Larry Kless' Weblog: February 2011

Sunday, February 27, 2011

Big Moves in Online Video: Ooyala Scores Yahoo! Japan

Last week Ooyala issued a major announcement that it has signed a multi-year agreement strategic relationship with Yahoo! Japan which will open up its access to 80 million users – the world's second Internet economy. Ooyala CEO Jay Fulcher said that it's one of the largest, if not the largest industry deals at this point. Yahoo! Japan is the 12th most trafficked site in the world, and 1st for all Internet traffic in Japan – "about 60% of the Internet traffic in Japan today. The partnership paves the way for rapid evolution of the delivery, analysis and monetization of online video in the Japanese market." As far as video goes, Yahoo! Japan serves approximately 40% of its online video, about 200 million page views per day, and is growing 25% per year.

On the Ooyala blog, Fulcher wrote:

"Over time, Yahoo! Japan will standardize on Ooyala across all of its properties. They will leverage our advanced technologies for wide ranging video initiatives such as cross-platform video delivery, subscription, and advertising services. Yahoo! Japan will deliver rich video experiences on connected PCs, smartphones, tablets and ultimately TVs in the Japanese market."

Fulcher said that this deal is very complementary for both companies and Ooyala will help advance video delivery and monetization in Japan. Video is no longer just a business imperative, but a strategic imperative and the convergence is underway, as he says in this Ooyala video release:

Streaming Media industry analyst Dan Rayburn noted that this is a big customer win for Ooyala which will lead into big profits:

"While it will take time to get Yahoo! Japan up to scale, I think this deal could bring in a substantial amount of revenue for Ooyala twelve months from now. By substantial I mean multi-millions, especially since Yahoo! Japan's stream count is in the billions each year."

Rayburn added that Ooyala is a "clearly a force to be reckoned with":

"In the online video platform space, the market is currently dominated by Brightcove, Ooyala and Kaltura in terms of market share. For some time I've thought that it would be very hard for any company to really give Brightcove a run for their money, but Ooyala seems to have really picked up a lot of momentum as of late and this deal is probably one of the largest seen in the OVP space."

Just a few months ago Ooyala raised a $22 million fourth round Series D funding which was used to build up its presence in Asia. Since its founding in 2007, Ooyala has raised $42 million and has 120 employees with corporate offices in Mountain View, California with offices in New York, London and a new office in Sydney and is working on Tokyo. Ooyala reaches over 50 million unique users a month via their player from their 500 media and non-media customers globally.

See this paidContent post for more on Ooyala's investors and partners.

Related:

Related Ooyala posts from this blog:

About Yahoo! Japan
Yahoo! Japan Corporation operates Yahoo! Japan, a search engine and online information portal. The company is based in Tokyo. Japanese telecommunications and web company SoftBank is Yahoo! Japan’s majority owner and the company is affiliated with US-based Yahoo!. Yahoo! Yahoo! Japan operates in a variety of divisions, including auction services, media development, Yahoo! BB broadband services, shopping and general business solutions. Users can also register for Yahoo! e-mail, personalized web pages, a social network (Yahoo! Days) and access to message boards.

About Ooyala
Ooyala is the leader in online video management, analytics and monetization. Our integrated suite of technologies and services give content owners the power to expand audiences and the deep insights that drive increased viewer engagement and revenue from video. Ooyala serves hundreds of global media companies and marketers including Telegraph Media group, Yahoo Japan, Fremantle Media, Vans, Endemol, Vice Magazine, and Glam Media. Visit Ooyala and follow @Ooyala on Twitter.

Friday, February 25, 2011

Fliqz is Acquired by VBrick, Another OVP Bites the Dust

News of more consolidation within the online video platform space came earlier this week with the announcement that Emeryville, CA-based Fliqz has been acquired by enterprise IP video pioneer VBrick. In a press release issued on Tuesday, Wallingford, Conn.-based VBrick announced that it has acquired the assets of Fliqz, and will merge Fliqz's SaaS-based online video platform with its video streaming product VBoss (VBrick's Online Streaming Service) to further grow and expand its offerings and customer base. VBrick noted that the Fliqz service "brings a strong on-demand component to VBrick’s already strong existing SaaS offering and also gives VBrick access to the small-and medium-sized business (SMB) market."

While no financial terms of the acquisition were disclosed, Jonathan Marino of peHUB suggested that "Fliqz investors took a bath" and that two of his sources confirmed that Fliqz was sold for less than its three rounds of funding which totaled $12 million. Marino noted that, "one of the sources acknowledged the sale process, run through Lighthouse Capital Partners, only attracted $1.4 million from VBrick."

Fliqz was founded by Benjamin Wayne in 2005 as a white-label plug-and-play video platform specializing in video SEO. Fliqz is in use by more than 35,000 websites with a wide variety customers including the US Army MLB, Monster, Rackspace, WebMD, Expedia, Sony, VH1, T-Mobile, Nokia and many others. Fliqz offers 5 different SaaS video solution packages and launched SearchSuccess in November 2009 as as an add-on to Fliqz's Gold video solution. Fliqz said that more than two-thirds of all videos submitted to SearchSuccess produce a first-page Google search result, and up to 25% have resulted in a number one Google ranking.

