Back in September 2007, I emailed the CEO and CTO of Blip.tv - the company whose amazing video player we use on our WatchMojo.com property to partner with Tubemogul- the company whose amazing analytics and syndication tool we use to distribute videos.
Here’s the email:
———- Forwarded message ———-
From: Ashkan Karbasfrooshan <ash@mojosupreme.com>
Date: Sat, Sep 1, 2007 at 2:02 PM
Subject: Syndication tool suggestion
To: Justin Day, Mike HudackI noticed you guys automatically syndicate to myspace, internet archive etc., which is really smart and useful.
But, you should look into tools like Tubemogul, I think these automatically add you to 6-10 other destinations like Veoh, Revver, Metacafe, etc. Could be a good add-on.
Cheers
Ash
Eighteen months later, it’s materialized… so yes, it takes time, but this shows that Blip.tv and Tubemogul listen to the needs of their market.
The deals were signed almost twelve months ago, but the folks at Blip.tv have been working on implementation and QA… which is no surprise given how robust their platform is.
But it didn’t stop there: today Blip.tv announced a bunch of integrations with main players such as Freewheel, Roku, Verizon Fios, Sony, NBC and YouTube.
It’s these kind of deals that are cementing Freewheel, Blip.tv and Tubemogul (and of course YouTube) at the intersection of content, advertising and technology…
A couple of quotes: one from CEO Mike Hudack, “for the first time ever, talent and hard work are a greater determination of success than contacts”. Quite true. I also echo Tubemogul’s CEO Brett Wilson’s assertion that “Blip.tv is the best solution for web creators”.
This was my third time in the Blip.tv offices and as an entrepreneur, I guess the nicest compliment I can pay them is that they serve as a blueprint for many ambitious startups.
TV content companies have a very hard time justifying moving their libraries online. To quote NBC Universal chief executive Jeff Zucker, why trade analog dollars for digital pennies. Sure, right now, the Web is offering media companies digital dimes, but we’re far away from a 1 for 1 swap.
Judging by the fact that TV remains a bigger advertising pie that online,
and a much bigger advertising pie that online video,
I don’t see this hesitation and fear of cannibalization fading away anytime soon.
But what I do see happening, and we’re in fact seeing it on the front lines at WatchMojo.com, is Web content companies moving aggressively to cable… where the ad dollars and licensing models “make the pie higher”, to quote another chief executive.
A number of companies are trying to facilitate this, the latest one is Clearleap, who has signed on Blip.tv, Revision 3 and Next New Networks (Blip.tv is an aggregator, Revision 3 and Next New Networks are creators). Read more about them here and here.
This poses a major challenge to traditional media companies, it’s one thing to acknowledge - like Disney’s CEO Bob Iger - that media is being increasingly consumed online and traditional media has to be there… but it’s another thing to actually “release the hounds”, because what you end up doing is accelerate the pace at which you shrink your business.
But now that some online content creators can move upstream and eat away at traditional media companies’ revenue streams… then the fear and envy of TV executives only intensifies.
This gives new definition to my saying, when it comes to online video: those who can won’t and those who want can’t.
I am not one to think that new media companies have a massive edge in this fight(I don’t even view it as a fight, frankly, since content creators from new and traditional media will eventually both diverge and converge on different levels), but I do believe that there is a massive opportunity to disrupt traditional TV companies, which is something that companies like Revision 3, Next New Networks and our own WatchMojo.com are doing at the expense of traditional TV firms.
See my earlier post on Blip.tv’s funding, in which they state that it served more than 51 million video views in September 2008, from more than 37,000 actively updated Web shows.
Working out the math: 51M streams / 37K video producers = 1,378 streams per partner per month. While this seems low, it’s the quintessential quality vs. quantity dilemma. For the record, I think Blip.tv is going about it the right way, foregoing the UGC or pirated type of content for quality made-for-web video content.
