Revolution In The Video Streaming Industry

The Prime View got the opportunity to interview Michael Jones, Senior Vice President, Head of Product at VisualOn, a global company that provides robust video streaming solutions to tier one streaming platforms.

Michael, you have a notable career profile. Can you tell us about your career path that has led you to this point?

In my career, I have done finance, sales, and operations. I started in Silicon Valley doing consulting, then joined Merrill Lynch and went to Asia to do corporate banking. Working there, I spent 90 percent of my time traveling and doing business between China, Japan, Taiwan, Korea, and Hong Kong. All in all, I stayed there for about seven years, enjoyed learning the customs and how people do business there.

Then there was time with Samsung, where I had a corporate finance role. I loved it, but I wanted to go back to the States due to family reasons (my mother had some health issues). So, I left Samsung, came back, and started consulting again. I advised startups. I made an angel investment as well. 

That is where I joined VisualOn, a very different company, doing streaming video. That was an interesting fit. What attracted me to VisualOn was their exceptional customer list; companies like Netflix and Amazon had been long term customers. And secondly, I wanted to understand streaming from a deep technical level, understand what makes Netflix, Netflix. It was clear to me that streaming video was the future.

VisualOn is a pioneer in video software technology. What do you consider your main market differentiator?

One thing that differentiates us is our service — for example, we built Remote Lab, a proprietary remote testing toolset. We originally developed this because getting the right expert, hardware, and stream in the same place was time-consuming and expensive. We wanted to be able to help customers faster.

But, troubleshooting video is both an art and a science. There were remote testing suites, but none offered what we needed — ultra-low latency to allow our expert to interact with the device and the ability to play the video at its native frame rate. 

Now, remote testing and debugging brings huge value in the time of Covid-19 as people work from home, and in many cases, engineers have no access devices to troubleshoot the immediate issues with streaming.

Another key differentiator is we offer various solutions — both native player based and fully proprietary software stack. It allows us to provide the most options for playback and features. We can play nearly any stream on any device. Customers with huge libraries do not necessarily want to transcode their content. They also don’t want to tell customers that their device is not supported.

Finally, we strive to be innovators — to do things before anyone else does them. And, in some cases, we do things no one else does. It is how a relatively small company can have so many huge companies as customers.

Who do you consider your main competitors? 

Our main competitors are open source data players like Shaka and Player.JS on HTML5 and ExoPlayer on Android. Along with open source, iOS has a free native player, AVPlayer. Those are our biggest competitors, and each of them tends to be a little bit different.

As VisualOn and our competitors aim ahead of the curve, it reminds me of the idea of World War One. You had to shoot a space of air ahead of the enemy flight trajectory to hit the target with no targeting computers. This analogy may help you understand what essentially we have to do in our business – we have to figure out where the streaming video is now, what consumers want, and try to build that. We can’t be reactive – if Google has already built the feature, we have missed the boat if it’s already free. 

You mentioned that you work with huge streaming platforms. Do you also work with smaller customers?

Our primary target and focus, historically, has been tier one companies in developed markets. Besides Netflix and Amazon, we have six of the top 10 global telecoms as customers. 

We have an ideal revenue mix of about 40 percent Americas, 30 percent Asia, and 30 percent EMEA. 

We traditionally were in markets that were the first movers in streaming. So, the US, Western Europe, and Asia, Taiwan, Japan, and Korea.

But we do also have some smaller customers, and in many cases, their needs are different. Big companies are looking for differentiating features, and their users expect nearly perfect user experiences. Smaller customers want systems that deliver video reliably, although it’s often a learning process where we share our experiences. Getting video to work isn’t too hard but getting it to work at any time, on any device, isn’t easy at all.

What new markets are you going to enter?

We are now seeing streaming video moves to new markets, many in the developing world. We’re getting business in China and see a lot of opportunities in India in the future. In India, the infrastructure still needs to evolve, but there’s a huge demand. It’s a longer-term perspective, but certainly, we’re very interested in it. 

We also see Latin America and Southeast Asia as a huge opportunity -everyone wants streaming video, and the infrastructure is evolving to support it.

What’s the most successful case study that you can share with us?

The interesting case study is Visual On partnering with KDDI, a huge Japanese telecommunicator, to stream the FIVB Volleyball World Cup utilizing the VisualOn Media Platform. Fuji TV was doing the World Cup’s linear broadcast, and people could use their mobile phone to see a synchronized stream of the ceiling cam, so they could see the play unfold, the tactics used. Or, they could focus on a chase cam of the most popular player. The latency was below two seconds, so the live broadcast did not have to be delayed. It provided a very different experience and a level of engagement.

Given the low latency event and the fact that we had to synchronize a linear broadcast and a stream, the task was technically challenging. But we managed to be successful, and we don’t know anyone else who has done this.

