token sale during the ICO) will be commission from transactions implemented within the ecosystem. VRP tokens issued during the ICO are exclusively a means of payment within the system (utility) and they do not entitle anyone to a share in the business nor any part of its profit. The founders indicate that the amount of commission for transactions can vary depending on the type of payment and other factors.
The Prosense team is planning to offer several additional ways to monetize the content available when running the ProsenseLive ™streaming platform:
- Purchasing of individual VR events – this is a pay per view (PPV) model, currently actively used by most sports organizations.
- Pay per minute. This model has the greatest applicability for video consultations, real-time chat, etc. A user pays for a certain number of minutes or authorizes payments per minute from his account to occur automatically.
- Purchase of subscriptions and packages. IP owners will be able to place their content into pools (independently or together with other intellectual property owners), which will allow users to receive subscription-based (for example, weekly or monthly) access to the event catalog as VR recordings.
- Donations - a method for monetizing free content. These are direct donations from viewers to the content provider.
It is logical to assume that the project, in the case of successful fundraising, can be developed with funds collected through the ICO, but its further viability will depend on the demand for the service from content producers and viewers. In other words, the success of the platform is directly related to the volume of in-platform operations.
The VR direction itself has great potential; however, as the creators note, one of the obstacles to development is the high cost of equipment - both cameras capable of shooting in 3D, and helmets for virtual reality. The developers expect that in the near future the price for such equipment will decrease, which will make the technology more accessible for both viewers and content producers, which will increase the demand for platform services accordingly.
Nevertheless, it is currently rather difficult to assess how quickly this price decline will occur, or how soon it will affect the growth in numbers of potential users.
If the decline in prices occurs more slowly, and the technological capabilities of the platform in terms of product quality are lower than users’ expectations, the demand for platform services may not be justified. As a consequence, the activity of users and the volume of the commission collected may not be sufficient to cover the current costs of the project after the funds raised in the ICO have been spent.
The team believes that live streams of sporting events, musical concerts and theatrical performances, as well as video games and 18+ content, are extremely attractive to users and will motivate them to buy VR helmets.
In general, the price of VCR tokens will be determined by the demand for the platform. In the case of low user activity within the Prosense ecosystem, both token demand and price will fall. The reverse is also true: if the creators manage to create a credible blockchain-based product with the collected funds, and also successfully position it in the market, having achieved stable revenues sufficient to cover costs, token demand will grow due to the increasing volume of transactions within the ecosystem. This, in turn, will provoke a rise in the VCR token price, which will be of interest to current investors.
Investment Attractiveness of the Token
PROSENSE.TV (VRP) Tokens are compatible with the ERC20 standard, and will be released on the Ethereum blockchain within 14 days of the completion of the sale. According to the developers, an additional release of tokens after the ICO is not expected, and undistributed tokens will be burned immediately after the completion of the crowdsale.
Since tokens will only be used for internal platform calculations, VRP are more likely to be considered as utility tokens. For this reason, the only scenario in which their price will increase is the gradual increase in the number of participants in the project and their transactions.
In addition, the team will also develop three types of status for PROSENSE.TV broadcasters, depending on the number of tokens in their account:
- 1,000,000 or more tokens: Gold status, which entitles free video storage and 24/7 technical support
- 500,000 or more tokens: Silver status, which provides a 50% discount on VOD storage
- Less than 500,000 tokens: basic Bronze status.
As a result, the more status broadcasters there will be on the Prosense platform, the fewer tokens will be in free circulation; this will also push their price up. On the other hand, if the value of the token increases, the price of the status will also increase, making it unattainable for many participants.
In our opinion, the Prosense project has a positive long-term potential, and it is likely that with the successful implementation of all the stages of development announced in the roadmap, the token price will grow several times in the time length of 2-5 years. At the same time, the main risk for the project is the impossibility of transforming the platform from a cloud to a decentralized model.
In addition, despite the attractiveness of the industry in general and the project itself in particular, investors should not expect rapid growth, so buying VRP tokens for speculative purposes will be justified only if there is a significant excess of demand
over supply during the ICO.
Thus, we recommend buying VRP tokens to long-term and medium-term investors who are aware of the risks identified in this review. Participation in the ICO for the purpose of obtaining short-term profit is acceptable only in the case of a significant excess of demand from investors over supply.
Disclosure: Dmitry Filatov, the founder of ICORating, is a managing partner of the ICOShark Fund that has invested in the Prosense project.
The information contained in the document is for informational purposes only. The views expressed in this document are solely personal stance of the ICOrating Team, based on data from open access and information that developers provided to the team through Skype, email or other means of communication.
Our goal is to increase the transparency and reliability of the young ICO market and to minimize the risk of fraud.
We appreciate feedback with constructive comments, suggestions and ideas on how to make the analysis more comprehensive and informative.