As I disclosed previously in the earlier post, we use Blip.tv but also syndicate widely to places like MySpace, Hulu, YouTube etc. That would be our “network”, where we do anywhere from 3-5M streams per month on the Web, but only 100,000-200,000 (so less than 5%) of those come from WatchMojo.com/Blip.tv (since we’ve integrated Blip.tv’s player in our CMS), which is what I refer to as our “property”. Mind you, for some reason, this past month we’ve seen a spike in our daily streams on the property:
I keep an eye on our total streams, which are powered by our network… I have come to accept the fact that we will do 30-50x more streams on our network than on our property, but it is nice to see our property grow too.
Anyway, from those numbers, that would make us one of the larger video content creators using Blip.tv, I suppose. The challenge for Blip.tv would be to parlay the relationship it has with content producers such as WatchMojo.com to extend its reach elsewhere online. I am not sure it wants to do this, but if it did, it would tap into a much, much larger pool of high quality inventory. We shall see what Blip.tv uses this additional funding for… but when you consider that Blip.tv is headquartered in Manhattan, one hopes it is to extend its reach onto Madison Avenue, too.
Our friends at Blip.tv raised some money from Bain Capital. In case the name sounds familiar, that is the company that Republican Presidential candidate Mitt Romney ran for years. This is the second institutional round for Blip.tv, who Tech Crunch notes is keeping its cards to its chest. Smart move. A lot of companies spend more time issuing press releases touting how much capital they’ve raised, all the while neglecting their clients and partners. From our experience working with Blip.tv (disclosure: we integrated their player in our CMS when we relaunched the site in August 2007), they are the polar opposite of that.
In the summer of 2007, we had to make a call between:
- integrating VideoEgg’s player
- going with Brightcove
- building our own player from scratch
- integrating Blip.tv’s player.
We went with option d, and especially in light of Video Egg getting out of this market earlier this year, this ranks as one of the best moves I’ve made in my career… because had I picked Video Egg and had to migrate away to something else this year, I would have lost it. Every week, some company calls us and offers us their platform pro bono in the hope that we migrate away from Blip.tv… consistently, we say thanks, but no thanks.
As you know, financing processes take 6 - sometimes 12 - months. When you see companies raise money these days, you know they are top notch quality companies backed by great managers. Why? Financiers have the best excuse in the world to back out of deals these days (hmm… “the world is melting away!”) so when you see deals being announced now, it means that much more.
Worth noting:
Blip.tv was founded in May of 2005 and has grown to serving more than 51 million video views in September 2008, which would represent a 250% increase compared to September 2007. The company now distributes more than 37,000 actively updated Web shows, which release an average of three new episodes per month.
Technically, we’re one of those 37,000… but we produce 100-150 segments per month, and publish 50-100. Admittedly, our videos are 1-3 minutes… but still.
From TubeMogul:
About a month ago, we launched a “Top 40″ list of the users getting the most views from videos deployed by us (an admittedly biased list, but an interesting one). We will be releasing an updated list shortly, but it’s worth pondering: what is the key to their success? Great content, for one. An additional insight came after we released our recent research on “Online Video’s Short Shelf Life.” A blogger savvily pointed out that most successful content creators already understood that online video fans have a short attention span, and thus put out a high quantity of videos.
Curious if that was actually the case, I tested it using our Top 40 list, and found it to be largely true. In the month of June, Chris Pirillo (#2 on our list), deployed 803 videos. Similarly, WatchMojo.com (#6) put out about 691. Further on down the list, Vlaze media (#35), put out a decidedly humbler 74 videos, and Sony (#40) deployed 32–and so on.
The data shows the brilliance of this. Since average online video viewership tends to peak on day three, putting out videos often allows producers to constantly ride the highest point of the wave. While individual videos rise and fall fast, a given producer can always have a steady audience.
Web video publishers need to balance quantity with quality if they want to be relevant, let alone scale, online. The pro of operating in a hyper-syndication world is that audiences might be splintered and fragmented, but you can reach them on those places if you have an effective distribution strategy. The con of it, frankly, is that it’s nearly impossible to stand out from the clutter.