Just two years ago, Fliqz was recognized as a "Contender" in the Forrester Research report, The Forrester Wave™: US Online Video Platforms, Q4 2009, which evaluated six leading online video platform vendors. Brightcove and Ooyala led the pack with their end-to-end product offerings that target organizations of all sizes. VMIX and Kaltura followed closely behind with comprehensive offerings and are Strong Performers, while Twistage and Fliqz served more narrow segments of the market and were noted as Contenders. Wayne received some notoriety as the "YouTube Is Doomed" guy from his Business Insider post from a few years ago. He's recognized though as an industry expert in video marketing and spoke with Reel SEO in this video about the importance of video SEO. According to Wayne, "video is fundamentally a marketing tool," and that video SEO is the "neglected gold mine" in the online space.

Kris Drey, Vidcompare Founder is the former VP of Marketing at Fliqz and provided a unique perspective on the Vidcompare blog:

"Fliqz was one of the early OVPs (when the term OVP was popularized) to mass-market SaaS-based B2B2C video platform services bringing the notion of using online video for marketing purposes to the forefront of corporate online marketers. In fact, I helped build the first version of this solution with Benjamin Wayne, the founder and CEO of Fliqz when he hired me back in early 2007 (I left the company in June of last year). Fliqz made it easy for businesses to integrate online video into their websites with simple to use uploading, encoding, management, analytics, and playback video content tools."

Although, recently Fliqz experienced trouble raising additional funding and just wasn’t successful competing with with other larger companies, like Brightcove, Ooyala and Kaltura for VC funding. Wayne will not be staying with VBrick but according to Drey and also Ryan Lawler and Fliqz's future still looks promising. VBrick will invest $1 million into Fliqz to help integrate and build out the product offering. VBrick has also renewed the lease of Fliqz’s offices in Emeryville, CA. Fliqz will remain open and continue function temporarily as its own business unit for the next several months as its staff of 20 are retrained and folded into VBrick. Jim O'Neil spoke with VBrick CEO Doug Howard who said that, "Fliqz CEO Benjamin Wayne will help guide the transition and is expected to remain onboard for at least the next three months." VBrick currently has 9000 customers in the corporate, government and education sector and according to Howard, Fliqz will add less than $5 million in annual revenue to VBrick's estimated $45 million.

It's been a busy M&A season within the OVP space within and as Drey said expect to see more changes ahead:

"We expect to see further merger and acquisition activity in online video this year and will keep you posted on what it means for the industry. January and February have definitely set a trend pointing towards more focused and specialized business plans and product offerings."

Disclosure: Vidcompare is a sponsor of this blog

Related:

About VBrick Systems, Inc.
VBrick is the leader in Enterprise IP Video, with over 9,000 corporate, education and government customers and 60,000 installations worldwide. VBrick solutions work over standard IP networks and the Internet to enable the creation, publishing and distribution of rich media content. Our comprehensive streaming solutions are used in a wide range of live and on-demand applications including meeting and event broadcasts, employee collaboration, distributed learning, digital signage, TV distribution, and video surveillance. Headquartered in Wallingford, CT, VBrick’s products and services are available through industry-leading value-added resellers. In purchasing the Fliqz assets, VBrick did not assume any liability, debt or obligation of Fliqz except to the limited extent specifically agreed and specified. For more information, visit www.vbrick.com.

Friday, February 18, 2011

Kaltura Secures $20 Million Investment to Further Disrupt the Online Video Space

This week Kaltura announced that it has secured $20 million in new financing led by new investors Nexus Venture Partners, with participation from Intel Capital and existing investors .406 Ventures and Avalon Ventures, and technology lender Silicon Valley Bankers. The open source online video platform has been on a steady growth path over the last 18 months and boasts over 100,000 publishers in a variety of markets and verticals in media and entertainment, enterprise, education and service providers. Kaltura offers a SaaS solution, a complete self-hosted solution and a free community edition of its open source video platform.

I caught up with Ron Yekutiel, Kaltura's CEO and Chairman, at NewTeeVee Live in November 2010, where he initially announced the C round funding with details to follow. We discussed Kaltura's 2010 year-end review, which for Kaltura was a phenomenal year of growth with 80,000 downloads of its code in 2010 alone, which he said is 60 times all the other industry combined. Part of that growth is measured with Kaltura's Community Edition, first released in 2009 at OSCON Open Source Convention as a completely free and fully functional self-hosted version its video management platform. Yekutiel said that with implementations in web management systems like Drupal, Joomla or Wordpress and learning management systems Moodle, Sakai or Blackboard Kaltura's platform is not just one application, but a myriad of applications, all of which have different parts of Kaltura connected into them.

When I spoke with Yekutiel earlier in the year at Streaming Media East 2010, he emphasized that Kaltura's two key differentiators are flexibility and control for online video publishers, with full control of Flash, Silverlight and HTML5 video content, and the flexible new Kaltura Exchange which fosters third-party development for their open source video platform. For Kaltura, this is how it sets itself apart from the rest of the OVP market.

In terms of Kaltura's growing customer base, Yekutiel noted many big name companies like Fox, Warner Brothers, Paramount Pictures, HBO, NBA and a long list of others have become customers and are consuming not only licensed software but also development, maintenance and support. Kaltura also saw customer gains in the enterprise with Bank of America, Texas Instruments, Coldwell Banker, Best Buy, Siemens and in the education space, there's been a "landslide" of universities joining, with Harvard, Yale, MIT, Stanford, NYU, Columbia University and all the Ivy League schools but Brown University, which they are working on.

