Surely one of the most enduring questions I and others who watch the online video industry are asked (and in fact often ask ourselves) is: How can video management and publishing platform companies continue to launch, even as the space already seems so crowded?
Personally I've been hearing this question for at least 6 years, going back to when I consulted with Maven Networks, whose acquisition by Yahoo was one of the few industry exits (and likely the best from an investor ROI perspective, regardless of the fact that it was shut down little more than a year later as part of Yahoo's retrenching. With yesterday's launch of Episodic and the recent launch of Unicorn Media, plus last week's $10M Series C round by Ooyala, it's timely to once again try to make sense of all the activity in the platform space.
The best explanation I offer traces from my Econ 101 class: supply is expanding to meet demand. Over the past 10 years, there has been an enormous surge of interest in publishing online video by an incredible diversity of content providers. Importantly, interest by content providers has intensified in the last few years. I can vividly recall 2003 and 2004, trying to explain to leading content providers why online video was an important initiative to pursue. Still, their projects were often experimental and non-revenue producing. Contrast this with today, where every media company on earth now recognizes online video as a strategic priority.
But even as online video's prioritization has grown, many media companies don't have all the strategic technology building blocks in place. In fact, many continue to use home-brewed technology developed a while back. The range of video features needed continues to grow and evolve rapidly. Consider how requirements have expanded recently: live, as well as on-demand video; long-form programs as well as clips; paid, as well as ad-supported business models; mobile, as well broadband distribution; multiple bit rate, as well as single stream encoding; in-depth analytics as well as top-line metrics; widespread syndication as well as destination-site publishing; off-site, as well as on-site ad management. The list goes on and on.
As media company interest has grown, technology executives and investors have taken note. Venture capital firms continue to see online video as a high-growth industry (even if the revenue model for content providers is still developing, as are many of the platforms' own revenue models), with significant macro trends (e.g. changing consumer behavior, proliferation of devices, improved video quality, etc.) as fueling customer interest. Another important factor for platforms is rapidly declining development costs. As Noam Lovinsky, CEO of Episodic told me last week, open source and other development tools has made it cheaper than ever to enter the market with a solid product. With ever lower capital needs, a new video platform entrant that can grab its fair share of the market has the potential to produce an attractive ROI.
Of course all the noise in the platform space means media executives need to do their homework more rigorously than ever. I'm a strong believer that the only way to really understand how a video platform works, how well-supported it is and how well-matched it is to the content provider's needs is to vigorously test drive it. Hands-on use reveals how comprehensive a platform really is, or how comfortable its work flow is, or how well its APIs work. While I get a lot of exposure to the various platforms through the demos I experience and the questions I ask, I'll readily concede this is not the same as actually living with a platform day-in and day-out.
Another complicating factor is that while there are some companies purely focused on video management and publishing, there are many others who offer some of these features, while positioning themselves in adjacent or larger markets. When I add these companies in, then the list of participants that most often hits my radar would include thePlatform, Brightcove, Ooyala, Twistage, Digitalsmiths, Delve, KickApps, VMIX, Grab Networks, ExtendMedia, Cisco EOS, Irdeto, KIT Digital, Kaltura, blip.tv, Magnify.net, Fliqz, Gotuit, Move Networks, Multicast Media, WorldNow, Kyte, Endavo, Joost, Unicorn Media and Episodic (apologies to anyone I forgot). Again though, this list combines apples and oranges; some of these companies are direct competitors, some are partners with each other, some have a degree of overlap and so on.
There's a long list of platforms to choose from, yet I suspect the list will only get longer as online and mobile video continues to grow and mature. At the end of the day, who survives and succeeds will depend on having the best products, pricing the most attractively and actually winning profitable business.
What do you think? Post a comment now.
This morning Kaltura takes the wraps off its "Community Edition" open source video platform, available as a free download, thereby threatening to disrupt its established proprietary competitors (e.g. Brightcove, thePlatform, Ooyala, Digitalsmiths, Fliqz, Delve, VMIX, etc.). Yesterday Kaltura's CEO Ron Yekutiel explained open source and Community Edition's opportunity. Later in the day I spoke to executives at many of its competitors to get their take what impact open source will have on the video platform market.
As a quick primer, open source isn't a novelty; it's a standard way that certain kinds of software are now developed. Successful companies like Red Hat have been built around open source. In fact many of today's web sites run on the open source software stack commonly known as "LAMP" - Linux (OS), Apache (web server), MySQL (database) and Perl/PHP/Python (scripts). Kaltura has been pioneering open source in the video platform industry which has been dominated by proprietary competitors. Ron believes the video platform industry is ripe for open source success because it has too many proprietary companies offering minor feature differences, all using a SaaS model only and competing too heavily on price.
Kaltura Community Edition's three big differentiators are that it's free for the base platform and offers greater control through self-hosting which can be behind the customer's firewall. Ron also believes that by tapping into the open source community, CE can offer more flexibility and extensibility than its competitors.