When people question our strategy of publishing so much content (5,000 videos, 100 new each month), the analogy I use is this:
- Think of the Web as a massive college building… seemingly with no end in sight, as one classroom leads to another, and another, and another.
- Think then of the online video ecosystem as a huge classroom with a number of desks…
- With each online video aggregator (such as YouTube, MySpace TV, Veoh, DailyMotion, Metacafe, etc.) representing a desk. While those desks share some similarities, they are all, in fact, independent and stand alone islands. It’s not, after all, like YouTube links to the same video - or for that matter, related videos - on another site…
- On each desk you find stacks of paper on it, lots of them, with each stack representing:
* categories
* subcategories
* keywords- Each video is represented by a sheet of paper…
What do you represent? You’re a you-know-what disturber shooting spit balls on as many desks and stacks as possible. What services like Tubemogul do is help you get those spit balls on as many targets at once… but that’s just one small part of the equation. Why?
Ironically, while online video content is broadband content and dynamic in nature, currently SEO is utterly ineffective with video (relative to text content), so no one can really see through the sheets of paper, let alone see what’s on each desk.
Individually, no matter how great the content (quality) on each sheet of paper, they get lost in a sea of pulp and paper…
The only way to get your sheet seen by users - who might be landlocked to one desk (by having signed up on that site) - is to ensure that your sheets of paper fall on as many:
a) stacks, and
b) desks,
as frequently as possible… why?
In between the time you upload two videos… there’s a whole lot of papers landing on your sheet after yours has landed… making yours disappear from the top and rendering it nearly invisible to the human eye.
In other words, content companies that can’t scale syndication - and production - will find themselves irrelevant before long.
However, this opens up a new question, which is: is there such a thing as diminishing returns with marginal distribution?
Paid Content refers to a NYT article on CBS which calls for the company that Bill Paley built to make digital acquisitions, which begs the question: should they go for a big purchase or make small moves?
Of course, answering that question alone without addressing the backdrop to that question yields an incomplete picture.
CBS has hit some rough patches, according to Paid Content:
The parent company is under a mini-siege of sorts about
a) its performance,
b) Leslie Mooves’ salary,
c) Katie Couric’s disastrous tenure at the company,
d) layoffs (even on the digital side, as others are ramping up) and other issues (…)
e) CBS’s need for an acquisition is becoming apparent. Some CBS executives privately agree.
All right. I want to dive in and comment on e) but let’s run through this list quickly.
a) Its Performance
We’re not sure if they are referring to its financial performance or its stock’s, either way:
As per the NYT:
“Without the cushion of Viacom’s other properties, CBS has been more exposed to the struggles of the advertising market. In 2007, it earned $1.25 billion, down from $1.66 billion the year before. CBS stock closed at $21.40 on Friday, compared with $30.99 a year earlier.”
While no company or manager can control what happens to the stock price, I think big media will see a lot of revenue loss over the next few years. Print-centric media companies shrank, why would TV or radio-centric media companies be any different in the next wave of the Web’s growth?
After all, 1994-2003 saw text-based media explode online, 2003 is about audio/video-heavy media.
CBS is seeing this sooner and faster due to its exposure to TV and radio. However, they are strong in outdoors, the challenge there is the upside there won’t account for the downside in more traditional media.
So all hope signals point to online… which explains why:
“On Monday, the company’s interactive unit will officially open a fully staffed office in Menlo Park, Calif., in Silicon Valley, to stir innovation and content development.”
Ironically, the CBS Interactive brass gets the Web quite a bit, but it’s true that they have been overly cautious, too. Being cautious is a bad thing in booming times and a great thing in corrections. The problem for CBS is that the correction is coming offline and online continues to charge ahead… so indeed, CBS does need to make some bold moves. But what are those moves?