Yekutiel said that a lot more service providers that have their own cloud and want to offer solutions are joining Kaltura as resellers of its OVP. An example he gave is Sport One in Europe, a large sports channel that many of the OVPs had bid on, but lost out to a local hosting provider that bundles and resells Kaltura's offerings. While Sport One didn't choose Kaltura directly, they became a customer through the local reseller, which Yekutiel referred to as small "Kaltura Mini-me's" that become OVPs in the local markets, and are really disrupting the industry.

Other key highlights for Kaltura in 2010 included, a number of new features and capabilities, in response to the latest developments within the online video ecosystem, such as HTML5 video playback. This led to big news with Adobe's announcement last October of its HTML5 video player widget based on Kaltura's HTML5 Media Library – already in use by Wikipedia – that works in all major browsers and includes a full set of HTML5 video tools – video and audio players, uploader and editor.

Yekutiel said Adobe's adoption of Kaltura's open source code creates great opportunities for the industry:

"This was a very historical release saying that Adobe's not anymore just about Flash, but also about HTML5 and after serving the whole industry and choosing if they could build their who le thing from scratch, they actual decided to adopt our code and offer it to everybody as the Adobe code. Which speaks volume on our ability to provide best of breed solutions."

Kaltura has been an early supporter of HTML5 video and earlier in the year, and with the Open Video Alliance and other partners, launched two new websites – Let’s Get Video on Wikipedia and HTML5video.org, an industry resource for all things HTML5 video-related, including news, technology demos as part of a mass campaign to bring video to Wikipedia.

"This is one small example of a bigger trend, that is, people understand the benefit of an open source solution. Not only being inclusive of all the innovation that's happening out there, but being able to rope in the power of the crowds and the wisdom of of thousands of people that are developing on top of our system. And I'm proud to say that we started off the year with maybe a few hundred developers that helped us externally, and today we have more then 6000 developers in the community that are building. So the pace of innovation is second to none."

Yekutiel noted that in regards to the $20 million C round investment, the new investors symbolized the power his company has as an open source vendor. Naren Gupta from Nexus Venture Partners called Kaltura, "a company that is hugely successful by combining the best technology with a powerful open source business model", and Maria Cirino of .406 Venture called Kaltura "a juggernaut" that is "led by a passionate group of world class entrepreneurs" and well positioned serve the exploding online video market.

Yekutiel believes Kaltura is disrupting the online video space "in a similar way to how open-source Red Hat™ and MySQL™ have disrupted their fields of operating systems and databases," and said the new investment will be used in the following way:

"To continue its momentum in the market and keep ahead of the curve, Kaltura is looking to further grow its team to increase development and professional services. We are also looking to expand into additional markets, including Europe, the Far East and India."

About Kaltura
Kaltura provides the world's first Open Source Online Video Platform. Over 100,000 media & entertainment companies, enterprises, SMBs, educational institutions, service providers, platform vendors, and system integrators use Kaltura's flexible platform to enhance their websites, web-services, and web-platforms with advanced customized video, photo and audio functionalities. Kaltura's features and products enable easy deployment of custom work-flows involving video creation, ingestion, publishing, management, syndication, engagement, monetization and analysis. The free community-supported self-hosted software and source-code is available for download at www.kaltura.org. A commercial version of the software can be obtained at www.kaltura.com along with Kaltura services such as streaming, hosting, transcoding, analytics, ad serving, support and maintenance packages, and professional development. Founded in 2006, New York based Kaltura is a founding member of the ‘Open Video Alliance' (www.openvideoalliance.org), a coalition of organizations dedicated to fostering open standards for online video. For more information: www.kaltura.com, www.kaltura.org and http://exchange.kaltura.com/. Follow @Kaltura and join the Facebook and LinkedIn groups.

Updated: 2/20/2011 Additional quote about what the money will be used for.

Tuesday, February 15, 2011

YuMe Report Shows Viewing Attitudes Shifting Toward Online Video vs. TV

According to data in YuMe's new research report, “Online Video and Television Viewing Attitudes and Behaviors”, conducted with Frank N. Magid Associates, marketers not using online video advertising are missing out on reaching a growing audience of online viewers. The report is a random sample of 500 online video viewers across YuMe’s video ad network which found that video usage, users’ content preferences, and consumption patterns are shifting to online video and away from TV.

I spoke with Mike Vorhaus, President of Magid Advisors at consumer research firm Frank N. Magid Associates, at YuMe's roadshow event in San Francisco to get an overview of the report. Vorhaus says, some very fundamental discovery was found from the data collected among the YuMe audience shows that with online video, brands could reach viewers more easily, more often and with less expense than traditional TV. Overall, online video viewing showed a dramatic rise becoming a major platform for entertainment while TV viewing is on the decline.

Vorhaus notes that across the board online video viewing is up from last year and becoming part of most people's daily routine. Over the last 12 months 66% of respondents anticipated increases in online video viewing over the next 6 months and 48% in the next 12 months. This was not a generational shift either, as YuMe’s audience ranged from kids to grandparents, and compared to 12 months ago online video viewers skewed older, higher educated, single female.

"We found that the online video is growing, in terms of demographics, it's becoming more mass media. So you've got older women, younger women, older men, younger men, all now involved in the online video world. You have 75% of everybody using the Internet in the United States that uses online video."

YuMe believes that widespread adoption of online video for news and entertainment was brought on through the proliferation of connected devices. Online video viewing across all devices, from PCs to the iPad and smartphones, made it easy for viewers of all ages watch video content where they and wherever they wanted.

Vorhaus notes that a lot people are considering online video content to be as high quality as TV and short-from "snackable" video content reigned supreme. Online viewers were also more engaged with online video ads in contrast to the multi-tasking viewers do when watching television ads, which is twice as much for TV viewers.

