Saturday, January 18, 2014

Online Video Conversations: AJ McGowan, Unicorn Media (now Brightcove)

The online video platform leader Brightcove acquired Unicorn Media on January 6, 2014 for $49 million, consisting of approximately 2.9 million shares of Brightcove stock and approximately $9 million in cash. Unicorn Media is a leading video technology platform company specializing in dynamic ad insertion in the cloud. Unicorn Media's key technology is a product called Unicorn Once, that enables dynamic optimization of video content, either live or VOD, across any Internet-connected device through a single URL, and monetize video content by dynamically inserting and analyzing targeted ads through its patented video cloud technology. Unicorn Media was founded in 2007 and made a name for itself within the online video platform space with more than 50 customers in the broadcast TV sector and $5 million in revenue in 2013. Boston-based Brightcove established itself as the first online video platform (OVP), founded by Jeremy Allaire in June 2005, and went public (NASDAQ: BCOV) in February 2012.

I spoke with AJ McGowan, Chief Technical Officer of Unicorn Media at OTTCON 2013, where he discussed Unicorn's product roadmap and customer experience, its perspective on the state of the online video industry, the challenges within the fragmented market, and where Unicorn would be in 2014. With the acquisition,  McGowan will assume of the role of CTO at Brightcove, and Unicorn's video team and its Once technology joins Brightcove's Video Cloud and App Cloud platforms, and Zencoder, a cloud-based encoding platform and open-source HTML5 video player Video.js, acquired by Brightcove on July 26, 2012 for $30 million.

According to McGowan, the online video industry is at a tipping point. "If you were to compare this, for instance, to the conversion from terrestrial broadcast to cable broadcast, we're probably roughly 1978 or maybe the early 80's, so we're definitely in the early days," says McGowan. "There's massive opportunity that's still in front of us and people are experimenting. There's a lot of fragmentation in the marketplace. There's a lot of complex problems, and we solve a lot of those problems."

McGowan admits that all the complexity is actually great for business, and that throughout 2013 we'll continue to see growth. "Particularly now that we're allowing our customers to monetize their content effectively on all platforms," says McGowan. "That spurs those folks forward to actually putting that content on more platforms. I think we'll continue to see lots and lots of organic growth, and I think we're going to see a lot of different models being applied and we're really excited as a back-end technology vendor, because we make it a lot easier for people to experiment and try different things as they build those audiences."

Some of the challenges facing the industry as a whole, as McGowan points out, is in the friction of the monetization process on the business side. A lot of the hard technical problems have been solved, but one of the biggest problems yet to be solved is how to make an optimal experience, from the brands buying the ad all the way out to the consumer and all constituencies in that value chain. But a lot of smart people are working on solutions now that there's real money flowing into the space.

"I think that a big theme that you're going to see in the next 12-18 months, is as more dollars are being added to this business, as it starts to scale up, how do you make it dial tone? There's this expectation from users whether they're paying for content or whether they're consuming it in an ad-supported way, in either case when we're talking about premium content delivered out to massive audiences, it's go to just work," says McGowan.

So looking into the future, it's going to be all about scale. "Scale, scale, scale," McGowan emphasizes. "How do I get to more users in more places in a consistent high-quality broadcast experience."

This interview was recorded at OTTCON March 19-20, 2013.