PART THREE
In Part Three of this interview, Rose introduces the new initiatives and partnerships that Brightcove will embark on this year and comments on the ease of introducing the company’s services in various Asian territories.
Q: Can you share with us what’s coming up for Brightcove in the year ahead?
A: One of the key things to look out for is Zencoder, which was acquired by Brightcove last August. It is currently being integrated with the Brightcove Video Cloud platform, and we are still in the midst of rolling it out as a stand-alone product for sale. Just to provide an example of what Zencoder does – it transcodes or re-encodes video assets or audio files from HD to low bit rates. In the old days, people would have bought Adobe’s Flash Media Encoder or perhaps sourced for a free version of it, both of which were acceptable but not very long-lasting options. Alternatively, they could have invested in Viol-Inlet technologies, which now belongs to Cisco Spinnaker. However, taking an internal broadcaster that has numerous racks of Spinnaker encoders – as does MediaCorp and many other broadcasters – warrants substantial capital investment that can be highly challenging. Just to give you a rough idea of the sum involved, a robust encoder for 16 channels would cost $50,000. As you can see, this is not a trivial expense.
After the global economic slowdown in 2008, a lot of capital spending was cut. We had the chance to speak to numerous broadcasters back then, and we realized that they were all facing the same problem. To quote them, “I either have too much encoding capacity because I’m not using it, or I don’t have enough capacity to get a video encoded when a breaking news story happens”. So what some broadcasters are beginning to do is keep those racks of encoders (you can’t throw them out), but burst the cloud and send them to us when faced with peak news periods during which there are a lot of content. An example of such peak periods would be high media-attention events similar to the U.S. elections, the Tsunami, or when Whitney Houston passed away. During these times, they have a lot of content to get out in various formats – be it tablet, phone, connected TV, or HD format, amongst many others. Upon receiving those racks, we encode it and push it back to its origin. We charge from one to five cents per minute of video coding, so it is extremely inexpensive to burst the cloud. Furthermore, the expenses involved are charged to operational expenses and not capital expenses, which make things much easier than having the CFO chase them down the hall with a pitchfork. This in turn creates a new revenue stream for Brightcove, and also serves as a way for broadcasters to be more agile and compete better against other players in the market. So all in all, this is new and exciting.
Brightcove is also pursuing further innovation in terms of enhancing our Video Cloud platform. We are very much interested in building up greater security for premium content with additional types of Digital Rights Management (DRM) offerings. Additionally, we plan to make the Brightcove Video Cloud players work on even more devices. They currently work on Sony, Panasonic, LG and Samsung, but there are a lot of set-top devices like Roku or Voxy out in the market as well, and these are just some of the many platforms that we are beginning to work with and integrate.
We also see a big shift happening in connected TV. Jeremy Allaire, our chairman and co-founder, wrote a piece on his personal blog a few months ago with regard to this issue. His vision of smart TV or connected TV is not one where Samsung, Sony and LG continue to put the logic in TV, because people just don’t change TVs that often. Content owners and app developers like Netflix, NASCAR and many more are unhappy because the applications become obsolete and incompatible with every new batch of TV sets released. For instance, a customer with two different LG sets in the house may realize that the same app can be played on one but not the other, and this gives rise to great frustration. In our opinion, the future of connected TV is one where the large screen becomes slimmer, more sophisticated, features super HD, and is logic-less. Be it Apple, Google, LG or any other brand, we believe that they will all produce new devices encompassing features such as a HD camera, high quality microphone, motion detection connectives and most importantly, interaction. Using either Adobe’s AirPlay technology or industry contortion technologies such as All Cast, interactive apps can be used to project whatever’s on the laptop onto the big screen. These apps will be compatible with any TV so long as it has a HDMI connector and as such, we will now have smart appliances that can be upgraded or made compatible more easily.
Another area that is undergoing big changes is that of smart TVs. People tend to struggle with the remote controls. Take the Apple remote for example – it is aesthetically pleasing, yet lacking in practicality. Who wants to type with a dial wheel? As such, we feel that smart TVs should either come packaged with or be compatible with any form of tablet PCs. These will then serve the function of a smart appliance and allow customers to use them to control the television.