Additionally, usage patterns indicate that consumers watch online video for the time-shifting benefits similar to how viewers use a DVR, and are not not worried about missing scheduled programs since they can watch them online whenever they want. For marketers this is a big issue because consumers skip more ads when watching TV than when watching online video. 49% of respondents skipped 75+% of ads on TV while only 29% of respondents skip 75+% of ads in online video.

Overall, Vorhaus says, the report paints a compelling picture that online video is powerful advertising medium:

"You put that all together and it's pretty clear that if you're a major brand advertising on TV, there are a group of people you're going to have to reach online because they're watching very little TV."

Download YuMe's Online Video & TV Viewing Attitudes and Behaviors (PDF link)

Also, for related coverage on YuMe's New York roadshow, see Beet.TV's coverage:
Online Video Viewing Becoming a "Routine" for Many, Industry Consultant Mike Vorhaus

About Frank N. Magid Associates
Founded in 1957, Frank N. Magid Associates has provided strategic insight and direction for clients domestically and in 37 countries around the world. Magid has developed an international reputation
for excellence that spans multiple industries. Frank N. Magid Associates is a world leader in research-based strategy consultation. Its knowledge base is substantive, encompassing thousands |of research studies and consultation engagements. Its clients include Fortune 500 companies and leaders in their respective industries, as well as promising young companies looking to leverage the market knowledge Magid can provide to help them reach the top. Magid’s experienced professionals and operations staff serve clients around the world from offices in New York, Los Angeles, Minneapolis, Chicago, Dallas, Atlanta, San Francisco, and Marion, Iowa.

About YuMe
YuMe is a video advertising technology company that makes professional video profitable for publishers and effective for advertisers. Its robust ACETM technology powers both its premium ad network and its industry-leading advertising management solutions, ACE for Publishers and ACE for Advertisers. YuMe’s premium ad network aggregates the best video content, representing hundreds of premium publishers. As a result, YuMe gives publishers and advertisers unprecedented reach, brand safety, contextual relevance, controlled syndication, and consistent delivery across all digital media platforms–Web, downloads, mobile, and connected TV. YuMe is a privately held company headquartered in Redwood City, CA and backed by Accel Partners, BV Capital, DAG Ventures, Khosla Ventures, Menlo Ventures and Intel Capital. For more information, visit www.yume.com, follow @yumevideo on twitter, or become a fan of YuMe on Facebook at www.facebook.com/yumevideo.

To learn more, please contact getresults@yume.com.

Monday, February 14, 2011

YuMe Says 15% of TV Ad Spend Should Move to Online Video

According to eMarketer, online video ad spending increased by 40% in 2010 and is projected to increase 39% in 2011, as more advertisers incorporate online video into their overall media mix. However, even with the explosive growth, online video still represents only a small portion of marketers' overall ad spend compared to their traditional advertising channels of television, radio and print. But new data in a research report from YuMe conducted by the Nielsen Company intends to change that.

As part of its ongoing market research, YuMe set out to demonstrate that shifting a portion of a brand's ad spend, for example reallocating 5%, 10%, or 15% of a TV buy, to online video can not only improve reach, effective reach, and frequency, but can also lower the overall campaign CPM. YuMe suggests a holistic approach to media buying independent of which screen the ad appears and set out to demonstrate this in its latest market research, Online Video Share-shift Analysis, which incorporated Nielsen TV/Internet Data Fusion, to show that online video campaigns complement TV campaigns, and that the combined effect is yields even greater advertising effectiveness.

I caught up with Travis Hockersmith, Director of Market Analytics for YuMe, at the YuMe roadshow in San Francisco to discuss the key findings of the share-shift analysis based on the selection of a representative consumer packaged good (CPG) food brand that invested $4.5 million in National TV spots (Network, Cable and Syndication) during the month of January 2010. Hockersmith says that Nielsen's new data set, Fusion, statistically fuses the TV and online panels to create a complete, or as he says, holistic video plan – which is really what agencies and advertisers want. This approach offers a lot of benefits and least of which, answers the question, "What percentage of my budget should I spend in online video and what exactly does that buy me?"

Hockersmith notes that while TV continues to command the dominant share of viewers, as audiences continue to move online and to mobile devices, it becomes difficult to achieve a brand's desired reach and exposure in the fragmenting advertising landscape.

"As online video is added to the mix, there's a lot of different benefits that advertisers realize, the most important of which is cross-platform reach. By that I mean, how can you get people to see your ad across multiple screens? So we know there's a major performance lift if you can get your TV spot in front of someone on a television and a PC screen, even more and more on a mobile screen, iPad screen, you name it. So as you add online video to the mix you get a nice lift, in that effect, in the campaign with no additional spend just by making the right decisions about where to pull from TV to put into online video."

The share-shift data points out that when a viewer is exposed to a campaign across multiple screens, brand recall scores increase dramatically with multi-platform exposure and performance, from 62% for ads solely on TV to 82% for adds viewed on TV and online.

A common question Hockersmith is asked is, "Do I need online specific video creative to run in online video spots?"

His answer is, no:

"We have a lot of evidence that TV spots work great. TV spots have a high production value, they're very well tested, typically. They also can reinforce the message that you see on TV by having the same creative online. So we find that advertisers do quite well with TV creative in the online space. There's really not a need for online specific creative. We do see a need to sometimes cut back the length of a TV spot to run online. Fifteens typically work best. We can still run thirties in the online video space, but the attention span in online video space tends to be for fifteens."

