Ooyala CEO: Online video industry is at an inflection point

Sitting under a teal beach umbrella, next to a gleaming, polished aluminum Airstream trailer in the Las Vegas Convention Center parking lot during the NAB trade show last week, Ooyala CEO Jay Fulcher looked the picture of contentment.

And why not?

Ooyala has had a solid three-year run under his leadership, is growing customers, employees and, most importantly, revenue. Fulcher said the company saw greater than 100 percent growth in 2011 for the third year in a row and has topped the 500 customer mark--many of which, like ESPN, are legitimate A-listers--and is causing some buzz in it sector.

Life is good. And busy.

Fulcher, took over as chief exec at Ooyala, which is venture-capitalized and privately held, when it was a small shop of just 25 employees. It now counts 250.

Even so, the culture for which the Silicon Valley-based company is known--part swagger, part joie de verve--hasn't changed.

"What do you think of this?" Fulcher asked, sweeping his hand across the green indoor/outdoor carpeting, picnic tables and umbrellas that are scattered around the trailer, making up Ooyala's alternative booth (it has no presence inside the convention center).

Smack in the middle of the busy lot, with taxis carrying convention goers streaming by its fluttering logo-bearing flags, it's a marquee setting for the online video platform.

That's a position Fulcher sees as appropriate to the OVP space in general.

"I think we are seeing a mainstream recognition and acknowledgement that online video is an important part of any business," he said. "People are no longer wondering whether this is real, we're at an inflection point in the market."

Fulcher said Ooyala-powered video is reaching one-in-four people in North America, and it's seeing growth in Europe and in Asia, where its platform is used by Yahoo Japan.

"Just look at the scale and scope of online video," he said. "People are no longer wondering if it's going to work; they're no longer wondering if they should do online video."

Part of that, he said, is that there have been advances in how to monetize online video better... the value proposition is evolving. As video resources are managed in a more sophisticated way, it's reaching consumers better.

"It's getting to all screens, from the gaming platform to the 10-foot experience," he said.

He points to Ooyala's recent expansion of the company's analytics to help personalize online video recommendations as one way the space has matured.

"We've been focused on analytics since we launched," he said. "But this takes it a step further, and it sets us apart from other companies."

Fulcher said Ooyala's trying to stay ahead of, and to lead, in a space that's changing quickly.

"It's transforming, " he said. "Publishers and content creators increasingly are looking for ways to get content directly to consumers, creating new options for monetization."

And, Fulcher said, the resistance that he felt when he walked into meetings with content owners and broadcasters just a couple of years ago has waned.

"Back then I might walk into a meeting and explain what we do... the reaction would be along the lines of ‘what is he talking about?' That doesn't happen anymore," he said. "Now, those executives have a desire to get that content online."

Part of that, he believes, is because the technology to deliver video keeps getting better. Adaptive bit rate continues to improve, reliability and consistency across the industry has become more standard. Expectations for five-9s quality are getting closer to reality.

The OVP space is a competitive one, with a number of players, including Brightcove, thePlatform, KIT Digital, Kaltura and others, competing for the same pie. That's somewhat mitigated at the moment because the pie is continuing to grow, rapidly.

The biggest threat to any growth in the industry is that posed by do-it-yourself solutions that have been in place with some content owners and distributors from the early days on online video.

"Content owners tend to retreat to things they know best, their content, for example," Fulcher said. "The challenge in our industry is convincing them that we can do a better job than they can with that content. And that they should concentrate on what they know best."

With the explosion of online video, and no real roll up in the space, pricing pressure remains minimal, at least among big content providers.

"At the high end of the market, the guy is more concerned with getting a solution into place that is high quality and reliable," he said. "You begin to see pressure as you move down into the market."

As the market has matured, the opportunity for start-ups to enter and play a disruptive role has lessened.

"The bar is just getting too high," he said. "It's not a simple thing to do and there are a lot of barriers to entry."

And, he said, smiling, "Nobody has been more disruptive in the space than Ooyala anyway."

In the year ahead, Fulcher said, Ooyala will continue to push analytics hard, rolling out new iteration on a regular basis.

That "actionable information" is what will continue to drive Ooyala's growth in a market that has a long way to go.

"This industry is absolutely in the whitewater right now," he said. "There were a lot of skeptics just a couple of years ago about how the consumer would react to online and over-the-top video, about whether they would engage with it. That's not the case anymore. The skeptics have changed their mind."

Fulcher, like many executives leading start-ups in the online video space, said one of his biggest concerns now is whether Ooyala will be able to keep pace with the growth.

"There's just so much being asked for by content owners and you gotta be able to deliver," he said. "We're optimizing and managing our growth and we're to a point, frankly, that we can finally be as opportunistic as we can."

One of those opportunities, he said, comes whenever Netflix announces it's planning an international roll out.

Netflix (Nasdaq: NFLX)'s U.S. success has helped raise awareness of OTT. But Netflix's international expansion plans have created what Fulcher calls the "Netflix Effect," the reaction of incumbents in a country to which Netflix has announced plans for expansion. "The phones just start ringing off the hook," he said.

After Netflix announced plans last year to expand into Latin America, he said, that region's fourth-largest cinema company called for help in setting up an offering of its own, a "Netflix-in-a-Box," and they wanted it quickly.

"They said, essentially, that they wanted to eat their own lunch before somebody else did, in this case, Netflix," he said.

As Ooyala has grown, Fulcher said, it's been challenging not to lose that kind of agility as a company.

"And the same time, we need to keep in mind that we're a leader in this space... people watch us," he said.--Jim