Last year, we suggested an outright merger with Yahoo! With MSFT’s $45B gamble, those bets are off (hmm… are they?).
b) Leslie Moonves’ Salary
Last week Henry Blodget wrote: “CBS CEO Moonves Gets 29% Raise, Just Reward For Job Well Done“.
Clicking through, I realized he was being sarcastic by pointing to the seemingly inverse relationship between Mr. Moonves salary and CBS’ performance. While I appreciate Henry’s position, the truth is that CEO pay is determined on a number of things, frankly.
It’s also about the demand and supply for talent. As the CEO of CBS, Mr. Moonves could probably command a much larger salary elsewhere, if CBS’s Board wants to pay him $100M because that is what it takes to retain him, I am not sure CBS or Moonves should be blamed. For the record, he did not make $100M but rather $37M. Is that a lot of money? Yes. But the company made well over a billion dollars in profit and $14B in revenues. Of course, I’m an executive so my perspective is going to be different than that of an analyst or journalist.
But my point is: running a shrinking business in a mature market is not something most executives would embrace, to lure the best (or retain them), guess what? It takes a generous compensation program.
c) Katie Couric
Don’t care personally, but indeed, this is becoming an albatross and if indeed she is that horrific (I don’t watch TV), it’s time to try something else. I recognize she might not be best suited for news, but surely there is plenty of things she can be doing for CBS in other capacties (infotainment, mainly).
d) Layoffs
Layoffs are always demoralizing, especially when a company is making over $14B in revenue and remains profitable. But what about a case - like this one - when the company is shrinking? This is a tough question.
My gut says Jack Welch’s “the lowest 10% should leave” is not a bad thing… so while I don’t want to dehumanize the layoff dynamics and their effect, I think it’s unfair to question the layoffs.
Of course, I do wonder why layoffs are taking place in online areas… which is what both Paid Content and NYT refer to. But just bear one thing in mind: many traditional media companies are not necessarily well structured in new media; divisions and structures are sometimes borne out of legacy organizational systems and sooner or later a correction or adjustment is called for. If this is the case, then I don’t think it’s fair to bash CBS on this point.
e) Acquisitions
The question remains: should CBS make one big hairy and ambition acquisition or should it buy a number of smallish companies and roll them up and/or foster their growth?
For the record, CBS has done both. In fact, it’s done everything including investments in Spotrunner, Joost and many others. In terms of acquisitions: Last.fm was a mid-sized / big one; Wallstrip was a small one.
What would you do if you were Quincy Smith and company? Buy? Merge? Sell?
ACQUISITIONS:
You know what, I admit a small acquisition won’t move the needle, but a major acquisition won’t either. Who would they have bought?
- Bebo? Is a company that marketers love really well-served by serving advertisers social networking inventory? Nope.
- Facebook? Too expensive to buy. Nothing to see, here (perhaps a merger? See below).
- Gawker Media? That might be an interesting addition. But I think Gawker Media founder Nick Denton wants to become CBS, and not sell to CBS. Anywa, Gawker Media lags in video, CBS needs to look ahead and not look back.
- Speaking of video, one company that might position it for future growth is Blip.tv, but Blip.tv does not own any content… so that is a risky move because CBS might buy a great video platform with amazing bells and whistles but then lose all of the content therein. [Disclaimer: Blip.tv is a partner of WatchMojo.com]. In the same broad category as Blip.tv are Brightcove and Video Egg. Bright Cove also does not own any content and is way too expensive, having raised $80M in funding. Video Egg ain’t cheap either, with $40M of funding in the tilt.
- Then there’s all of the YouTube/MySpaceTV competitors: Revver, Veoh, Metacafe, DailyMotion, Break, etc. Mind you, CBS invested in Joost… so what message would that send? As well, Revver was on the auction block and I presume CBS looked at it and then balked. Again, none of those companies own any content, CBS needs to be stronger in web content. That would be the hedge for CBS going forward, of course, it also needs better distribution. I see CBS works closely with Veoh… but is Veoh big enough as a distribution source? [Disclaimer: WatchMojo.com syndicates video to all of the sites listed here]
- Craigslist.org? Not sure Craig Newmark would sell, no matter how progressive Quincy’s team might be. This is Big Media after all… but Craigslist.org would not unleash CBS’ digital revenues.
