Ooyala founders share their grand vision

Video delivery and advertising platform wants to serve soup-to-nuts to the head-to-tail

Back in 2006, I wrote about Brightcove, a rising star in the video platform business. Two years later, online behavior has changed, technology has improved dramatically, business models have iterated, and, of course, newcomers are trying to redefine what former newcomers tried to do not so long ago.

Today, Ooyala is that seemingly rising star in the video delivery and advertising business. It’s different in many ways from Brightcove. But its ambitious is just as grand. 

“Our goal in building our company was very similar to the way that Google has done AdWords, build a very sophisticated, scalable and extensible platform and make it accessible to all businesses of all sizes," said Bismark Lepe, CEO and co-founder of Ooyala. Lepe and his younger brother, Belsasar Lepe, and former Stanford dorm mate, Sean Knapp, recently visited me at the Vator studios. Oh, his brother and former classmate are also his two co-founders. And, did I mention they all worked at Google and run together? I digress. 

Ooyala wants to be the comprehensive video delivery and monetization provider for sites that span the head down to the tail. In addition to its Google-aspired approach to building its platform, Ooyala has an aggressive approach to building market share. Recently, it launched a promotion aimed at Brightcove customers.

As an owner of a video publishing site, I’m always interested in learning about video platforms. We never used soup-to-nuts providers at Vator because we've always wanted the flexibility to put our platform together and choose the best-of-breed and low-cost providers for transcoding, delivery, analytics, advertising, syndication, etc.

Soup-to-nuts video offerings can be a tough sell because a lot of flexibility is lost.

But then I learned more about what Ooyala is offering. Yes, they do provide a comprehensive suite of offerings to deliver and monetize video. They also offer, however, the option to buy a la carte. 

Now, when it comes to ambitious and multi-faceted endeavors, I'm pretty skeptical. It's hard to be good at all things, let alone great. So, I asked why Ooyala decided to offer delivery all the way to the monetization and syndication.

It comes down to economics. And, as a video publisher, it makes all the sense in the world.

“When the company originally got started, we were going to focus on monetization,” said Lepe (the older). But in order to monetize, there had to be a good delivery system in place, he said, suggesting the pricing for delivery had to be priced low enough in order for video publishers to make money on the advertising. Hence, the reason to provide a good soups-to-nuts offering to make the economics work, he suggested.

Today, Ooyala can have over 10 CDNs (content delivery networks) to work with to get the best delivery prices.

Ooyala, which raised $10 million in venture funding ($8.5 million of which came from Sierra Ventrues, $1.5 million in angel), is trying to redefine the way video is monetized by aiding in the way it's delivered.

The Mountain View, Calif.-based company started in the spring of 2007, and by December 2007, it had won the $100k Amazon API prize. A full version of its delivery platform was launched this past April. To date, the company has signed over 700 paying customers, ranging from Warner Brothers, National Geographic, Slide, Glam to Cool Plumbing Videos.

The larger media sites account for 40% of the company’s revenue, the “fat belly” of properties make up 40% of revenue, and small publishers account for 20% of sales, according to Lepe (the older). As it turns out, the established companies prefer to buy per component. Smaller publishers, which pay about $25 to $30 per month, pay for the full suite. Larger sites pay several thousand dollars per month, and the larger accounts pay $50,000 per month (though I'm not sure if Ooyala has landed any of those). 

When you hear these different models and different sales paths, it does make you raise your eyebrows. Of course, it's OK to have these different tiers of customers. But at such a young age, it does seem like too many wheels turning in different directions.

But the team has an intriguing proposition. And, their monetization ideas (which was discussed in a second interview that will be published in the next couple weeks), will make anyone take a second look at their offering.