GetGlue + Viggle Is a Big Bet Based on Small Numbers

Viggle, which pays users to “check in” to TV shows, says it will shell out more than $70 million for GetGlue, which lets users “check in” to TV shows, but doesn’t pay them.

The combined company, according to a Viggle press release, will be the “dominant force in the exploding social TV market.”

I don’t think that’s true.

I think that lots of people like to talk about TV shows on Facebook and Twitter, but I’m not at all convinced that there’s an “exploding social TV market” — at least not one where people use specialized services to help them talk about TV.

In any case, it’s a very small market right now.

Viggle says the combined company will have more than 4 million registered users, but the number that matters in the Web world are active users — people who use the service at least once a month. That number is about 1.5 million — a million from GetGlue, and another 500,000 or so from Viggle, says CEO Robert Sillerman.

And those numbers get much smaller once you apply them to a specific show — which is what TV programmers and advertisers care about, since the idea behind the services is that they can boost ratings. Here are a couple of charts that GetGlue provided last month, when it was arguing that it had more influence on social TV than Twitter:

Conclusion: GetGlue might get more people talking about a particular episode of “Modern Family” than Twitter does (live “event” TV is a different story) — but it’s still a tiny fraction of a TV show’s audience. Likely less than 1 percent.

Sillerman’s argument is that Viggle does a much better job of bringing its audience to a particular show, because it rewards them with goodies like iTunes gift cards. He says that on any given night, Viggle can get 100,000 of its users — 20 percent of its active user base — to check in to a program.

If that math applied to GetGlue’s audience, it could bring another 200,000 users. And that certainly could be significant, especially for cable TV shows that are happy to get a couple million viewers. But that’s a lot of assumptions, so we’ll see.

Meanwhile, one other bit of merger math: Viggle intends to pay $25 million, plus 48 million shares, currently valued at $1.30 each, for GetGlue. At the end of June, Viggle had $3.8 million of cash on hand, and said it would need at least $22 million more to fund operations for the next year. Now you can add another $25 million total, which Sillmerman says he will likely raise via debt.