As far as pre-roll ads, Hockersmith says, they are still king for a number of reasons:

"It's the king because you have this lean-forward engaged audience calling up a piece of content, and then getting an ad in front of that piece of content. In banner, it's wallpaper, it's off to the side, it's somewhat of a distraction. But in-stream, as we refer to it, is where you get the highest user attention."

Hockersmith summed up the take home message of the share-shift analysis in this way:

"We are all still trying to figure out what percentage of television budgets make sense to put into online video and we think that we've quantified the effect that 5, 10, 15% level – we really believe that there's a strong case and a lot of hard evidence that suggests that 15% of TV spend should be moving into the online video space."

Download YuMe's Share-shift Analysis - TV + Online Video: The Best of Both Worlds (PDF link)

Also, for related coverage on YuMe's New York roadshow, see Beet.TV's coverage:

About YuMe

YuMe is a video advertising technology company that makes professional video profitable for publishers and effective for advertisers. Its robust ACE™ technology powers both its premium ad network and its industry-leading advertising management solutions, ACE for Publishers and ACE for Advertisers. YuMe’s premium ad network aggregates the best video content, representing hundreds of premium publishers. As a result, YuMe gives publishers and advertisers unprecedented reach, brand safety, contextual relevance, controlled syndication, and consistent delivery across all digital media platforms–Web, downloads, mobile, and IPTV. YuMe is a privately held company headquartered in Redwood City, CA and backed by Accel Partners, BV Capital, DAG Ventures, Khosla Ventures, Menlo Ventures and Intel Capital. For more information, visit www.yume.com, follow @yumevideo on twitter, or become a fan of YuMe on Facebook at www.facebook.com/yumevideo.

To learn more, contact getresults@yume.com.

Thursday, February 10, 2011

YuMe Shows the Power of Online Video for Brands in Compelling New Data

YuMe recently released two new complimentary reports that both demonstrate the changing attitudes of online video viewers and presents a compelling case study for brands to shift advertising dollars from TV to online video for maximum campaign reach. In partnership with Frank N. Magid Associates and The Nielsen Company, the findings of the two reports “Online Video and Television Viewing Attitudes and Behaviors” and “Share-shift Analysis – TV + Online Video: The Best of Both Worlds” were presented at a series roadshows hosted by YuMe stopping at 6 major cities across the U.S.

I caught up with Scot McLernon, YuMe's Chief Revenue Officer, at the San Francisco event to get an overview of the two studies and hear how brands can benefit by adding online video to their advertising and marketing mix. McLernon has been in the digital media space for the past 15 years and noted that within that space online video is the single fastest growing segment of online advertising. He said that the last two years have been a test for online video and now that test is over and online video has received high marks with its growing adoption.

Despite these trends, online video advertising still remains just a fraction of most brands overall advertising spending. YuMe's clients now want to know how to make online video an integral part of their overall media mix, which includes television, radio, print, outdoor advertising, out-of-home solutions and connected devices, to reach the growing audience that has shifted from TV to online video.

It's on that premise, McLernon emphasized, that YuMe's roadshow is based and explained that TV ad dollars are now shifting to online video because consumption patterns are changing, online video, impression-per-impression, is more impactful than TV and, performance increases as online video is added to the media mix.

McLernon said:

"Online video is the fastest growing segment of online advertising but it's a confusing topic for many marketers and brand managers. We worked with both of these esteemed research companies to provide data that would help dispel the confusion around how to weave a cross-platform online video campaign into existing campaigns and future projects."

The first report, conducted with Frank Magid Associates, was a random study across the YuMe video ad network of over 600 top publishers. The data showed that with online video, brands could reach viewers more easily, more often and with less expense than traditional TV. Online video viewing showed a dramatic rise becoming a major platform for entertainment while TV viewing is on the decline. Over the last 12 months 66% of respondents anticipated increases in online video viewing over the next 6 months and 48% in the next 12 months. This was not a generational shift either, as YuMe’s audience ranged from kids to grandparents. In addition, short-from content reigned supreme and the viewers' perception of the quality of online video has improved and was viewed as on par with television. Online viewers were also more engaged with online video ads in contrast to the multi-tasking viewers do when watching television ads.

I also spoke with Mike Vorhaus, President of Magid Advisors at Frank N. Magid Associates, at the YuMe event and will feature him in an upcoming post with more in detail on this report. Vorhous noted that it's important to educate marketers on the major trends and available opportunities as video viewers move away from traditional TV to online.

The second report is based on research conducted with Nielsen set out to prove that shifting a portion of TV advertising dollars, in this case 5%, 10%, or 15%, to online video not only improves the campaign's reach, effective reach, and frequency, but also lowers the overall CPM. The CPM decrease was a real surprise for YuMe, as McLernon noted, since it was done without any increase in brand's advertising budget.

The take home message for brand advertisers, McLernon summarized is:

"This is not a generational shift. This is a shift that's taking place across all of the generations, from young to older and that shift is more of a technology shift than anything else. The second is don't be scared by the CPMs. Sure they might be a little but higher but the effective CPM, the return on investment is absolutely terrific. And the media mix, the effective reach and all the effective attributes that you would apply to your media buy, all of those go up as you sprinkle online video into the mix and shift it from television."

