Online Video in 2011: A Look Back - Part 1

As we said goodbye to 2011, many articles focused on what a big year it had been in online video. While most the news revolved around YouTube, Facebook, Apple and Netflix, there was a lot more going on in online video. I recall that on New Years Eve last year, many people had said that we'd be "turning it up to 11 in 2011" and everyone I talked with over the year was kicking it up a notch across the industry. As we start another year, I want to extend my thanks to everyone who reached out to me in 2011 to contribute material to this blog, and while I couldn't cover everything that came my way, I do appreciate the time you all took to share your news and commentary.

While my output of blog posts declined, the number of video interviews increased dramatically, and I think that provided richer content through the series of online video conversations I featured throughout the year. To all of you who read my blog, watch my videos, subscribe, retweet, comment, and connect with me on Twitter, LinkedIn, YouTube, Google+, Facebook and at conferences, industry events and meetups – I thank you. I am incredibly grateful and humbled by your support.

It was also another year that consumed my time and energy like a ravenous beast that could not be tamed. I looked back on my post a year ago, and I thought I'd follow a similar format as last year and recount the news I covered on this blog in 2011 and conversations I had along the way.

I started 2011 with a 3-part year-end review about how 2010 Was a Breakout Year for Online Video and  that online video was finally showing promise as a replacement for the traditional television and cable industry, and businesses and organizations of all sizes, started to integrate video into their communications, marketing, PR and training programs.

In a surprise move at CES 2011, Skype announced its acquisition of Qik, the popular live mobile streaming startup which I said helped consolidate Skype's position as the leader of the live video calling market. More big news about Skype followed a few months later, when Microsoft acquired Skype for $8.5 billion. As the first week of 2011 came to a close, many trends had already emerged from the annual CES show. 2011 would ne known as the year of the tablets, 3D TVs, connected devices and mobile, and without actually being at the show, Apple's news that iPhone will finally be coming to Verizon overshadowed much of the other news, and that turned out to be a theme throughout the year.

Each year also brings out the many predictions of how online video, social media and technology will shape the consumer and business markets and set the stage for the future. The growth of online video was a no brainer, and many predicted that 2011 would be a breakthrough year for video advertising, with mobile devices viewing the majority of video ads. Social media integration into advertising was also expected to grow with video properties emerging as the top ad networks. I shared my annual collection of predictions for the coming the year: 2011 Predictions from Around the Web - Online Video, Social Media, Technology and More

Just few days later, when it appeared that the online video industry was moving toward a video standard, with H.264 video playback in HTML5 – more chaos ensued with Google's announcement of its plans to phase out support for H.264 in its Chrome browser, in favor of open source formats like its own WebM or Theora. The overwhelming response within the online video industry is that this move by Google would set the adoption of HTML5 video back even further, and for online video publishers, cause even more confusion and increase in video publishing costs.

Many both lauded and lambasted Google's decision while many others have shrugged it off as not being a really a big deal. Regardless of the debate around "open" and "closed" standards and patents or codecs and containers – the net result of Google's decision affected the entire ecosystem of video content creators, publishers, developers and advertisers and created an atmosphere of fear and loathing in online video.

February kicked off with big news within the online video platform market with KIT digital's  triple-play OVP acquisition 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. A few months earlier, I had 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 about Kyte's online and mobile video experience. I also spoke with Mike Sommers, then VP of Product Management for KickApps who discussed the growing importance of curation, specifically social video curation. As part of the acquisition KickApps' CEO Alex Blum, was appointed to the new position of global chief operating officer of KIT digital.

In other OVP news, Kaltura secured $20 Million investment to further disrupt the online video space, another OVP bit the dust with VBrick's acquisition of Fliqz, and Ooyala made a big move by scoring Yahoo! Japan.

I also caught up with Scot McLernon, Chief Revenue Officer at YuMe, at a San Francisco event to get an overview of two new studies YuMe had released, that demonstrate the changing attitudes of online video viewers and present 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.

Travis Hockersmith, Director of Market Analytics for YuMe, talked about the key findings of the share-shift analysis that 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. Mike Vorhaus, President of Magid Advisors at consumer research firm Frank N. Magid Associates, said that the data 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. 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.

Editor's note: This ends Part 1 of Online Video in 2011: A Look Back. Stay tuned for Part 2.

Encoding.com Sees the Future of Video Encoding in the Cloud

At Streaming Media East 2010, I spoke with Jeff Malkin, President of Encoding.com, to hear about how his company's cloud-based encoding business model works, and how the company and customer base has shaped up over the last year and half. According to Malkin, Encoding.com is the world's largest encoding service, which he says both seriously and facetiously – and described his company as the dominant player in the encoding SaaS (Software as a Service) space, which he admits is a new and emerging space.

Since its launch in September 2008, San Francisco-based Encoding.com has delivered over 6 million encoded videos, and encodes an average of 30,000 videos per day for its growing customer base. With more than 700 customers, Encoding.com powers the encoding and transcoding services of many leading video publishers and platforms including Cisco Eos, MTV Networks, WebMD, CarDomain, MySpace, Nokia, Kaltura, Vzaar and Giant Realm. While their roster of customers are impressive, Malkin admits that he's most excited by the various use cases of how their customers are applying the service, for media and publishing, user generated content, online education, news and information – just to name a few.

