Online video platforms – why have two of the heavy hitters recently struggled?

Online video platforms (OVPs) are fee-based, software-as-a-service (SaaS) online content businesses that enable content owners to ingest, transcode, store, manage, protect, publish, syndicate, track and monetise online video.

As video becomes increasingly critical for communication, collaboration and revenue across the world, the global OVP market continues to grow exponentially. A 2016 research report stated:

With about 80 OVP vendors across the globe and growing, Frost & Sullivan predicts the OVP market to almost triple revenue from $574.5 million in 2015 to $1.6 billion in 2021, a compound annual growth rate of 18.8%.

OVPs have benefited from...

• The increasing penetration of broadband
• The ever-increasing use of connected devices
• Growing demand for content anytime, anywhere and on any device
• Aggressive investment in over-the-top (OTT) and TV everywhere (TVE) strategies

But despite these positives, we’ve noticed some of the online new tech companies have, surprisingly, hit the skids to a certain degree, which is why we thought it’d be interesting to understand in more detail the reasons for these issues.

Why are some emerging video distribution platforms faltering? What – and who – are their biggest threats?

Brave Bison

Founded in London under the name Rightster in May 2011, the software company – which handles the distribution (including live streaming), marketing, rights management and monetisation of digital video content – performed strongly in its early days.

By March 2012, monthly video views of Rightster’s clients grew from approximately one million views per month to 100 million views per month, and the number of people it employed quadrupled during that time. Content partners included London Fashion Week, ITN Productions and The Guardian.

But Brave Bison, as the company’s now known, has run into trouble.

The loss of two contracts at the end of 2016 the potential closure of certain low-margin areas of the business led to a fall in the company’s share price, warnings that 2017 revenue would be “substantially lower” than that of the previous year and the resignation of both Ashley Mackenzie, the chief executive and son of former Sun newspaper editor Kelvin Mackenzie, and Simon Pont , the chief strategy officer, which in turn have triggered a boardroom reshuffle (former chief operating officer Richard Mansell had already left his role, citing “private family reasons”).

Mackenzie stepped down on 9 January “following a disagreement with the board…on the future strategy of the company and the timing of any potential exit”.

The company operates three divisions – a content production studio, talent agency and brand-funded content – but, according to one investment website: “The overall impact of the strategy shift and the contract losses is that it is expected to take a little longer than originally anticipated to achieve profitability.”

Brave Bison has reduced employee numbers and property costs as it looks to bounce back. Its share price, meanwhile, is at an all-time low of 1.125p, down from a high of 80p in 2014.

Ooyala

Providing a service that’s used by the Times of India, Disney, News Corp and the Telegraph Media Group, Ooyala is, according to the company’s website, “one of the world’s largest premium video platforms, a media logistics solution for video production workflows, and a holistic advertising platform for direct and programmatic trading”.

One of Ooyala’s major clients is Sky Sports’, the Silicon Valley-headquartered company handling the UK broadcaster’s linear and digital rights, making all in-game clips available for download and redistribution within minutes of their live transmission.

But Ooyala, which was acquired by Australia-based telco Telstra in 2014, has recently laid off about 70 people, which equates to 14 per cent of its total workforce.

Acting CEO Issac Vaughn said in a statement:

The restructure...will put more specialized product, sales and channel resources in the field, and significantly grow our technical support staff to improve customer enablement and long-term customer success.

So why are such video distribution platforms faltering? Who – or what – are their biggest threats?

Threat No.1: competition

Dan Rayburn, who’s considered to be one of the foremost authorities, speakers and writers on streaming media technology and online video business models, wrote recently:

While having to let people go is never good, in this case Ooyala is using the layoffs to re-focus their business.

Ooyala definitely got a bit too big when it came to the number of employees they had working on their OVP product line and re-focusing the business is a smart move on their part. The online video platform market is not as big as some think which Ooyala’s acknowledges in their memo saying the market is “becoming more commoditized by the number of competitors and large enterprises entering the business“. So making sure their workforce and investments are equal across all of their services, and realigning their workforce around that is a necessary step.

Some have said that there are “just too many [OVPs] to easily compare them”, while others agree:

There is confusion around what constitutes an OVP owing to the number of features, including transcoding, digital rights management (DRM), analytics and multiplatform delivery.

Key competitors

The biggest players (along with Ooyala)

• Brightcove – the market leader. Frost & Sullivan reported:

Approximately 12 years ago, Brightcove helped create the original OVP space based on the vision that video would become the principal online communication medium.

Frost & Sullivan ongoing analysis confirms that the company maintains its leadership position in the OVP market - capturing approximately 23% of market share.

The company powers some of the world’s largest publishers, enterprises, networks, broadcasters, and digital media companies.

Brightcove’s global presence includes nearly 5,000 customers across 75 countries.

Other big players include thePlatform and Kaltura, while others who enjoy market dominance in a particular region include:

• XStream (influential in Europe)
• Arkena (also key in Europe)
• Samba Tech (Brazil/Latin America)
• Viocorp (Australia/New Zealand)

Other OVP providers:

• Wistia
• Piksel
• Clearleap
• Anvato
• Neulion
• Vzaar

Threat No.2: lack of market awareness and education

Continuing the point made above, on the apparent confusion surrounding the market and OVPs, the Frost & Sullivan report also suggested:

From a customer's perspective, comparing various product features, pricing and deployment options is complicated, and the report warned that this lack of market awareness around exact capabilities of an OVP makes consumer education and the right messaging critical.

Threat No.3: capital

In Brave Bison’s case, the Simply Wall St investment website said:

Brave Bison Group currently has to rely on external funding to even run its business. This is a clear sign of financial distress and even a threat to its existence if it doesn’t grow fast and profitable enough to cover at least its operating expenses.

Threat No.4: video managed services

There’s a growing market occupied by external service providers that look after entire portions of content companies’ workflows. This outsourcing is worth $2 billion and challenges the growth of OVP.

Threat No.5: low-cost/no-cost alternatives

The take-up of OVPs is more gradual in regions where the economy is growing at a slower rate and where budgets are constrained – and these forces tend to drive small to medium-size businesses and smaller content providers away from investment in professional OVP providers and towards low-cost alternatives such as YouTube and Vimeo.