Right before the holidays, video aggregator Roo, one of the many, many distribution partners in WatchMojo.com’s syndication network, announced a 21% reduction in headcount. I know a good number of people there so we wish everyone the best of luck as they try to bounce back.
As reported by Paid Content, there are a lot of unanswered questions. I for one won’t be commenting on those company-specific issues, but I would like to point one comment on the industry based on an observation made today by new company CEO Kaleil Isaza Tuzman:
“Getting our house in order with respect to burn rate… profitability.” He also suggested that one of Roo’s weaknesses is its lack of premium content, an issue he hopes to address.
In case the name sounds familar, Kaleil Isaza Tuzman was the CEO of ill-fated venture GovWorks.com, which was featured in the Startup documentary a few years ago. Anyway, Tuzman was a former investment banker and his most recent gig was as CEO of Jump TV, an aggregator of foreign TV stations, delivered to consumers via the Web.
While I won’t comment on any company specific matters, I will say this on the greater macro environment:
Investors have gotten silly drunk investing in more and more aggregators. Today, for example, yet one more WatchMojo.com syndication partner Vuze raised a Series C $20M round. Vuze is the offspring of Azureus, who in turn is the legal business spawned from the Bittorent P2P application. I wish all of our partners well, but yet more money being poured in the space?
As we speak, we have YouTube, Veoh, Revver, Metacafe, Daily Motion, Joost, etc. etc. etc. This is a tight space and the shortage is content, not distribution.
For more on the challenges in the space, see our pieces on:
- The race for #3 is on.
- The commodization of distribution
The same applies in video ad networks, too:
- Brightroll vs. VideoEgg vs. YuMe vs. ScanScout vs…
- Video bubble moving from file sharing networks to ad networks?
Roo is not the only company to face challenges this year, GoFish (broken disk player warning: one more distribution partner of WatchMojo.com) totally shifted company direction this year after facing some challenges in the space.
Here is what is needed for the market to catch up to itself:
- media companies need to further embrace the web and shift their content online, but they won’t… because that will shrink their businesses just as moving online shrunk the print media companies (newspapers and magazines).
- investors need to start investing in content companies, to improve the quality and quantity of video content found online.
- these two will get marketers to change their perception of online video, from UGC to premium stuff they want to associate their brands (or clients’ brands) with.
But, I doubt this will happen. Investors are clueless and their pedigree makes them unable to invest in media or content. Mind you, every day we see more and more investors entering the space and wanting to invest in digital media (Velocity Interactive Group, the CAA fund, etc., but these are not as agile or accustomed to making VC-style investments, so it will take time).
We get it, video is a big opportunity, but content is king… and unless there’s more of it, the entire file sharing video networks and video ad network space will go up in flames. Mark my words. Of course, I am wasting my breath here…
More on the video opportunity here:
- Web video will become larger than search ads?
- Video is a $150B market cap opportunity by 2011?
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