- Glam Media? That would be a shot in the arm with regards to bolstering its female audience online… but here’s the problem: female audiences still watch TV… what CBS might be better suited for is getting access to a men’s audience. [Disclaimer: Glam Media is one of WatchMojo.com’s syndication partners, too]
- Digg? Not a fan of this one, frankly. Maybe a combo Revision3 / Digg? Even less of a fan of that. Revision 3 is way too niche: it’s too tech-oriented and relies on two hosts, largely. Given how Kevin Rose’s interest waned from Digg to Revision3, then to Pownce, I am not sure he’s buyable because he’s the main asset of Revision 3. [Disclaimer: if you look very broadly at all video content, then WatchMojo.com is more or less competitive to Revision 3, though I view them as rather complementary to our programming].
- Federated Media? Too tech-focused and they don’t own any of the content on the blogs they rep. Big media needs to own content to make it worth their while. Sorry, but that’s just the way media works.
- Gorilla Nation Media’s audience might be a better fit, but as an advertising representation firm, it faces the same challenges: You are buying a stack of contracts that at any point could be severed. Unless you own the underlying content, those contracts are not worth the paper they are printed on.
- Heavy.com? They have a men’s audience, for sure. But if CBS is to buy a destination, it needs to be an enormous destination, I am not sure Heavy.com would move the proverbial needle. In fact, in 2005, News Corp. bought IGN Entertainment, but IGN was doing over $70M in revenues on the strength of its Media Properties (IGN.com, RottenTomatoes.com, etc.), had a lot of technology (in-game advertising + digital distribution of movies, music and games). Moreover, IGN Entertainment was far and away the leader in terms of men’s 18-34 audiences.
However, if Fox Interactive Media has become a new media behemoth, it has more to do with MySpace’s burgenoning audience than with IGN’s properties. That being said: IGN Entertainment does give a lot of content and audiences that marketers look for. The challenge for IGN is that a major chunk of their inventory comes from their message boards, which are notoriously hard to sell and monetize.
This being said, when one looks at how instrumental MySpace and IGN’s acquisitions were, it’s fair to say that the ROI has hitherto been higher on the MySpace deal. I am surprised at this, I won’t lie. But this lesson would encourage CBS to look for a MySpace and not an IGN.
I am not that familiar with Heavy.com’s business, frankly, but I am not even sure if Heavy is an IGN.
- IAC is way too e-commerce oriented. Its search engine Ask.com does not really fit with CBS, either. So pass.
- There’s Meebo, but at $250M or more in value… I am not sure if CBS would even know what to do with it. And, who are we kidding: do marketers really even want to advertise in instant messaging communications? That one makes sense in theory but in practice? Not sure.
- There’s the barrage of search video tools: Blinkx, Pixcy, etc., but CBS remains a media company; it should be technology-centric, I think. What I mean by that is that its content should be compatible with all tech platforms to make it was widely available as possible.
- There are a number of ad networks: Tribal Fusion, Specific Media, Casale Media, Adconion etc. I think the obsession over ad networks will pass. Moreover, a lot of media companies will build and launch their own, which is a mistake as well. I am not sure if CBS should plunk down $100-$500M on an ad network. Advertising.com rescued AOL’s butt because AOL was transitioning from a walled garden to a normal website but the fact remains, that says more about how poorly AOL was doing than how great Advertising.com has done (for the record: it has done great).
Valueclick is publicly traded, but expensive.
If it was interested in ad networks, it might as well skip over display ad-based ones and dive into video networks such as Tremor Media or Broadband Enterprises. Again, I am not sure being in the ad network business is the best capital allocation move.
