Hispanics are the second fastest-growing ethnic demographic in America and account for over 58M of the US population as of 2016 according to Pew Research.

In fact, in a 2017 study by Hispanic Online Marketing, it was found that “Broadly speaking, U.S. Hispanics over-index when it comes to watching TV online, and comprise 29% of all cord cutters in the United States.”

With a $20B streaming market that is still growing in excess of 15% on a yearly basis, meeting the need of the Latino population that over-indexes in cord-cutting seem like a must.

However, to date we still only have two relevant players distributing Latino-focused content to audiences in the states and both of them are broadcast TV channels rather than streaming channels.

The opportunity to capitalize on this market gap in a growing industry, amongst a growing population that is prone to cord-cutting seems like a no-brainer. Perhaps Pongalo can become the first true “Netflix” tailored to the digitally savvy Latino population.

Pongalo is a rapidly-growing media company and one of the only companies currently distributing popular programming to Latinos. Although the company is focusing on Latinos at the moment, Pongalo is trying to solve a bigger problem and is on a mission to create a worldwide, multi-platform media company servicing the entertainment needs of underserved ethnic groups globally.

Since 2014, Pongalo has focused its effort on creating an extensive library of Spanish-language films and TV shows and just recently launched its direct to consumer service. One of the ways Pongalo has evolved the business is by utilizing market validation licensing content to major providers like Netflix and Hulu over the past couple of years. Doing this has let Pongalo gauge the market as well as receive reactions to their content.

Pongalo has now winded down its licensing service to focus on going D2C. This is a powerful statement because as anyone who is in the media space knows, content is king.

By moving away from the Netflix’s and Hulu’s of the world, Pongalo now has the deep l ibrary and content to act as a standalone business, while those major organizations will struggle to create a competitive offering without access to the Pongalo content.

The first two direct to consumer products the team has formulated are a premium subscription service for women called Pongalo and an ad-supported service for men called Moovimex.

Moovimex features action and comedy movies from Mexico and makes money through advertising. Pongalo makes money through a recurring $5.99 per month subscription. It is no secret that the company is imitating the content distribution and business models of the biggest media players in the industry. And people are watching. In July alone, over 200M+ minutes were streamed by their users.

This is clear evidence that the product they are providing is meeting a real customer demand in the market.

1. Defensive moat: Pongalo currently has over 90,000 registered users on its subscription app and over 350,000 followers across all media channels. Pongalo has also spent the first three years of its existence building a library of 13K+ hours of Spanish-language films and TV shows giving them control of one of the largest libraries of Latino-focused media in the world.

Because of this, Pongalo does not have to worry about the fast follower problem and has protected themselves from competitors who do not have a library of their size. The company also has over 30 suppliers of content with 75% of the content being exclusive.

In addition, 50% of their licenses have two or more years remaining. With their extensive library, it doesn’t seem like Pongalo is facing any close competitor serving a similar audience.

Concern about Univision, one of the main Latino focused broadcast channels coming into this market is low. The reality is, the channel has lost 50% of programmers over the past four years and seems to be struggling in its current form. If anything, we see Univision and its deep pockets pursuing a business like Pongalo through acquisition.

2. Promising revenue streams: The team has decided on implementing several revenue strea ms in order to validate their business. In addition to the advertising revenue they get from Moovimex and the subscription revenue from Pongalo, the company is also beginning to experiment with a new revenue stream, which is white labeling their video streaming technology for other companies.

In the past, Pongalo generated revenue by licensing their content to players in the industry like Netflix and Hulu but have since then realized that it would be a better idea to use their technology to reach customers directly.

As the company’s direct-to-consumer offerings went live, they did not seek to renew most of its licenses in an effort to push audiences to find the company’s content on the company’s own services.

Although this was a sacrifice in near-term revenue, the team believes that greater enterprise value is created this way in the long run. Now that Pongalo has a recurring revenue model and does not rely on third-party platforms, Pongalo will reach new heights if they are able to achieve economies of scale.

As mentioned above, these revenue streams are similar to what the big players implement so it is really a matter of if Pongalo can reach more of their target market.

3. Product validation: The team at Pongalo has recognized the need to partner with big players in efforts to establish brand recognition and in order to validate its service. Having partnered with Amazon, Roku, YouTube, Xumo, and other platforms in efforts to distribute their content, Pongalo has learned valuable lessons in understanding the market for their service.

Although the company does not intend to renew its distribution partnerships, Pongalo has been able to gain more insights on who their customers are and other data. Their recent switch to a direct-to-consumer model is, in my opinion, a sign that they have the market validations to make the move to being a standalone entity.

4. Potential acquisition target: Any Spanish speaking individual who wants to enjoy a movie or TV show in Spanish should be using Pongalo. With such an extensive library of tailored content to one of the fastest growing demographics of streaming subscribers, it is likely that we will see major providers like Netflix or Hulu poking around the business.

As Pongalo captures a larger audience, competitors will see this and will likely try to acquire them for their user base and their large library. Be it a streaming service trying to broaden audience appeal or a cable channel like Univision trying to win consumers back over, you can expect to see significant movement in the streaming media space.

Pongalo was founded by three people but has since shrunk down to only one founder with the other two leaving and giving back all equity. Rich Hull is the founder and CEO of Pongalo and is a proven leader in the media and entertainment space. In addition to his work on media deals and turnarounds totaling over a billion dollars with companies such as Disney and Universal, he has also proven himself to be a problem solver through his roles as an award-winning film and TV financier and producer. Hull has led the creation of over 25 produced projects generating hundreds of millions of dollars with projects such as the young-adult movie SHE’S ALL THAT and other movies like GET OVER IT and DADDY DAY CARE, among many more.

Hull’s impressive background is elevated as he clearly has demonstrated perseverance during his time with Pongalo. Hull’s character is praised for sticking with Pongalo despite his other co-founders leaving him and the number of times the company had to pivot.

Although Hull is now the only founder, he is not alone as he has been able to surround himself with competent advisors and investors. Having already raised a couple million of outside capital from investors at Canyon Creek Capital and 500 Startups, Hull seems poised to accelerate the growth of Pongalo.