Ooyala CEO Jay Fulcher on the future, Brightcove and a shake out in the OVP space, Page 2

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from an innovation and technology perspective and I think that--at the end of the day--it's going to be hard for someone to compete with us just on price.

I'm not willing to lose money to win a customer. It's not good for the category. When this concept of free comes up-I have a favorite line, and I can't claim it's original, but, it's, ‘Well, there's free beer and there's free puppies. Free beer-that's a good thing. Free puppies, maybe not so good." I think savvy customers see through that.

There are 60-plus OVPs. How many don't survive until the end of the year?

Half. The VCs are starting to see it's game, set, match for at least who the top two or three players are. When that starts to coalesce, the money to go attack those companies-it doesn't completely go away-but it's radically different. I think half are out of business and maybe that's probably too conservative.

Who's the biggest casualty?

Big is relative, because big isn't all that big.

Who's the one you'd like most to go out?

You can fill in the blank. I shouldn't really name somebody that I'd like to go out of business. I will tell you--and this is a very genuine thing--I'm rooting for Brightcove to do well, because this space needs a couple of healthy companies. So, I'd like to see them not raise more money, be more capital efficient, be more innovating. It'd be better for customers, better for Brightcove, and I think it would be better for Ooyala. Now, I'm not running that company, so I don't have to worry about it.

I think that with some of the other payers, I think that the Delve Networks of the world, I think the Kalturas, some of those kind of businesses, I think they have a tough row to hoe ahead of them. It's a tough row to hoe. They all have their individually issues in place which make their situations not easy. But it's not easy for any of us, so...

Do you think CDNs are likely to-because their market is so competitive-add on services, services that might include an OVP?

CDNs definitely have to continue to think about how to continue to be strategic to their customers to the degree they can be and for sure there has been a lot of margin pressure on those guys over the last four or five years. Some have handled it a little better than others. I know that they're all trying to figure out how best to offer other services, other capabilities to sort of defy gravity a little bit in terms of the margins. Whether or not it's a natural fit for them to be in the OVP space, I'm not convinced it's as natural for them as it is for a number of other companies who have a vested agenda in this space. So that's going to be another factor in how this space coalesces over the next few years.

Google buying Episodic... surprised?

Not really at all. I think that Google has had an interest in turning YouTube from a destination site to a syndication hub. Over time they want more professional content onto YouTube. Today, they're not in a position to do that; post the Episodic acquisition they're still not in a position to do that, but it's a first step.

Google is constantly trying to figure out buy, build or partner. They're a little unusual because they're not so interested in customer or revenue, they're more interested in technology and engineers and innovation.

Episodic just happens to be a little bit of a half step on their way. The revenues are relatively minor, the amount of customers is very minor, and officially, Ooyala really likes the Episodic guys. We know them, and spent some time with them.

Was their sort of a collective groan when you heard it was Episodic and not Ooyala that Google had tapped?

A collective groan, I think, is overstating it. The quick sound bite in that is that we think time is on our side. Our business is getting more valuable every week, every month, every quarter. And, over time there are not just one, but several quality companies of that size who have an interest in this space. So, at the end of the day, there's lots of options for us.

The best option is the one we're focused on; we think we've got a more and more valuable independent company that we think we can continue to grow and develop. We're going to continue to have a really good relationship with Google, in the same way that we do with Adobe and Microsoft and Cisco and any number of other companies.

Speaking of YouTube, what's next for it?

The YouTube that Card Hurley founded is giving way to the YouTube I think that is the second generation within Google, and they're starting to be focused on other things. They're starting to experiment with, "So, how do we start to put some of that skill set and experience and background into the company and be able to get there."

Take it from something entertaining to something functional?

Yeah, like I said, the destination site-there's nothing wrong with that, when you have 40 percent of the video market-but eventually when I think they would like to hook their already world-class monetization engine to the professional content so that they could monetize it more easily.

So when Google lights up all of its dark fiber, what happens in the industry?

I'm probably not smart enough to give you all the implications of that.

It's dominoes isn't it?

Yeah, it is. It is. In some ways I think, and I think that Eric and others have made it clear that they're going to set the pace for how a lot of companies, including some of their competitors, have to think about what's going on in the market. I think that makes the market better, it makes the ability to deliver what customers want a  lot better and, so I'll be curious to see how it comes out.

What's with Ooyala and Brightcove? They were really angry at how the recent security brouhaha went over.

They were. And I think the one thing that's unfortunate is that their marketing spin cycle tended to sort of convey this somehow that we were reckless or irresponsible in what we did. To set the record straight: We did not go broadly to their customer base. We went to some customers who were looking to flip Brightcove out for Ooyala, we went to some customers who had Ooyala and Brightcove side by side running in their shop, and we went to at least one customer who was a current Brightcove customer who was engaged with us and was starting to ask some questions about security specifically. And, I'm talking about a handful of clients, not their client base, as sort of was alleged. I don't think that not only is that not irresponsible, I think that's very responsible for us to point some of that out.

We also knew, absolutely, that that would immediately go directly to Brightcove and that they would need to react and they should. So we don't really make any apologies for the process. In hindsight I think that just in terms of all the drama-which I think in some ways was cultivated-we definitely could have, maybe just gone to them simultaneous to make sure they were aware. And I think that in the future, that's what we'll do, just so there's no question about what our intent is.

We do think there are some major points of differentiation between our approach and theirs. In general, what this really exposes is that we've made a lot of progress as a company over the past year, I don't think anyone is confused about at whose expense we've made that progress, and I think they're smarting from it.

What are Ooyala's goals for the remainder of the year?

We're going to grow the company substantially year-over-year. We are more of less on schedule on the stated plan that we built back in the winter of 2009. We start to get into some big milestones, 500 and beyond customers and the expansion of where those customers are physically located. This year we're excited about that we are in a financially very self-sufficient position. We raised some money late last year, we've been really capital efficient and have been very careful in how we utilize our resources. It'll be interesting to see just how quickly we arrive at a point of profitability... which really gives us ample opportunity to decide if we are going to raise more money, maybe not. That's really our goal this year, to be in a position to have those choices.

We're kind of delighted with where we are right now, with our traction and our momentum. Along the way, there are going to be some guys who take some shots at you but usually, that's probably a pretty good sign.

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