Before Encoding.com came along, Malkin says that most companies invested a lot capital expense into infrastructure and teams to manage in-house encoding requirements. Encoding.com helps solve the "build vs. buy" conundrum by offering a SaaS model that leverages cloud infrastructure through an XML API.  The company is the only video encoding SaaS provider integrated with both EC2 and Cloud Servers, with storage choices with Rackspace and Amazon.

He maintains that Encoding.com makes it easy at a very high level:

"You tell us where the source file is located – that can be at a CDN, cloud storage, secure FTP –  the one or many ways you want each file to be transcoded, and where do you want us to deliver it to. Which is 9 out of 10 times to your CDN for serving." 

Malkin described Encoding.com's value through cost-savings, quality, and a scalable solution:

"By approaching the market this way, we solve some critical pain points for our customers. Number one is this instant notion of infinite scalability. No longer do you need to worry about making these large investments up front or being able to predict your video encoding requirements. There's this notion of having to manage this in-house – as many of us know in the video encoding space, video encoding is somewhat of a black art, there's lots of errors that occur, it's not really a science yet – and by outsourcing it to an automated platform such as Encoding.com, it's our job to manage that effort for you, and as you know, stay on top of the latest and greatest of the technologies that continue to evolve."

Encoding.com supports all the major and emerging web and mobile media formats, including Apple's HTTP streaming and Google's new open source WebM format. In a guest post for VideoNuze, Malkin offered some insight and advise on how to navigate the video format wars.  With confusion in the online video marketplace with HTML5/H.264 vs. Flash vs. Silverlight vs. WebM, he says it's going to get a lot worse before it gets better.

According to Malkin:

"While both H.264 and VP8 are good quality codecs, only VP8 is currently royalty-free and therefore, has a great opportunity to emerge as the new leader within the next year or two. However, for web distribution today, we recommend encoding your videos using the H.264 video codec in an .mp4 container. This is a high-quality output format already supported by Flash, and the leading HTML5 browsers including Firefox, Chrome, Safari and Internet Explorer v9."

Malkin says that the mastermind behind Encoding.com is his partner, Greggory Heil, Encoding.com's Founder and CEO, and for him it was born out of necessity. Heil was running a software company focused on building and managing user-generated video sites, and wanted to streamline the incompatibility issues he kept running into with encoding and ingesting of video content. He found only expensive hardware solutions on the market and saw an opportunity to fill a gap in the market using his background in product development and application hosting services. Heil relaunched Encoding.com as a SaaS video encoding platform in September 2008, moving into the cloud and away from the company's roots of the mid-1990s where they hand coded and archived source video content from videotape formats. Encoding.com was named one of seven finalists in Amazon Web Services' 2008 $100,000 Startup Challenge.

Encoding.com also received praise from Streaming Media EVP Dan Rayburn earlier in the year, in a post: Encoding.com Would Be On My List Of Top Companies To Watch In 2010 | The Business Of Online Video.

Rayburn said:

"One of the things I really like about Encoding.com is that they are small, focused and want to be the best at only one thing. Their executives know the market, have spent a great deal of time and effort to create a very good platform and frankly, I think they are really smart. They know what they want to be, where their service fits into the market and what problem they need to solve. In just about every piece of the video ecosystem, be it content delivery or video management, there tends to be many players, but one clear leader. While Encoding.com is not the only SaaS based transcoding service on the market, they are already by far the leader in the space and I expect them to further dominate this segment of the market this year."

In addition, Streaming Media magazine selected Encoding.com as an, “Editors’ Picks 2010 – The Best of the Best”, as one of the top ten hottest companies in the world of online video.

Last week, the company released a new API that allows customers to offer Encoding.com as a white-label solution within their own platforms. In December 2009, Encoding.com closed a $1.25 Million Series A funding from VC and angel investors. Malkin says the company will use the funds to fuel aggressive sales, marketing, and brand awareness initiatives. Encoding.com plans to stay hyper focused on their core business and customers. 

Malkin also spoke at Streaming Media East panel session: B203: Automation and Workflow Solutions for Transcoding Your Video Content and you can view the archive of that session here: Conference Videos - StreamingMedia.com


About Encoding.com
Encoding.com, the world's largest video encoding service, makes video transcoding into all popular formats easy, cost-effective and instantly scalable for global enterprises and SMBs including video sites, agencies, and website development platforms. As the first and only encoding service offering service level agreements, Encoding.com removes the necessity for its customers and partners to make heavy investments in expensive hardware/software solutions and overhead required to manage high-volume video transcoding needs and backs it with a wait-time service level guarantee. Encoding.com received Series A funding in 2010 from Metamorphic Ventures and angel investors: Patrick Condon, Fred Hamilton, Zelkova Ventures, Dave Morgan and Allen Morgan. It was selected as an Editors’ Pick for 2010 by StreamingMedia. This Software-as-a-Service (SaaS) business is based in Denver, Colorado and San Francisco, California. For more information about Encoding.com, visit http://www.Encoding.com.