Ooyala: The Online Video Startup That Isn’t Out to Destroy Hollywood

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increase the overall ad load for its online video—the minutes of advertising per hour of video viewed—-to a point that’s even higher than its on-air load, according to Lepe.

ESPN can’t charge as much for online pre-roll or post-roll ads as it can for TV commercials—but increasingly, it can use the engagement statistics it gathers from its Web and mobile channels to sell sponsorships across TV, Web, mobile, and print (yes, ESPN has a dead-tree magazine).

Lepe and Knapp say Ooyala’s long-term vision is about making the online video viewing experience just as smooth as broadcast television—with no buffering or dropped frames—and enabling media companies to offer fully personalized video streams to every user, based on their viewing preferences and the device they’re using at any given moment.

“It’s not about having 500 channels of niche content,” Lepe says. “It’s about having one channel that understands you. My own ideal channel would be primarily financial information in the morning, coming from CNBC and Bloomberg and Forbes. Then in the evening it should be cooking shows. I shouldn’t have to go out scouting for it. To me, that is the ideal model, and it’s one of the primary reasons that companies are willing to pay a premium to buy our stuff.”

For all this talk, though, online video still represents only 10 percent of overall video consumption. (And at the moment, the Internet simply isn’t a plausible replacement for video delivery via the cable and broadcast networks: aside from the monetization challenge, the pipes just aren’t fat enough.) So offering an alternative content ecosystem, as Google is attempting to do, is an interesting exercise, and it may result in some fascinating new programs. But it won’t sate viewers’ hunger for live sports and expensive shows like Mad Men and Breaking Bad.

“The philosophy at Google obviously works phenomenally well for YouTube, but we’re not convinced it works for TV as it evolves,” says Knapp. “Consumers’ need to suspend reality and sit back for a few hours a day is not going to change. The producers will change—we have already seen an evolution toward lower-cost content à la Machinima. But that’s fantastic [for Ooyala], because guess what? They have the same problem. They want to reach more users and monetize better.”

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Wade Roush is a freelance science and technology journalist and the producer and host of the podcast Soonish. Follow @soonishpodcast

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2 responses to “Ooyala: The Online Video Startup That Isn’t Out to Destroy Hollywood”

  1. Deepti says:

    Today, most forward looking organizations understand the power their content carries and the worth is well accumulated, once it is monetized well.
    Personalization & recommendation helps a user stay tuned and with features like continuous playback and power packed analytic, its best of worlds.

  2. David says:

    It’s interesting that ESPN is their biggest customer, yet the reason most people go to ESPN is actually not available via Ooyala: To watch live professional sports in real time.

    Clips and recordings are great for those who seek that content. But until one can legally watch live NBA, MLB, and NFL via the Internet on a 60″ screen @ 1080p with no buffering delays (and at a reasonable price), cable and satellite companies will continue to rule rule the control of television consumption.

    Then there is this statement:
    What’s truly new today is that consumers want to watch shows on their tablets, PCs, and smartphones, not just on their TVs. “The consumer doesn’t care about the medium, they just care about the access,” says Knapp

    I would reword it to say this:
    “Techies and people under the age of 30 want to watch shows on their tablets, PCs, and smartphones, not just on their TVs”

    There remain millions of people in this country who have no interest in watching TV on a 4-15 inch screen. This goes back largely to sports fans. The only time sports fan would choose to watch a key game on a small device is if they’re stuck someplace where there is no full-sized TV. I hope that the Ooyala guys don’t forget about this market (the live sports fan). When you look at the amount of revenue that live sports generate for TV, you have to seek accommodation for this group or you will make no headway with the cable and satellite TV providers.