To download the two white papers, go to Video Advertising Trends & Research | YuMe.com

Also, for related coverage on YuMe's New York roadshow, see Beet.TV's coverage:

About YuMe

YuMe is a video advertising technology company that makes professional video profitable for publishers and effective for advertisers. Its robust ACE™ technology powers both its premium ad network and its industry-leading advertising management solutions, ACE for Publishers and ACE for Advertisers. YuMe’s premium ad network aggregates the best video content, representing hundreds of premium publishers. As a result, YuMe gives publishers and advertisers unprecedented reach, brand safety, contextual relevance, controlled syndication, and consistent delivery across all digital media platforms–Web, downloads, mobile, and IPTV. YuMe is a privately held company headquartered in Redwood City, CA and backed by Accel Partners, BV Capital, DAG Ventures, Khosla Ventures, Menlo Ventures and Intel Capital. For more information, visit www.yume.com, follow @yumevideo on twitter, or become a fan of YuMe on Facebook at www.facebook.com/yumevideo.

Friday, February 4, 2011

KickApps Brings Its Social Software Solutions to KIT digital

KickApps was founded in 2005, and is a leading provider of customizable social software solutions consisting of a suite of hosted applications and services which are used by some of the world’s largest brands and recording artists including: NBC Universal, American Express, Live Nation, Scripps Network, Simon & Schuster, Viacom, The Washington Redskins, The Weather Channel, Madonna, U2, Kiss, Shakira and all the NHL teams. Its more than $12 million annual revenues are made almost entirely from recurring software license fees.

On January 28, 2011, KIT digital acquired the privately-held KickApps Corporation, based in New York City. Its more than $12 million in annual revenues are almost entirely from recurring software license fees. As part of the acquisition, KickApps' CEO Alex Blum, was appointed to the new position of global chief operating officer of KIT digital and will be responsible for the overall business operations of the company. Blum has had a long career as a pioneer and innovator in online video and interactive TV as vice president of products at AOL. Additionally, KickApps CFO David Lapter will assume the role of SVP of business administration at KIT.

KickApps adds significant technology and product synergies to KIT digital. KickApps’ Open Source Media Framework (OSMF) App Studio will help unify all publishing-layer technologies across KIT digital's family of products to deliver fully customized Flash and HTML5 experiences. KickApps' suite of self-serve deployable social solutions that are created using an intuitive drag-and drop interface, ranging from full social website experiences to simple social widgets. The platform also includes KickApps’ proprietary WidgeADs ad format, that can be served in any IAB-standard ad slot and shared across the web.

KIT digital's President Gavin Campion said:

“KickApps’ innovative and proprietary suite of social media applications are a perfect strategic fit for us, adding powerful social tools and player authoring capabilities to our software platform solutions. Its applications will also help us reduce our marginal cost of customized interface development and dramatically reduce the speed of our custom player deployments versus the competition. We see extensive and attractive cross-selling opportunities in our respective client bases, and plan to mine KickApps’ capabilities immediately in the global geographies we cover.”

Prior to the acquisition, I caught up with Mike Sommers, then VP of Product Management for KickApps, at the 2010 Online Video Platform Summit, who discussed the growing importance of curation, specifically social video curation. With the proliferation of video on the web, Sommers said, it's getting more and more difficult for consumers to find the good content they are looking for. He noted that a long time ago curation of content on the web was done by editors at AOL or Yahoo, and there would be a bunch of links to point the way to that content. Then Google came along with its bots that automated search, and its algorithm became the main curator of content through keyword searches.

But as Sommers noted, the problem with video is that Google's search engine bots can't understand what video content is about as well as humans can.

"So, what's happening today is that we're going from search engine optimization – which is a practice of building your website in a certain way that makes it understandable to search engines – to friend engine optimization – which is building your website in way that makes it sharable, that invites people to take our content, notify your friends about it and then drive traffic back to your website."

Sommer said that publishers building out their platforms with social media should pay close attention to to their brand, and that means where they host their content:

"I think the temptation right now is to leverage these social media platforms, like Twitter, Flickr, Facebook and YouTube, because they're free and there's a lot of eyeballs there. So the temptation is to put your content on these destination sites and try to figure out how to monetize it. But what's really important for these brands to understand is that the true experience is about more than just that little piece of content.

It's about the brand, and it's about what happens around that content and what happens to that content once it's been distributed – and when that content is distributed on platforms that you don't control, you don't have the ability to leverage that content and leverage the data that's created when that content is interacted with. So with a platform like KickApps, we provide a method for our customers to create completely branded social experiences at their domain or out on their Facebook tab, or on their iDevices or Android devices."

Kyte Brings Its Online and Mobile Video Experience to KIT digital

Kyte was founded in 2006, and offers advanced mobile distribution and social media integration capabilities through its cloud-based publishing platform for live and on-demand video. I've covered Kyte on this blog for several years and it has both a free UGC platform and a premium service for major brands and recording artists. 50 Cent was a early Kyte adopter, and with the Kyte player brands have been able to create a “micro websites” that are virally distributed on many platforms. Kyte has differentiated itself from other platforms as "an enabling technology" for branded mobile destination sites through Kyte’s multimedia chat, RSS, Twitter and Facebook notification services. Kyte was named Streaming Media Editors' Pick for its technological advances in the growth of the online video industry, as one of the “the most innovative, most important, and just plain coolest stuff in online video.”

