Saturday, July 4, 2009

Ooyala Sees Growth in the Crowded Online Video Platform Market

It was a bad news week for online video businesses with Maven Networks and Joost, but it's not all doom and gloom and when you look at the financials of nine of the leading companies, as Will Richmond pointed out, they have collectively raised $64M in funding in Q2 '09 and a total of $219M has been raised by 26 companies over the last three consecutive quarters. Other good news reported by Dan Rayburn is that Brightcove profitable and cash flow positive. Dan says, "While this is a big deal for Brightcove, it's an even bigger deal for the industry and is validation that companies in this market can in fact create scalable, profitable businesses." Techcrunch also noted, Joost, Meet The Competition. Magnify.Net Sees Growth In White Label Video Platform.

I spoke with Ooyala CEO and Co-founder Bismarck Lepe yesterday to get some insight on how his company is doing and his view of the market itself which has been overshadowed by the economic downturn. In a crowded field of online video platforms Mountain View, California-based online video technology company Ooyala sees growth. According to Ooyala, in June they signed more than 40 mid to large publishers 12-24 month agreements (of which 75% were taken from other platform providers) and self-serve product grew by another 1000+ publishers.

This video, actually recorded several months ago at the Ooyala headquarters, features Bismarck along with Ooyala CTO and Co-founder Sean Knapp who talk about the core value of their online video platform which is based on modularity and how Ooyala is innovating beyond a content management system.


The following is my interview with Bismarck Lepe from yesterday. This is not the transcript from the video.

Larry Kless: So Dan Rayburn just talked with Jeremy Allaire this past week and Brightcove is saying they're profitable and we spoke several months ago and you said you were getting towards profitability. How's that progress?

Bismarck Lepe: So we've also had months of profitability, being cash flow positive and we're investing in the business and continuing to grow it -- and you know again Jeremy is doing the smart thing -- with a startup the goal is never to really to just maintain profitability. The goal is to make sure you break even; that you're covering your expenses and your investments but this isn't a dividend business. Right now we're trying to grow the market and grow our businesses quickly as possible.

I think in general no one will argue with the fact that more and more people are watching more and more video every single day and more and more sites. So this transition from a completely analog push method of video delivery is changing with the web. The mid-tail and pro-tail has actually finally found a home where they can actually amass a large viewing audience. So I'm very excited and a couple of weeks ago I had drinks with Jeremy and he's also very bullish about his business and how much growth he's seen just in the last 6-12 months.

Larry Kless: Will Richmond's post, Video Companies Raised $64M in Q2 '09, Notching Another Stellar Quarter, was definitely some of the good news, can you talk about Ooyala's numbers? I understand you've had significant growth in your big publishers and individual publishers.

Bismarck Lepe: So, month over month growth from existing publishers that have been on our platform for at least three months they're actually seeing about 10 and 20 percent month over month viewership growth. The good news about viewership growth is that it directly drives more impressions and more ad revenue for them. So that's just the core base. In June, just from our mid to large publishers and these are customers that actually signed between 12 and 20 month deals we signed over 50 of them and we continue to see growth on our self-service product. In a monthly basis we're consistently signing between 900 and 1,000 new self-serve publishers. So we think that the momentum is actually increasing.

One of the things that we've seen from a platform company has been tremendous growth internationally because a lot of the media publishers and content publishers that have historically built their own solutions abroad their just now getting into the online video space and the idea that they would build technology when they're content producers doesn't even cross their mind, they're only going to outsource it. So today we're seeing about 50% of our new monthly recurring revenue that's coming in is actually coming from international markets.

Larry Kless: When we previously Sean and you talked about the core value that Ooyala brings in terms of the modularity of the platform and also that personalized experience. So what's important?

Bismarck Lepe: Again, one of the things that really excited me about online video back when I was still at Google and trying to figure out how to monetize YouTube, was the fact that in the new media consumption world the consumer is the new brand manager and the consumer is in control and they get to decide on what they see when they want to see. And that's pretty interesting because you're giving a lot of power to the mid-tail and pro-tail content providers because they can directly find the audience that's of interest, so a couple of our customers although they probably wouldn't have enough content to have their own TV network, they actually drive tens of thousands and in some cases hundreds of thousands of daily hourly viewership online. You know you have folks like Vice TV, people like FUNimation that have niche content that have actually found an audience base online.

Larry Kless: So back to the platform, what is the value? Why should a publisher consider an online video platform vs. a YouTube or other video sharing site vs. a do-it-yourself model?

Bismarck Lepe: When we talk about online video one of the first problems that needs to be solved is just getting your content online as quickly as possible and improving the experience. So the publishing piece is important but it's very difficult to differentiate and there are a lot of people offering basic publishing and you're seeing some of the key technology and infrastructure players actually getting involved to make it easier for content owners to publish their content. Akamia has OBP and Adobe is launching their Strobe initiative.

Larry Kless: I just saw the iPhone app that Akamai has. (Note: see Akamai Launches iPhone Video Streaming And Showcase Portal (iphone.akamai.com) | The Business Of Online Video)

Bismarck Lepe: Yes, it's brilliant.

Larry Kless: And I'd add Sorenson Media too with their video delivery network.

Bismarck Lepe: Yes, and I think it's extremely important that, we've gone through the top Quantcast one million sites and we've looked at kind of where the industry is headed and we look at our business and we think we can have up to 300,000 customers today. Like the current market for online video platforms is somewhere in the neighborhood of 300,000 customers. That's pretty neat, right? These aren't the self-serve free YouTube customers these are people who are willing to pay for platforms.

But again, the first barrier to entry is getting your content on the web and then once your content is on the web you start noticing that in order to increase viewership you really need to figure out how you can recommend the best content make your content more discoverable and improve the end-user experience. So that personalization piece becomes important and as you start to bring more and more content you realize,"Well, I've really need to cover my costs." Because it's not just about proving a better user-experience on my web site or making my site stickier, now I can start driving som e real revenue.

So where we think we've differentiated our offering is really been around the monetization tools that we offer our content owners. Being able to yield maximize across several ad networks and several 3rd party ad servers then also offering our own 3rd party ad server; for in-stream, pre-rolls, post-rolls, overlays; and then the analytics, figuring out how people are consuming the content and all of that has actually been built in house and is part of the platform when someone buys one of the licenses of any one of the packages and that where we think we're going to continue to differentiate our offering. Really helping personalize the consumer experience and at the same time helping our content owners actually build a real business.

End of Part One of Interview. Stay tuned for Part Two

About Ooyala
Ooyala is a video technology company that provides an integrated platform enabling the delivery, management, and monetization of high quality video content. Committed to providing the most accessible and comprehensive video solutions to companies worldwide, Ooyala's solution is easy to use, quick to deploy, and customizable. Ooyala's partner portfolio includes 1000s of media companies including Bebo, TV Guide, Glam, and Electronic Arts. Free trial Backlot accounts can be created by clicking here:http://www.ooyala.com/products/install. For more information please visit www.ooyala.com

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