- It could - much like how NYT invested $29.5M in Wordpress - make a bid for Six Apart (makers of Movable Type) or even Wordpress. But, again, I am not convinced it makes sense for a media company to own a platform without the underlying content. News Corp. buying MySpace made sense because the content on those sites become News Corp. property, or at the very least, MySpace gets a license to profit from it…
- Slide? At the company’s last $500M pre-money valuation, I think CBS would gain street cred in one block on SF by buying Slide but see Wall Street punish it. Hey, just being honest here folks: that is one expensive widget company with moutain-fulls of unsellable inventory!
- There’s TheStreet.com, though I am not sure if it’s big enough or whether CBS really wants to get that deep into finance and investments. Bear in mind Wallstrip was all about investing… so this would be a doubling down on one category. Moreover, at a market cap of $250M, it would eat a lot of money the company could spend elsewhere.
- CNET remains very tech-oriented but it has embraced a lot of lifestyle properties, too. In fact, CNET would be a good fit with 100M uniques, $400M in revenues etc. In fact, trading at $1.2B, it’s not that expensive. CNET would give CBS some web DNA and CBS would open up swarms of traditional advertisers to CNET. This could be the best move yet: unlike most other options, CNET owns a lot of content. It also owns a lot of URLs such as TV.com that with CBS’ help could come to life.
Updated: Oh, wow, they listened to me: it’s official.
MERGERS
- CBS could in fact merge with Yahoo! I wrote about this and frankly, this remains an option.
- It could merge with Facebook; won’t happen. At a market cap of $14B technically Facebook is worth roughly the same as CBS. This would be a bizzarro world deal where Facebook trades in growth for CBS’ $14B in revenue… but this one is so loopy.
- As crazy as it sounds, it could undo the merger with Viacom; won’t happen.
SALE
What about a sale to News Corp.? News Corp. owns FOX, it would love to own CBS. But for this to happen, it would mean Sumner Redstone and my old boss Rupert Murdoch would have to come to terms; won’t happen.
Incidentally, last Friday, GE lost 12% of its value, or $40B. It could have bought two CBS’s. By buying CBS, GE’s NBC Universal would own two of the three main networks, making this an impossibility.
That same obstacle is present in a sale to Disney, who owns ABC.
CONCLUSION
As you run down the list… you realize that all CBS is actually a great media company that just needs some tweaking. Yes, indeed: “Nobody likes negative growth, from the guy who shines shoes to the C.E.O. Everybody feels the pain” the truth is no one wants to blow something up either.
My two recommendations for CBS:
- Buy CNET for $1.5B - $2B (that would be a 25% to 66% premium), which would take its digital revenues from “$200M” to $600M. Combining CNET with Last.fm would also yield a lot of upside in digital music and video tie-in’s. But even then: for a company with $14B in annual revenues, does $600M mean much? Many analysts only give credit to a media company’s stock if digital revenues account for 10% of total sales. Even News Corp. or Disney do not claim that.
CNET remains one of biggest acquisition targets that represent meaningful revenue opportunities, and even that won’t move the needle. So what other options are there?
OR
- Merge with Yahoo!
Actually, there’s also one more option:
GO PRIVATE?
One way that no one will care about a) Performance or b) Les Moonves salary is if it were not publicly traded. Moreover, Wall Street is being unreasonable: yes the company is shrinking, but it will take time for digital revenues to grow, anyway. However, if someone came along and took CBS out at $20B, I think a lot of shareholders would buy that (or I guess, sell for that).
It then allows CBS to d) clean house if they so choose to (and will have to). Kate Couric becomes moot in the grand scheme of things… but most importantly, it will allow CBS to roll up a number of smaller web properties, content producers and tech applications to bolster its overall portfolio. In 4 years - when video advertising will be $7.1B in the US (up from $1B) and all online advertising will be nearly $100B in annual expenditure - it can then be go public again…
This might very well be the best course of action. The question remains: does private equity have the stomach for a $20B debt purchase? With $16B in annual revenues… I think so.
