Q&A With Inlet Technologies Chairman and CEO Don Bossi

Each week I spend a lot of time trading emails with CEOs in the industry and simply due to time restraints, many of the conversations never go up on my blog. While probably half of what they tell me I’m not able to disclose anyway, there is a lot of information they share that I can make public, especially when it comes to the trends they are seeing in the market. With that in mind, I am going to try and post a few Q&A pieces each month on the blog. If you want your company interviewed, send me an email and let me know as I already have a bunch of these Q&A posts in the hopper and will always be looking for more executives to interview.

Inlet-logo Over the past seven years, Inlet Technologies has made a name for themselves with products that help content companies manage their workflow to help automate the entire process of content capture, ingestion and transcoding. Unlike many companies that have changed business models over the years, Inlet’s has stayed the same, focusing on solving one very important process in the video ecosystem. Over the past year, the company has been through some changes as thirteen months ago, co-founder and CEO Neal Page passed away after a year-long battle with Acute Myeloid Leukemia (AML). Last week, I had the chance to interview Inlet’s new Chairman and CEO Don Bossi and get some updates on their business and trends they are seeing in the market.

Question:  Inlet was one of the first list of partners when Google announced the WebM project back in May. Since that time, what kind of traction have you seen for VP8 and what are customers asking about when it comes to the WebM Project? Do you see VP8 ever truly displacing H.264?

Don: Our customers are definitely asking about VP8, so there is overall industry interest in it. Its open-source and royalty-free nature make it an appealing option. Plus, several of the big players in the industry have voiced support for VP8. However, since WebM has only been released for about three months, it stands to reason that adoption is not yet widespread. That said, I expect VP8 to represent a reasonably significant part of the video encoding ecosystem in the future.

To the question of VP8’s impact on H.264, I certainly don’t expect total displacement. The reality is that H.264 is a well-established codec, supported by Apple, Adobe Flash, and MS Smooth. Our view of the future is one with multiple codecs.

Question: A lot of fuss
has been made about video streaming on Apple devices but to date, the adoption
rate for video to these devices hasn’t been stellar. In the case of live
streaming, it’s extremely limited with very little content being offered. What
type of content do you think can be successful for streaming live to the iPhone
and what’s the real barrier to entry stopping adoption?

Don: In our experience, demand for delivery to the iOS devices has actually been surging. Two great examples  are Major League Baseball, whose live, linear content is offered in a very successful subscription model, and Home Shopping Network (HSN), which has been offering a 24/7 live stream to iOS devices for nearly one full year. More recently, we are seeing particularly broad adoption in Asia-Pacific and in Europe, where wireless providers and broadcasters have started to offer a significant amount of their content to these mobile devices. For example, we recently announced that we’re helping Australian Broadcast Corporation deliver live video news programming 24/7 to iPhone and iPad.

I think the HTTP adaptive bitrate specification that Apple has developed delivers a very good experience in relation to the bandwidth available to the consumer. We think the next barrier to break down is to help broadcasters and content owners recognize additional revenue by inserting targeted, digitally streamed ads in place of linear broadcast ads present in the signal, and early reaction to this capability has been fantastic.

Question: There has been a lot of talk this year about HTTP adaptive streaming and the role it could potentially play for the future of video delivery. While the benefits are very clear, why hasn’t HTTP based video delivery really taken off as of yet? Do you have any data on the percentage of your customers who are encoding their video to take advantage of adaptive bitrate technology?

Don: While I don’t know the exact percentage, I can say with confidence that the vast majority of customers of our Spinnaker product line use Adaptive Bit Rate (ABR) for live streaming. HTTP adaptive streaming continues to grow: Microsoft uses it for IIS Smooth Streaming, Apple for their HTTP Adaptive to iPhone and iPad, Adobe has adopted it for their HTTP Dynamic Streaming, and Android expects to support it next year.  It is really starting to take off, and we think it’s the way all professional, live streaming will be delivered in the future.

Question: Another topic getting some attention as of late is 3D streaming. I know Inlet showcased a 3D workflow scenario with Microsoft and Level 3 at NAB in April, but realistically, no one is really doing 3D streaming in the field today. With the cost to deliver HD video still keeping many content owners from increased the quality of their video, how are they even going to be able to support the costs associated with the workflow and delivery of 3D videos?

Don: Content owners want the flexibility to deliver any format to any screen at any time, and 3D is no exception. That said, and as you note, our customers tell us that they are more focused on providing the highest quality HD streaming experience versus 3D at this time. 3D content delivery requires some fairly complex camera angles and operation (i.e., a field-level camera for an NFL game) to properly demonstrate the depth of field required for a stellar 3D experience. However, as our customers further refine the monetization process and as their appetite for 3D increases, we are prepared to help them deliver.