Q: This appliance that you mentioned sounds similar to a set-up box. Are they the same?
A: Technically it is the same, with the key differences being the camera, microphone and motion detector – features that currently cannot be found in a set-top box. The appliance also takes a smaller form and is more customer-oriented. I do foresee a lot of vendors heading in this direction, especially since there are still complexities involved in setting up a set-top box.
Brightcove’s play on this will obviously be to deliver the applications and videos into the TV. However, in acknowledgement of recent trends, it may be more sensible to do so through the appliance as opposed to the TV itself. This is especially relevant to the Asia-Pacific region due to the high numbers of people using mobile devices to access the internet, as opposed to places such as Western Europe and the U.S. where people still tend to use PCs. For example, Indonesia is reflecting high penetration rates for Facebook and Facebook applications (which are now capable of games and video), and we see this as a potential growth driver for us. As such, I do believe that you will be seeing more innovations from Brightcove over the course of the next year, and hopefully more growth as well.
Q: Which territories in the Asia Pacific do you see strong potential in? Do you think it might prove to be challenging at this stage?
A: One territory that’s been a very pleasant surprise is Korea, which greatly exceeded our expectations.
The Philippines market has also been very good for us. Some of our large customers include the Asian Development Bank, various sections of ABS-CBN, as well as Internet churches that broadcast live church services every Sunday to Filipinos all around the world.
We also have a number of customers here in Singapore, including several universities and institutions such as the Singapore Institute of Management, Singapore Management University, and National University of Singapore, all of whom have just signed up with us. Apart from the academic community, we have also gained the interest of government agencies such as Spring Singapore, as well as the media community. In general, all of the above have been good markets.
On the other hand, India has proven to be a relatively challenging market. We have been successful with accounts such as Sony Entertainment Television, which have had blockbusters like ‘Who wants to be a Millionaire?’ and ‘Indian Idol’, both of which garnered incredibly high levels of online viewing. However, the issue of low CPMs in the country has made it very difficult for brands in India to shift from display, print, radio and TV advertising to advertising through applications or browser-based content delivery. Large companies like Sony do have marketing budgets for the promotion of their shows, but if you have a brand marketer or even a small TV broadcaster in India that wants to monetise video, the advertising revenue that you will ultimately gain through an application or browser will just be a fraction of what the CPMs are in the rest of Asia.
Q: Does Brightcove regard Indonesia as a potential market, given its high social media usage and mobile penetration?
A: Indonesia is indeed a potential market, but it does face challenges that are similar to those of India’s. Just like the latter, the publishers in Indonesia will have to reconcile the fact that they all have low CPMs, and recognize that it will thus be difficult for those who wish to do videos and make a profit from advertising. In this sense, the market will be a challenging one.
On the other hand, we do have quite a handful of customers who are not interested in advertising – for example, Spring Singapore, Office of the Prime Minister of England, David Cameron, the U.S. State Department, the Turkish Government, and quasi-government agencies such as the Asian Development Bank. The sole concern of these institutions is to get their stories out. As such, it is highly possible that similar government, academic or non-profit organizations in Indonesia will adopt the same mentality and see value in using videos to tell stories in a better way.
Media companies usually find it easier to implement videos or applications because they already have the relevant content, skills, and are able to customize according to their preferences. They do not wish to lose their audience to YouTube, and as such they do not regard it as a must-do. However, it is different in Indonesia – free-to-air dominates the scene there, and though aspects such as DTH, direct TV and cable operators are improving, they are still laying fibre. As such, companies that wish to pursue the Indonesian market will have to be prepared for the proposition of long-term growth. However, regardless of the possible challenges that they may face, the demographics, high penetration rates of mobile devices, and the sheer size of the market are just too large to ignore.
Q: Will Brightcove be hampered by the connectivity issues in Indonesia?
A: Yes. Like India, it will probably succeed in four or five metros or major cities, but not nationwide. We are also facing a similar challenge in the Philippines as well. Apart from Manila and other major cities, the drop-off rate of connectivity is pretty high given that there are 7,000 islands. Globe, Smart and Sun may be making investments in aspects such as the LTE and coverage, but let’s face it – whether it is 7,000 or 17,000 islands, it is still a lot of ground to cover.
