New CDN Conviva Gets $20 Million In Funding: VCs, Stop The Insanity!
With VC funding for CDN and P2P delivery networks already topping $325 million in the past 18 months, it was no surprise to see Conviva, formerly known as Rinera Networks, announce this morning that it has raised $20 million in a series B round led by UV Partners with participation from Series A investors New Enterprise Associates (NEA) and Foundation Capital. This brings Conviva’s total money raised to date to just over $29 million.
Anyone who has read my blog long enough knows I am pretty straight forward when it comes to describing what I see in the market. The one thing I really dislike, more than anything else, is a company that talks a big game while delivering nothing more than marketing speak. Instead of Conviva quietly raising the money and not coming to the market and pitching editors on the company until after they have a real story, customers, and product to talk about, they make a big deal now about the company, even though there is nothing to talk about. Why would you want to be known as a company who has raised a lot of money and has no product they can talk to? Does anyone in this industry know how to do good marketing anymore? There is no story here, nothing to latch onto and simple saying we got a lot of money equals absolutely no creditability.
If it was just a press release with the basic info and was left at that, no issues. But what makes it worse is that the founder speaks to the media and gives ridiculous statements like, “The first generation of video delivery just doesn’t work”. Really? So what is all this video content that I am watching on the web? Seems to be working just fine for myself and many others. And considering that the worldwide market for CDN video services will be north of $400 million this year, I’d say it’s working quite well.
But then again, what do I know. I always thought I was watching live video over the past many years. But apparently I’m not since Conviva says they are the developers of the “FIRST live media platform that enables media companies to deliver an inviting, exciting and uniting online live experience.” So apparently, not only is the current Internet broken, but also Conviva is the first and only company who has a platform capable of delivering an inviting and exciting live event on the web. How bad does that make a company look, to make a statement like that, just after the Olympics finished being streamed live on the web.
And since you said it when describing today’s networks, what exactly is the “first generation” anyway? You mean the networks that have been around for ten years and have constantly updated their technology and infrastructure? That quote makes it sound as if companies like Akamai launched a CDN ten years ago and in that time, have never made any improvements to their technology and are running on legacy systems. The other interesting thing to note is that when Conviva was known as Rinera Networks, their focus wasn’t even on live video.
Looking at the very limited details of their offering on the Conviva site and it reads like a dictionary of the most popular buzz terms in the market today. They manage to get nearly all of them into just a few sentences including “greater brand loyalty”, “engage audience”, “site stickiness”, “monetize perishable content”, “target advertising”, “new platform” and “real-time Intelligence”. And while the site says they have a white paper on something, they don’t make it available on the site and say you can only get it if you contact them. Odd. They contact members of the media asking for coverage, but then don’t send us the white paper, which potentially could actually give us something to write about in our coverage. Great marketing strategy. Conviva won’t say how their platform works, what exactly it does, who the customers are, how it is priced, when it will launch, what video formats it will support, how the product/service will be sold or even give real details on what they are going to do with the $20 million that was just raised.
Now I don’t fault Conviva for taking the VCs money as they are simply getting their piece of the pie like the previous 20+ companies have in the last 18 months. But what I’d like to know from UV Partners, and would welcome their response in the comments section below, is how big is the market for live streaming on the Internet? And how much will it grow by over the next three years? Since none of the CDNs I speak to have ever broken out what percentage of their revenue is from just live streaming, how big do you think the market really is? And more importantly, what percentage of the market do you think Conviva can capture and how quickly? Live streaming over the Internet is a small market today and even with big growth, will always be small compared to video on demand.
My personal estimate is that less than $50 million a year in revenue comes from the delivery of live video. And right now, Akamai and Limelight combined have at least 75% of that market. So is Conviva saying it is trying to challenge Akamai and Limelight for that business? If so, you started on the wrong path. Lots of noise, lots of marketing terms, yet no info or story of any kind.
Note: Just as I was about to make this post live, someone from UV Partners returned my call. While they nicely spent a few minutes on the phone to hear my questions they were not able to give out any more details on Conviva at this time.