As with all open source options though, free isn't "free," because if you're interested in support and maintenance, professional services for customization and certain features like syndication, advertising, SEO and content delivery, these all cost extra. And you can't forget about the costs of the internal staff you'd need to run the video platform or the costs of the infrastructure itself (servers, bandwidth, storage, etc.). In the SaaS world, many of these costs are borne by the provider and then reflected in the monthly fee. Determining which approach is more cost-effective depends on your particular circumstances and needs.
All of this is why, as one competitor's CEO told me yesterday, the choice to go open source more often than not isn't primarily price-based; rather it's features-based. In fact, given the range of low cost proprietary alternatives (e.g. $100-$200/mo packages from companies like Fliqz and Delve), even free doesn't represent really significant savings.
When it comes to features, clearly the ability to download CE and self-host is a big differentiator, and will be valued by segments of the market. As Ron pointed out, there are government agencies, universities and others who have mandates to self-host. He also noted that by customers' gaining access to CE's code, their ability to integrate with other applications and customize is enhanced (though again, not without an additional cost).
Other industry executives countered that unless you have to self-host, these advantages are diminished by the fact that in this capex and opex budget constraints make SaaS more appealing than ever, especially for smaller customers with less in-house technical expertise. They added that they're rarely asked about self-hosting options (though that could well be due to self-selection).
Further, many of the leading video platform companies offer a slew of APIs, which open their platforms to 3rd party developers without needing to be open source per se (examples include Brightcove's and thePlatform's robust partner programs). Another industry CEO noted that while there's a gigantic and highly active open source community in the LAMP world, it remains to be seen just how vibrant it is in the video space. And it's important to remember that the intense competition among today's video platforms have already driven the feature bar quite high.
So the question remains: will Kaltura's CE open source approach truly disrupt the video platform industry, causing rampant customer switching and gutting today's pricing models? My sense is no, or at least not immediately. Instead, Kaltura will definitely grow the market, creating new video customers from those who have been dissatisfied with current choices or have not yet jumped into video, but inevitably will. CE will likely peel away some percentage of existing proprietary customers who have been eager for a self-hosted, open source alternative. For many others though, they'll be keeping an eye on open source and will successfully push their existing providers to adopt similar capabilities if they're valued.
What do you think? Post a comment now.
Wrapping up a busy June, I'd like to quickly recap 3 key topics covered in VideoNuze:
1. Execution matters as much as strategy
I've been mindful since the launch of VideoNuze to not just focus on big strategic shifts in the industry, but also on the important role of execution. I'm not planning to get too far into the tactical weeds, but I do intend to show examples where possible of how successful execution can make a difference. This month, in 2 posts comparing and contrasting Hulu and Fancast (here and here) I tried to constructively show how a nimble upstart can get a toehold against an entrenched incumbent by getting things right.
While great execution is a key to successful online businesses, it may sometimes feel pretty mundane. For example, in "Jacob's Pillow Uses Video to Enhance Customer Experience" I shared an example of an arts organization has begun including video samples of upcoming performances on its web site, improving the user experience and no doubt enhancing ticket sales. A small touch with a big reward. And in this post about the analytics firm Visible Measures, I tried to explain how rigorous tracking can enhance programming and product decisions. I'll continue to find examples of where execution has had an impact, whether positive or negative.
2. Cable TV industry impacted by broadband
As many of you know, I believe the cable TV industry is a crucial element of the broadband video industry. Cable operators now provide tens of millions of consumer broadband connections. And cable networks have become active in delivering their programs and clips via broadband. Yet the broadband's relationships with operators and networks are complex, presenting a range of opportunities and challenges.
On the opportunities side, in "Cable's Subscriber Fees Matter, A Lot," I explained how the monthly sub fees that networks collect put them on a firm financial footing for weathering broadband's changes and an advantageous position compared to broadband content startups which must survive solely on ads. Further, syndication is offering new distribution opportunities, as evidenced by Scripps Networks syndication deal with AOL in May and Comedy Central's syndication of Daily Show and Colbert Report to Hulu and Adobe. Yet cable networks are challenged to exploit broadband's new opportunities while not antagonizing their traditional distributors.
For operators, though broadband access provides billions in monthly revenues, broadband is ultimately going to challenge their traditional video subscription business. In "Video Aggregators Have Raised $366+ Million to Date," I itemized the torrent of money that's flowed into the broadband aggregation space, with players ultimately vying for a piece of cable's aggregation revenue. These and other companies are working hard to change the video industry's value chain. There will be a lot more news from them yet to come.
3. Video publishing/management platforms continue to evolve
Lastly, I continued covering the all-important video content publishing/management platform space this month, with product updates from PermissionTV, Brightcove and Entriq/Dayport. Yesterday, in introducing Delve Networks, another new player, I included a chart of all the companies in this space. I put a significant emphasis on this area because it is a key building block to making the broadband video industry work.
These companies are jostling with each other to provide the tools that content providers need to deliver and optimize the broadband experience. The competitive dynamic between these companies is very blurry though, with each emphasizing different features and capabilities. Nonetheless, each seems to be winning a share of the expanding market. I'll continue covering this segment of the industry as it evolves.
That's it for June; I have lots more good stuff planned for July!