Question: I get a lot of questions from content owners who are always looking for details on what setting they should use for encoding video. What are some of the resources available on the web that give them a break down of the best settings to use based on the type of content and the device it is being delivered to?

Don: The term “best practices” is one we hold in high regard.  Getting the settings right and delivering the optimal quality is paramount — for our products, our customers and consumers. In many cases, we’ve helped develop the optimal settings for a given compression scheme and the content therein with our major technology partners. We’ve tried to “bake” best practices and settings into our products, but we also expose a number of “knobs” for those who wish to do additional fine tuning.  Here are a few excellent resources offered by our partners:

Question: Do you envision a day when we will see any cross-platform synergy amongst Adobe, Apple and Microsoft? For content owners, having to support so many different platforms in their video workflow is expensive and time consuming. Do you ever see that changing?

Don: I do foresee some potential commonality emerging among vendor-specific formats in the future. As it stands today, the Adobe, Microsoft, and Apple formats all leverage H.264 video and AAC audio. I can imagine a time when there is more alignment on the specific nuances of how each format renders video and audio for the user. We’ve also begun to hear that different technology teams within these providers are talking about how they would reach agreement, and standardization, on some specifications. For example, Apple’s HTTP Live Streaming implementation (also called “Pantos”) has been submitted as a standard to the Internet Engineering Task Force (IETF). What if the Android team could utilize this specification to bring adaptive bitrate delivery to that platform? That really makes things interesting, and I think we will see expanded discussions in this realm.

Question: When it comes to reaching multiple devices with a single live stream, there still is no way for content owners to encode once and deliver everywhere. Aside from the encoding workflow issues, content owners also have to deal with the delivery protocol differences. Do you see a way that this can all be streamlined down the road?

Don: Content owners seek to address a wide array of devices and formats, and the list grows and changes frequently. That being said, we’re actually already addressing the exact challenge you describe.  We allow customers to perform a single encode (or multiple encodes in the case of an adaptive bitrate experience) and then simultaneously wrap the encoded stream in multiple formats, such as Smooth, Flash, and iPhone/iPad, for delivery to a variety of devices, all out of one box.

Question: While live events get a lot of press in the media, to date, very few media and entertainment events actually make any money. Live events are expensive to produce, have a very short life-span and typically don’t have content that is worth paying for or can be profitable based on advertising. Do you see any new live business models in the M&A vertical that have a chance at actually making money?

There are numerous ways in which content owners can make money from live video streams. These include advertising, subscription, pay per view, sponsorship, and licensing. Major League Baseball has a very healthy subscription model, and CBS Sports has been very successful in selling advertising around their March Madness on Demand product. In both cases, not only are viewers provided with professional-quality live video, but they are also provided with an exceptional experience wrapped around that video. This includes multiple camera angles, play-by-play descriptions, scoring data, and social media integration.

I believe that successful live business models take advantage of this type of experience that moves online video beyond the “lean-back” / living room way of viewing to the “lean-forward” model where viewers are actively engaged in the event. Providing that exceptionally rich experience – and not just simulcasting an event online – is what will help content owners take their online monetization to the next level. Additionally, the ability to easily insert video ads into live video streams in place of broadcast ads will make it simpler than ever for broadcasters to generate new revenue streams around online and mobile video. Finally, I’d like to add that we are looking at ways of helping our customers quickly repurpose live content for VoD use, giving it a greater shelf life and additional opportunity for monetization.

Question: Inlet was recently named as one of the top 100 leading
private companies in North America by Red Herring. How big is Inlet in
terms of revenue and what kind of sales growth has the company seen over
the past twelve months and what’s the breakdown on what verticals
Inlet’s revenue comes from?

Don: Inlet has seen a healthy and steady increase in revenues since
our inception in 2003, but our growth has really accelerated over the
past two years. As a private company, we don’t publicly release revenue
numbers, but I can share a couple of relevant data points. First, we
have over 300 customers in 50 different countries, spanning many
different vertical markets and applications.

Inlet serves
several different vertical markets, but all of our customers are looking
to deliver a professional quality experience to consumers on one or
more screens or devices (e.g., TV, PC, mobile devices). Our most
noteworthy verticals are sports; media and entertainment; broadcasters;
content aggregators; and several types of service providers, including
cable TV, telco and wireless providers, as well as media service
providers. We also see strong and growing interest among government and
enterprise customers.