The State of Enterprise Video 2015
Video is now a standard corporate communications tool, and OVPs are pivoting to stay relevant as the market changes.
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In 2014, streaming media became a fixture in the enterprise space. A large number of corporations have now taken much more control of their streaming output, both live and on-demand, and made it an integral tool for communication with their audiences. A September 2014 AV Online survey highlighted the fact that video in the enterprise space has now become a run-of-the-mill corporate communication tool—although not yet a fully mature one.
In the survey, 75 percent of the corporate participants reported that they use streaming media internally or externally at least once a week. There was also significant growth in the corporate self-service webcasting market, with a Frost & Sullivan report published in April 2014 stating that “the total number of SaaS-based enterprise webcasts grew at a robust 22.7 percent in 2013.”
Another key trend was that those corporates with confidence in the medium—as well as solid approval and control mechanisms in place—began to encourage the creation of user-generated content. For most corporates, this means allowing staff to create their own content and share it with their peers, or even the whole company.
This is creating a hierarchy of video within the corporate space. At the bottom are live video meeting and collaboration tools, such as Link and WebEx, and user-generated video. In the middle tier are the more complex webcasts that are aimed at a bigger audience and which may contain professional production, as well as externally produced on-demand corporate video. The top tier is comprised of large-scale internal and external webcasts for large internal and external audiences; these events require outside resourcing and more scalable technical solutions.
The AV Online survey confirmed that security and technical issues are still important concerns within corporations. However, it is the actual asset management of streaming content that was rated as either important or very important by 86 percent of those surveyed. This demand has created an opportunity for online video platforms (OVPs) to expand their corporate customer base; this has been the driving force behind a lot of the activity this past year.
Corporations are beginning to use these systems for simple streaming projects and using bolt-on external resources to enable the delivery of high-profile or high-risk events. This underpins the continued growth in the live and on-demand OVP sector this year and bodes well for continued expansion in 2015.
When Gartner released the 2014 version of its magic quadrant, which includes the major OVPs, it rated three companies as leaders based on the two axes of “completeness of vision” and “ability to execute.” The three companies were Panopto, Kaltura, and Qumu.
In its annual “magic quadrant” report, Gartner ranked Panopto, Kaltura, and Qumu as the leaders in the enterprise video platform space based on “completeness of vision” and “ability to execute."
Panopto has a strong client base in education and is now moving into the corporate market and already has a few significant clients including Siemens. Despite its education-focused approach and appearance in the magic quadrant, Panopto is not as yet as significant a force in the OVP market as the top four players in the space: Kaltura, Brightcove, Qumu, and Ooyala. However, it will still be one to watch in the corporate sector in 2015.
While there has been growth in the demand for OVPs from a wide range of businesses, there has also been an ever-increasing number of competing products entering the market. This has led to a clear stratification of the market with platforms more clearly defined as low-, medium-, and high-end offerings featuring similar price points and functionality in each section of the market. For example, Gartner’s research covered 17 providers at the top end of the market in 2014, compared to 12 in 2013. The growth in platforms is happening at every level of the market, and as the Gartner analysts noted, “market consolidation remains very likely.”
The idea of corporations looking for more control over their video goes hand-in-hand with this concept of the OVP offering more value to customers by creating end-to-end solutions for their particular client use cases. This became the key theme of the year as the OVPs looked to make acquisitions to support their existing platforms and enhance their end-to-end solutions. Throughout the year, larger OVPs acquired businesses. In Ooyala’s case, an OVP was itself acquired by a larger business.
Australian telecommunications company Telstra paid $270 million for a 98 percent stake in Ooyala. Telstra had already acquired around 23 percent in a previous investment round. Ooyala became a subsidiary of Telstra while still serving its existing clients from its Silicon Valley headquarters.
After the acquisition, Ooyala did some acquiring of its own, buying Videoplaza, a U.K.-based video advertising firm. According to Videoplaza, half of all broadcasters in Europe use its Karbon platform for video advertising. The acquisition make sense for both parties; Ooyala gained a stronger advertising product on its platform, while Videoplaza gained an easier route to market in the U.S.
The Videoplaza acquisition was an obvious step, as Ooyala spent the year emphasising its focus on offering an end-to-end workflow to its customers, as did the other main OVPs. The Ooyala offering, like many of the OVPs, covers everything from content acquisition through playback and ad serving, to content recommendation and real-time analytics.
Ooyala CEO Jay Fulcher summarised this in a statement at the time of the acquisition: “Ooyala helps media companies build the largest possible audiences online, while Videoplaza helps them extract as much value as possible from that audience. Our combined platforms will offer a more holistic view of content and ad performance across a broadcaster’s entire business, including granular data on not only what, how, and where people are watching, but also where and how they can make the most money.”
The video advertising market has become an area of focus for the OVPs, as it has for large internet-focused companies. This meant both began to execute strategies that focused on video advertising as the next big growth opportunity as respectively either a value-add proposition for their end-to-end solutions or as a revenue generator.
It is easy to see value in this market. In terms of total revenue video advertising is growing fast. Digital advertising revenue accounted for $42.6 billion in 2013. Video advertising presents around 9.7 percent of that amount—about $4.15 billion, expected to have grown to almost $6 billion by the end of 2014. YouTube has about 20.5 percent of that video advertising market, which still leaves around $4.75 billion of potential revenue that Google’s competitors are looking to gain a significant share of. This is why several internet-focussed companies have acquired video advertising companies over the past 18 months.
These deals have included AOL buying both Adap.tv for $405 million and Vidible for a reported price of $50 million, Yahoo buying BrightRoll for $640 million, Facebook acquiring LiveRail for somewhere between $400 million and $500 million, Google buying mDialog for an undisclosed sum, and Comcast buying FreeWheel for $375 million.
For many of those, the interest in advertising is not only about the size of the market but also the price paid for advertising units. According to Credit Suisse, the average CPM for digital video advertising is about $24.60, which is about 5 to 10 times the average cost of traditional display ads.
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