All righty, that was a great use of 40 minutes of my time. Back to work.
Despite the tough financial climate, the week ushered a sizable investment in content producer Next New Networks (N3).
Blue-chip investor Goldman Sachs and media-oriented Velocity Interactive Group (VIG) led a $15M Series B investment round in N3. VIG is the fund that was created by way of a merger between ComVentures and Jon Miller and Ross Levinsohn’s new endeavor. Miller was actually a member of N3’s board.
After the investment, Goldman and VIG join Spark Capital, Saban Media Group and Bob Pittman (formerly of AOL and MTV) as investors. That’s as blue chip of an investment group as you can get for any media company. Spark Capital is a champion of media and content investment, something that is hitherto very rare amongst VCs, who prefer technology opportunities.
N3 - which CEO Herb Scannell described to me as Weblogs Inc. in video format (I asked him once if that would be a fair description, I am not sure if he introduces it as such) - has a range of properties which, when combined, have generated over 100M streams throughout 2007.
While the naysayers are quick to point out that this is a small number relative to TV reach, as a video producer ourselves at WatchMojo.com with a sizable library, I can attest to the fact that this is a very impressive number of streams over a yearly period. In the spirit of giving credit where it’s due, it should be noted, that Revision 3 has also crossed that threshold, too. So hats off to both companies. Broadly speaking, WatchMojo.com is similar to those companies insofar that we all create original content but we’re all very different. Ultimately, we all line up on the same side of the line of scrimmage in the sense that we all strive to convince marketers that online video is more than UGC or pirated content alone.
N3 has a fantastic pedigree of founders, executives and their investment DNA just got bolstered considerably.
Goldman Sachs, for example, invested $130M in Limelight… sheltered them for some time against the Akamai litigation. While the company’s post IPO life has indeed been challenging, it was a successful case study in how quickly Goldman could take a company to the public capital markets. This is no small consideration in light of the fact that the same markets are currently embroiled in the sub-prime mess. Of course, to paraphrase Mr. Miller, very few companies are actual IPO candidates… and it could be argued that N3 (or Revision 3) are no-brainer acquisition opportunities.
In fact, Revision3, too, has an all-star lineup of founders, execs and investors (it is founded by Digg’s Kevin Rose and Jay Adelson). They have raised $9M since launch, notably from Greylock.
Admittedly, my jaw drops a bit when I compare how much money I’ve invested in WatchMojo.com to build the library and get the traction we have… but I won’t lie: if you can raise that much money, hey, more power to you.
Many were waiting for the N3 funding news to materialize, in fact. I presume the tough climate added to the cycle time. But to raise $15M is impressive regardless of how long it takes.
Incidentally, last week I noted that Velocity Interactive Group was building a new media focused, online video-centric fund, and judging by their investment, their next investment would likely be in content.
It will be interesting to see what some of their next moves will be. If you take a step back and envision the “keiretsu” that they are building, I can imagine a few missing elements that they will be looking at filling - or reinforcing - in order to add velocity and momentum in the months to come
As a content producer ourselves, I did not specify that content would be the next piece, but knowing that Jon Miller was on their board, it was easy to see the pieces fall in place with content and Next New Networks being the “void” they were looking to fill.
Heavy Hitters
The $15M Series B pushes up NNN’s total funding to $23M, just over what Mania TV has raised ($22.7M), but still a bit less than what Heavy.com ($25M) and Ripe TV ($32M) have raised in the video content space.
Mania TV just raised an additional sum last week. This is a trend that will continue. While some, like Paid Content’s Rafat Ali, question the model altogether, and others, including Mr. Scannell or Blip’s co-founder and CEO Mike Hudack remain unsure of the model that will prevail, it is a given that online advertising will continue to grow, and that professional content will draw the bulk of video advertising.
Any way you dice it: to quote CBS Interactive CMO Patrick Keane: online video is where search was in 2002, and considering that in December 2007, there were more video streams than search queries, the best is yet to come, and investors are just starting to place bets.