I spoke with Gannon Hall, (who at the time of this interview was COO of Kyte and is now Executive Vice President of Global Marketing for KIT digital ), at the 2010 Online Video Platform Summit following his panel session on, Delivering Content to Mobile Devices. Kyte had just released its live streaming to iOS devices capability which fully enabled the ability to live stream to both the web and Apple iOS devices at the same time in native apps and over mobile web in HTML5. Kyte also released new monetization capabilities built into its HTML5 solutions to allow publishers to integrate with third party ad platforms like Doubleclick DART to deliver pre-roll and post-roll video advertising and companion ads.

Hall commented on the importance of mobile for video publishers and consumer:

"Mobile is important, because for one, it's become the fastest growing video segment of video consumption – it's not the largest by any means, but it's one of the fastest growing. So we're seeing increasing demand from our customers to be able to make it much easier for them to deliver full featured, high-quality video experiences to mobile platforms, both as native applications as well as just making sure that their websites playback and function properly on mobile platforms. This is actually something we've been doing for quite some time and we've had a mobile delivery capabilities as early as 2006. Some we were one of the earliest innovators in mobile video delivery and we're continuing to push the envelope as much as we can."

On January 25, 2011, KIT digital acquired the privately-held Kyte for approximately $5.7 million, including $3.1 in cash and $2.6 in KIT stock. It reported a $3.7 million revenue in 2010, primarily from SaaS platform fees and had raised more than $23 million.

In a post on the Kyte blog, Hall said the company was pleased to be joining KIT, and noted:

"We are confident that this partnership will give us the opportunity to bring even more value and exceptional customer service to your organization. More than ever, we are committed to helping you reach, engage and converge your audience with live and on-demand media, wherever they are. Merging the two businesses and our complementary technologies together will enable us to offer a more robust, end-to-end solution portfolio to better meet the full breadth of your video delivery needs."

KIT digital CEO Isaza Tuzman said:

“Kyte is recognized as having the most advanced mobile publishing technology in the marketplace, and has an aggressive and talented management team. We plan to leverage Kyte’s proprietary platform and application frameworks to serve and expand KIT’s global client base. The acquisition also adds a strong West Coast presence in the U.S., which we will use as a R&D and business development hub.”

About Gannon Hall
In his new role as Executive Vice President Global Marketing, Gannon leads KIT’s overall global marketing strategies. Gannon brings nearly two decades of entrepreneurial leadership experience within the emerging and established consumer Internet and enterprise software industries. Prior to joining KIT, Gannon was the COO of Kyte, a leading online and mobile video platform, where he led the company’s product strategy, marketing, business development and operations. (more)

KIT digital Makes Game-changing Triple Play Acquisition of OVPs, KickApps, Kewego and Kyte

For anyone who has been following KIT digital's acquisition strategy, it's no secret that KIT has been on a buying spree over the last year purchasing online video technology companies. So, it should come as no surprise that the Prague-based video management solutions provider announced a triple-play OVP acquisition this past Monday, of New York City-based social media KickApps, Paris-based Kewego, and San Francisco-based Kyte, for approximately $77.2 million ($14.8 million in cash and approximately $62.3 million in stock). All three companies – KickApps, Kyte and Kewego – each have been regarded as leading video platforms within the space with innovations in social media apps, mobile video publishing and B2B video solutions. In its press release, KIT outlined the many benefits that the three companies will bring to "the KIT digital family" and that the acquisitions "signal an era of video-driven social media."

KIT digital is a publicly traded company (NASDAQ: KITD) based in Prague, Czech Republic with global offices in 28 different countries and 3 regions, Asia Pacific, Europe and the Middle East and, the Americas, that extends from Canada to South America. Founded in 1998, KIT's VX-one platform offers a full service IP-based video asset management, delivery and monetization solutions for online video, mobile and IPTV-enabled devices, and ranges from commercial video distribution to internal corporate deployments, with a client base of more than 1,300 enterprise customers across 30+ countries.

KIT digital acquired Multicast Media in March 2010 for approximately $18 million, following the purchases of Narrowstep, Visual Connection, Morpheum, Kamera, The Feedroom and Nunet. Both The Feedroom and Nunet brands were both acquired and retired in late 2009. Last year, I spoke with Lou Schwartz, Head of the Americas for KIT digital, and former CEO and co-founder of Multicast Media, who said that the merger with KIT helped Multicast cross sell products among existing KIT customers and take advantage of greenfield markets where it hadn't been able to take advantage of previously.

KIT digital has a global presence and multi-platform three-screen delivery solution, with a greater emphasis than most OVPs on mobile handsets and set-top boxes and IPTV delivery. KIT's revenue is expected to be around $100 million in 2010, and KickApps, Kewego and Kyte, had an combined 2010 revenue estimated at about $25 million.

A triple play OVP acquisition

KIT digital is led by chairman and CEO Kaleil Isaza Tuzman, who described the rationale of the acquisitions:

“These strategic acquisitions complement and enhance our existing product offering while growing our market share across geographies and client verticals. They support the company’s aim to deliver end-to-end solutions covering each major aspect of Internet Protocol (IP) video management for our three primary client verticals: network operators, content distributors and general corporate enterprises. It is important to note that these acquisition discussions pre-date our public equity offering completed in December 2010; we have sequenced events purposefully and the proceeds from that offering continue to be dedicated to support a larger acquisition which we are currently on track to announce later this quarter.”

Will Richmond noted that KIT Digital's Deals Signal "Race to Scale" is Well Underway and it's a sign of "the maturing of the online video market and increasing consolidation." He spoke with Kyte's COO Gannon Hall (who will become KIT's EVP of Marketing relocating to its Prague headquarters) and KickApps' CEO Alex Blum (who will become KIT's Global COO) who both said that KIT's reach will help clients tap into global and green field markets. According to Hall, a concern for Kyte was the "increasing commodification" of the OVP market in the U.S., and for Kyte that meant a more narrow reach of a limited customer base.

