Aussie telco giant Telstra invests in Ooyala video site

For its fifth round of funding, Ooyala bags $35M to further scale its international presence

Online video is a booming and crowded marketplace filled with companies looking for the magic formula that makes the content owners, advertisers and viewers happy. One company looking for the perfect balance, Ooyala, has just announced its fifth round of funding to the tune of $35 million. 

This round was led by Telstra Applications and Ventures Group, the investment arm of Australia’s telecom giant, Telstra. Previous investors Sierra Ventures, Rembrandt Venture Partners, and CID Group also participated, along with several other strategic investors.

The new round of capital brings the startup’s total funding to just under $80 million, and adds Gary Traver, director of Telstra Media, join the company’s board of directors.

Founded in 2007 by Sean Knapp, Belsasar Lepe and Bismarck Lepe (all former Google employees), Ooyala now delivers content to over 6,000 different domains, reaching nearly 200 million viewers. The company also claims that one in four Americans watch Ooyala-powered video each month.

As of this announcement, Telstra is also working on a commercial agreement with Ooyala that would allow the telecom company to become a major reseller of Ooyala content and deploy Ooyala’s software, analytics, and service offerings throughout Australia.

Ooyala already works with Telefonica and Yahoo Japan in this reseller capacity and is eyeing further, global expansion. 

Some of the companies using the Ooyala platform to deliver video content to users include ESPN, Sephora, Victoria’s Secret, Rolling Stone, and North Face. 

While Telstra is an Aussie company, the telecom company has presence in 15 countries, including China, and owns Australia’s biggest integrated IP and broadband networks. So this looks like a big win for Ooyala.

Back in April I chatted with the Ooyala team about the company's new product, referred to as a tool of content discovery, that enables publishers to increase their advertising revenue on multi-screen experiences by tailoring content to the unique viewer. 

For example, if a person goes to ESPN's website from their iPad to watch clips from a recent basketball game, the content discovery tool would then monitor the viewer's habits based on that given device and might suggest follow-up content of a similar length that others watching that show enjoyed. I know that my viewing habits on my laptop are different than my viewing habits from my iPhone or my HDTV.

On my laptop I might watch a single episode of a TV program and would be more likely to watch a movie on my television and a music clip on my iPhone. Ooyala's new product can tailor those habits and make sure not to suggest content that is much shorter or longer than you usually watch on that device -- this also translates to smart ads that fit the profile of the viewer and aren't 30 seconds long when you are watching a four minute clip. 

These types of tailored options for a brand's viewers increases the likelihood that they will remain on the site and discover more content that is enjoyable to them -- thus resulting in more video ads viewed and more revenue dollars.

In pre-release ,with select customers, Ooyala found that the tailored content was already driving a four-fold increase in consumer engagement, meaning longer viewing periods, more videos completed and ultimately improved monetization. 

I sat down with Bismarck Lepe, Ooyala's co-founder and president of products, the other day and he explained to me that as more people shift the time they are watching video content to online methods, people are going to gravitate to the services that have the best elements of television with the personalized aspects of on-demand viewing.

"With only about 10% of the video viewing population spending a significant amount of time online, the video management field is wide open," Lepe said. "But it is the experience that people are going to compare when they make their choice on what sites they will come back to over and over again."

This may sound similar to advertising experiences, and it is to a degree, but since the video is what brings the consumer to a site and the content that they like is what keeps them their through the commercial, creating a better system of content suggestion and discovery is crucial in improving the online streaming ecosphere.

Ooyala plans use its new capital to help Telstra integrate its technology, as well as to initiate further expansion outside of the U.S. with multiple service operators and TV programmers, specifically in Asia, Europe, and Latin America.

To date, more than half of Ooyala’s business comes from international viewers, and has fueled the company to nearly quadruple revenues since its last funding round in 2010.