In fact, while the numbers seem large, this is still far less than what the platform and aggregators have raised (see a list of funding by video company breakdown here), and it does reinforce what we outlined last year: VCs will focus more and more on content investments as advertisers reject UGC and demand premium content.
Technically, Wallstrip founder (whom CBS bought, incidentally) and TubeMogul investor Howard Lindzon was right in arguing that I was wrong on that point last year, but I think I was wrong in the timing. That did not happen in 2007… but 2008 seems to suggest that it is happening as we speak.
Believe it or not, there are more and more digital media funds being set up every day.
That this is happening against the backdrop of a financial meltdown is even more impressive.
Here’s the rundown of funding in the video space
Almost exactly a year ago, Mojo Supreme and WatchMojo.com were looking at relaunching on a new platform.
After a lot of soul searching and due diligence, we opted to build the content management system using Typo3, a powerful open-source system. We then considered many options for the video player. We looked at Brightcove, Maven and other such closed options… but ultimately we were torn between Video Egg and Blip.tv’s players.
I won’t get into all of the reasons and criteria I went through, but for a few reasons - one of which was nothing other than my gut feeling - I decided to opt for Blip.tv.
It was one of those feelings that to this day I cannot fully explain. Maybe it was based on my interactions with the folks over at Blip.tv… who knows. Of course, within hours of choosing to work with Blip.tv, I knew it was a very wise decision. We’ve worked with them since August 19th, 2007, when we relaunched. Incidentally, at the time, our property (WatchMojo.com) was generating as many streams as our syndication network. Today, our network does 95%+ of our total streams, so yes, in some ways, the property is less important in that sense… but make no mistake about it: our property remains a showroom or storefront… so when people pass by and check us out, we need to put our best face forward.
I could easily say that going with Blip.tv remains one of our better judgment calls. Blip.tv serves videos for many great content producers, but I think that the way we’ve integrated them in both the back end and front end is very unique.
Since I made that call, Video Egg has tried many things and after $32M in funding have decided to drop the video hosting unit to focus on the ad network strategy. Good for them. This post isn’t a knock at Video Egg - I’ve interviewed their CEO, know a couple of their investors - and am sure that we’ll work with them in one capacity or another… what this post is about is a reminder of two things:
- When you build your company, you will face many crossroads, sometimes your gut is the best source to find the answer. Why? Because your gut will consider all of the variables anyway, but it will also allow you to see that some companies don’t really have their heart in a product, service, or segment… and if and when they realize that and get out of the market, you will have to find a replacement, fast.
Which takes us to point two for this blog post:
- If you are using Video Egg and got the following letter look at the glass as half-full. Check out blip.tv and tell then Ash from WatchMojo.com referred you to them (hmm… no, this isn’t an affiliate marketing schtick). This little episode just might prove to be a blessing in disguise.
Here’s the full letter, which I came across on SAI:
Hope this email finds you well.
Our business is changing, and I wanted to send you a personal note to let you know.
On May 31, 2008, we will be shutting down the VideoEgg Publisher and Player service. As such, we will be sending a termination notice to you early next week.
As you know, over the past twelve months, VideoEgg has become a leading video advertising network. We have decided to focus on video and rich media monetization technologies, and therefore are no longer investing in the video platform side of the business. We are trying to consolidate our relationships with profitable large partners and continue our focus on creating higher value ad solutions for brand advertisers.
Please be assured that, until May 31, 2008, all videos uploaded to our servers using the VideoEgg Publisher will be available for playback on your site.
Pursuant to our contract with you, we will provide you with access to your uploaded videos for the next 90 days. If you wish to work with us to allow you to access your videos, please email us at partners@videoegg.com, and we will assign an engineer to work with your team to provide you with access.
Check out WatchMojo.com to see more… or enjoy the following video for some nice eye candy:
And now check out Blip.tv.
PLAY
