In part two of my interview with Ooyala CEO and Co-founder Bismarck Lepe, he talks in more detail about how his company is expanding their offering within the online video platform market with a key focus on personalizing the consumer experience and at the same time helping their content owners build a real business. In the previous post, he described that in the new media consumption world of today the consumer is the new brand manager and is in control of what they see when they want to see it. Ooyala has analyzed where the industry is headed, based on data collected by Quantcast, and believes that the current market for online video platform is roughly of 300,000 customers who are people who are willing to pay for an online video platform. For startups within the online video space, Lepe emphasizes that you need to know how to make your customers successful and help them build their businesses.
Larry Kless: When we spoke a few months back you talked about the subscription model and your plans to roll it out in Q2. Where is that now?
Bismarck Lepe: We've already started rolling it out with a couple of sports teams as a white-label and a pay-per-view model and one of the other monetization options that we're most likely going to be adding is licensing, and actually allowing content owners to license their content out to distributors. This has definitely been as evolution. When we look the majority of the dollars being made in the offline world the majority is actually made at the licensing phase. People who are taking digital rights and buying it for a certain window and a certain region and then figuring out how to target that content and sell that content to their market. There's so much content that's being created for online that the need for that marketplace is actually pretty rich, and I think it's also very rich for people who are taking their offline content and pushing it online and creating little clips for it. So I think it's going to be another monetization opportunity for content owners that will really start helping subsidize the creation of high quality content.
Larry Kless: What's next? What are you going to build on from there in terms of expanding throughout the following quarters? What's important?
Bismarck Lepe: I think what's really important for us right now is personalization and bundling of content. Really figuring out our audience either at the profile by profile level or if we're provided any individual log in and customizing the viewing experience for each one of those viewers. One of the problems with monetization today is that most people look at it on a title by title basis. But if you can actually create these dynamic and virtual networks around an audience then you can actually get bigger ticket prices. You can almost create a hybrid subscription and monetization model that mimics a lot of what the cable industry does today. So it's this hybrid of you pay your monthly cable subscription but then you also see advertising. And lot of what we're doing right now is being able to create these dynamic networks on the fly based on the content that's flowing through the system.
Larry Kless: Can you talk about the journey? Where you started and where you're at now. I understand that initially the tools were built because of the idea to be a destination site but the tools were just so great that changed.
Bismarck Lepe: I think we've taken advantage of the fact that content owners are putting more and more of their content online and we're realizing that the content owners want to be the masters of their future and they don't necessarily want to work with individual destination sites to power all of their video. Even today although Hulu has been successful in terms of getting mindshare, I don't necessarily know if that's going to be the model that's going to work for all content owners. Because again, it's very difficult for a destination site like that to get to profitability when they're only taking a fraction of a fraction of a dollar.
Larry Kless: Hulu is a good example too of the studios doubling down on two of the screens, computer and television and an iPhone app sometime soon.
Bismarck Lepe: I think that they're are going to be successful in gaining mindshare but ultimately I think what's going to be most successful is, a lot of these individual sites are built around a specific audience base as oppose to trying to aggregate as much viewership around all of the content that's out there. Because I think the economics are just not going to work for a lot of these property owners. But we'll see, I think what Hulu has done is actually get a certain level of adoption and acceptance at the studio level that is also helping raise all ships in the video space. You know people who are providing analytic solutions, people who are providing ad serving solutions, people who are providing CDN services.
Larry Kless: Finally from the distribution standpoint for content owners they're finally able to sink their teeth into real analytics with online video versus the Nielsen ratings. In looking at your list of customers on your web site it's pretty diverse. It must feel good to be able to provide this level of service to such a wide variety of customers.
Bismarck Lepe: Yes, and in June some of the customers we signed include Warner Media that owns Rolling Stone and US magazine, the Philadelphia Eagles and even Cesar Millan "The Dog Whisperer."
You know, I'm extremely bullish on this industry as is true with most sea changes in technology or ways of thinking. There are a lot of players, there are a lot companies that try to blaze a new trail. Some of them are successful and some of them are not and I think we're now starting to see some really good traction with the people that own the content and the people who are consuming the content online.
Larry Kless: So you've built in the API structure and extensible modules. How about the pricing structure?
Bismarck Lepe: So again, were focusing on the top 300,000 publishers that are out there and we have an enterprise solution that gives big companies multi-level access and multi-level access controls to the individual pieces of content, sophisticated analytics, live streaming and at the low-end a five figure annualized deal to six figures annualized deal and then we have our self-serve product that is available to anyone and everyone that wants to publish. Obviously they need to pay an hourly basis for the content that they use but we want to make sure that we enable the building of businesses all sizes with our platform and on our platform.
Larry Kless: So what drives you? What make the company tick? Being a long distance runner, what makes you put on those shoes and run everyday in this race?
Bismarck Lepe: For me, it's making sure that we are personalizing that media experience. I should never have to see a tampax ad I should only see content that's interesting to me and the Internet allows us to do that. And more and more of video is going to be delivered over IP which means across all screens we're going to be able to personalize that experience and that's our goal. Our goal is not just to build a publishing platform but to build a personal media platform.
Larry Kless: What sort of advise would you give a startup getting into this saturated market? What are the key differentiators?
Bismarck Lepe: I think you need to know how to make your customers successful. It's not just about taking their money but it's about helping them build businesses, and the way we think we're going to help our customers build businesses is by focusing on the consumer and continuing to drive the best possible experience with our platform. Now as a business owner and starting a company, at the end of the day, as long as if you're in a good a industry and you have good people it's going to be sheer force of will. As a startup you either sink or swim and that's it, there's no middle ground.
Larry Kless: In terms of your company, it seems that anytime you see news now you almost can't see a sentence that says Brightcove without seeing Ooyala in the same sentence. You also mentioned having drinks with Jeremy Allaire recently. How is it within the online video platform space? Is it a community of innovation or cut-throat competition?
Bismarck Lepe: I think that the people who are going to be successful in this space are going to realize that there's so much opportunity out there and that at this point everyone should be focused on helping make the pie as big as we can make it, and then we'll figure out it gets divvied up. But in the near term on the higher end there actually isn't that much competition and there isn't enough business out there for everyone who is approaching it the right way.
Larry Kless: So you never take a day off, do you?
Bismarck Lepe: You know, this really isn't a job so everyday is a day off. I love what I do.
Larry Kless: So overall it sounds like it's been a good journey so far with plenty of road left to cover.
Bismarck Lepe: I've been very lucky to have great team mates, great founders, great investors and a phenomenal industry. Back when I first got a taste of this when we were working on Google's first foray into the video space with Google Video, the studios and the broadcasters weren't as receptive to testing online video initiatives. But that has definitely changed, I think everybody understands that all video will eventually be delivered over IP, that the consumer is going to be in control and that they need to come to the table and talk to startups and they themselves need to push initiative in order to be relevant 5 years from now.