Where do you think the market of streaming video is going to? What are the trends going to be?

I think there are a couple of key trends. One of them is 5G. The technology’s main advantage is a lot higher bandwidth that will make video accessible to customers who could not traditionally have it. With 5G, we will build cheaper networks and handle a vast number of tracks and customers. With the mass adoption of 5G technology, we will be able to expand the market. That is what ultimately matters.

The second key trend is direct to consumer (D2C) technology. Owning the customer data is critically important. It comes down to having streaming as the primary platform for video instead of traditional linear paid TV. That is where the industry is heading in the longer term. 

How do you make the streaming experience better?

Sport is an area where you can do a lot to improve the customer experience. For example, volumetric video, a novel technology for video processing, is now mostly limited to broadcasting booths. Gradually it is coming to the client-side. In Korea, customers can pan and zoom in and decide how they want to watch the show on their devices. They can have multiple camera angles or watch multiple games with streams that all are synchronized. If you are watching football, you may want to see the goalkeeper’s view or may chase your favorite player. Ultimately, this technology allows people to control their sports experience.

Another highly relevant thing is using data to drive content creation. When Netflix brings any new content, it is based on a massive amount of analytics data. Data drives D2C. That is what Disney, Warner Media/AT&T/HBO, and Comcast/NBC Universal saw. Netflix can understand who is watching and what they like. Netflix knows when they get engagement in a show and when they lose engagement. Whoever owns the service owns the data. That’s very, very powerful.

So, displaying multiple streams or offering volumetric video isn’t practical right now for movies and television shows. D2C platforms can use technology to have a deep understanding of what engages customers and what does not. Then they know how to impact that. 

Michael, do you envision changes in the revenue model? 

Absolutely. I think the business model, as it is right now, is very consumer-unfriendly. First of all, it’s not a great user experience when you have five different services, and you have five various bills. Also, you have to track what content is on those different services as there’s no aggregation. The recommendation engine does not go between them. 

Another huge problem, along with poor user experience, is that these services are getting more expensive. For about 60 dollars in different subscriptions, users are not getting much in sports or news, which is what a lot of people want to watch. I think this business model will change, and part of it will be using sponsored advertising. At some point, we might have to have aggregation – central billing and a recommendation engine. 

Can you think of any advice to a company that wants to succeed in the video streaming business? 

I think it is a tough business. As a startup, you have to add specific value to get paid. You have to be able to say, “Here’s a new feature. Would you like to buy it?”. But you can’t say, “Let’s work on this, let’s develop a feature together,” then figure out how to get paid. That is not how it works. 

Streaming is relatively small in revenue; even as successful as Netflix is right now, they make a lot less money than pay-TV does. Streaming is the future, and we can see cord-cutting accelerating. 

I think that is the challenge for getting into a business model that you can properly monetize. Historically, when customers had a budget and specifications, and these two did not match, they didn’t increase the budget, they cut specs for streaming video. To succeed, new companies will have to offer a quality experience and displace existing things with innovative technology. 

Huge investments are making in this space. Comcast and AT&T want to become media companies. It is a great business long term, but you have to navigate profitability as your customers do the same in the short term.

Can you share the insights on the impact Covid-19 has had on the industry? 

Absolutely. There was increased demand for streaming video and services, and it has generally been good. Where it has been not good is advertising. According to Conviva data, over 40 percent of ads failed to start. Some of that is network strained because the handoff between ad servers and content service needs to be perfectly smooth. If there are any disruptions, an ad does not play. Now streaming ad revenues are down at about 50 percent. Anyone reliant on ads is hurting right now. Anyone reliant on subscribers is doing well. Although, the higher usage numbers do lead to higher operating costs. 

How companies like Netflix deal with this problem?

Netflix has two technologies that are very important to their success. The first one is called Dynamic Optimizer. This technology employs AI techniques to parse a video into scenes then compress each scene, based on the complexity, as much as possible without diminishing the image quality. This encoding method reduces the amount of data used, allows customers with limited or metered internet connections to better enjoy the video, and reduces Netflix’s operating costs. Netflix is not the only one with this technology, but they were the first one that publicly announced it. That is a very important technology in video streaming. Disney and Google use it too. 

Open Connect is the second essential technology, and only Netflix has it right now. It is a distributed CDN — basically, an SSD with the most-watched content locally stored. It allows millions of people in 190 countries to watch shows simultaneously with very little additional traffic on the Internet. Their traffic is delivering via direct connections between Open Connect and the residential Internet Service Providers (ISPs). In regions where it is deployed, most of these connections are localized to the regional point of interconnection that is geographically closest to the member watching. 

Michael, thank you for the thoughtful conversation. Your professional insights on the global video streaming market, future trends, and streaming technology evolution are invaluable.

Stay tuned for the next interviews!