Richmond said:

"The bet that KickApps and Kyte are making here is that KIT will be one of the global leaders as video delivery moves to an all IP (online and mobile) model. As Alex said, this is a "race to scale" and with its multiple offices and relatively deep financial resources, KIT is perceived as one of the eventual winners."

However, Gavin Campion, president of KIT digital explained that the acquisitions were not just about consolidation and market share:

“As important as the extended market reach and financial contribution these acquisitions provide, they demonstrate our commitment to ensuring that our 'VX-one' video management platform has market-leading functionality which helps our clients realize value across the video distribution value chain, from securing and capturing the right content to delivering it across multiple channels and social communities,” said “We are intent on becoming the one-stop-shop for the video needs of medium and large corporations, delivering IP video management services from the lenses of the camera shooting the video to the eye of the person watching it on any device—or, as we like to say, from 'lens to lens.'”

Summary of the acquisition benefits for KIT Digital

According to KIT, the benefits to its roll up of the three competing video companies are many, including:

An acceleration of KIT’s product roadmap by 12-18 months by adding several key technology and product features, including advanced social media tools (KickApps), superior mobile publishing and software development kit (SDK) features (Kyte), and behind-the-firewall and digital signage capabilities for enterprise clients (Kewego)
KickApps’ suite of tools deepen KIT’s ability to integrate and deploy new technology assets for accelerated client deployments
Support and extend expertise into KIT’s three major client verticals: around transportation, automotive, manufacturing and fan-based media assets (sports and celebrity sites)
Addition of strong management to KIT’s global team, with R&D and business development in San Francisco and New York
Additional revenue from acquired companies recurring licenses in a software-as-a-service (SaaS) business
The acquired companies have been growing between 20-35% per year
Quality new shareholders, including the appointment to the KIT digital board of Santo Politi, founder and general partner of Spark Capital, the venture capital firm behind Twitter, Boxee and thePlatform

Conclusion: Expect more consolidation in the OVP market

KIT digital stated that the acquisitions of KickApps, Kewego and Kyte were separately negotiated, and the companies have no common ownership. In the past year, KIT digital raised over $200 million, and almost three years has acquired 12 video companies (including: Multicast Media in Atlanta, Benchmark in India, Singapore and Asia, Megahertz in the UK, Accela in Boston and Brickbox in Prague) signaling "its intention to extend its market leadership through acquisitions, complementing its organic growth."

Ryan Lawler noted on NewTeeVee that it appears the tide has turned for once fast-growing OVP segment with KIT's ability to acquire so many of its competitors at fire-sale prices.

"Despite a string of funding announcements from a number of online video platform providers just a few years ago, it seems that capital has largely dried up. While the market for online video publishing continues to grow, it apparently hasn’t grown quickly enough to support the large number of startups offering cloud-based video management platforms.

Joseph Tartakoff also noted on paidContent that the three companies were heavily funded (KickApps raised $30 million, Kyte and Kewego both had raised more than $20 million), and KIT got the three companies at fire sale prices. This suggest, he said, that investors may have at best gotten their money back. Additionally, on Twitter, Rafat Ali said: Not a good exit for KickApps in sale to KIT, v little cash. Flashes of Ning bust in the whole category. http://cnt.to/nre

But according KIT’s chairman and CEO Tuzman, we are now beginning the third wave of video, where you need to use IP video across many different physical and virtual environments and devices, and that the OVP era will be replaced VAMS (Video Asset Management Systems) era. In this video from KIT's video blog series, he discusses KIT’s recent acquisitions and capital markets activity in 2010, as well KIT’s goals for 2010 and beyond and emerging trends in the video asset management space.

Tuzman said that KIT's aim is to garner 50%+ market share in its segment by the end of 2012. through a combination of organic growth and accumulative acquisitions:

“We believe that in five to ten years’ time virtually all mid-size and large companies will be buyers of IP video management software, and KIT is uniquely able to bridge the gap between the traditional digital video systems of today and the Internet-driven solutions of tomorrow. We realize we must move fast, which is why we are complementing growth among our existing customers with an acquisition strategy that sees us consolidating the industry.”

It's clear that KIT is on a mission to win the IP video management and delivery market, and with its reach across the globe into international markets, and with more game-changing plays like this triple play acquisition – it just may become the reigning champion within the space.

About KIT digital
KIT digital (NASDAQ: KITD) is a leading global provider of cloud-based video management solutions for multi-screen delivery. KIT digital's global client base includes approximately 1,300 customers across 40+ countries, including The Associated Press, BBC, Best Buy, Bristol-Myers Squibb, Disney-ABC, FedEx, General Motors, Google, Hewlett-Packard, Home Depot, IMG Worldwide, ESPN Star, Media- Corp, News Corp, Telefonica, Universal Studios, Verizon and Vodafone. KIT digital is headquartered in Prague, and maintains principal offices in Atlanta, Beijing, Boston, Buenos Aires, Cairo, Cambridge (UK), Chennai, Cologne, Delhi, Dubai, Kolkata, London, Los Angeles, Melbourne (Australia), Mumbai, New York, Singapore, Sofia, Stockholm, Taipei and Toronto. For additional information, visit www.kitd.com or follow the company on Twitter at www.twitter.com/KITdigital.