Verizon Ventures Invests in Beamr to Further the Company’s Market Penetration

beamr-logo-color-horizontal-hiresEarlier this year I reported about Beamr’s acquisition of Vanguard Video, the video encoding technology company best known for supplying the HEVC codec SDK that Netflix is using for all their 4k, Dolby Vision, and HDR-10 content. At the same time, they announced raising a funding round of $15M led by Disruptive Growth, with participation from their existing VC’s Eric Schmidt’s Innovation Endeavors fund and Marker, LLC. With today’s announcement of Verizon Ventures adding $4M to the company, it seems the company’s momentum is set to expand faster.

Beamr tells me the additional funds are being earmarked for market expansion to capitalize on the opportunities they see in the telco, cable, and satellite sectors. Which is in addition to their existing video optimization business and the H.264 and H.265/HEVC encoder SDK business, which I can assume is healthy given Verizon’s investment.

For those not familiar with Beamr, they are an interesting company, who has grown from being a niche technology provider in the area of video optimization to a video encoding and processing technology vendor. New entrants in the video optimization space seemed to pop up every other month a few years back, yet we’ve since seen most exit the market or change directions since that time. With the acquisition of Vanguard Video and the advancement of their perceptual quality measure technology, the company appears to be adapting quickly to the needs of the market. Netflix, IBM, Imagine Communications, Microsoft, Dolby and dozens of other companies in the space leverage their technology.

As new entertainment experiences are being introduced such as VR, 360 and UHD 4K with HDR, there is a clear need for more advanced video encoding solutions. Which in concert with the consolidation that has hit the encoder market this year, such as the acquisition of Envivio by Ericsson and Elemental by Amazon, I see an opportunity for nimble technology disruptors to grab market share based on their technology and ability to adapt to the needs of the market.

In the piece I wrote earlier this year about Beamr, I suggested it’s becoming more difficult for some companies to do business with certain vendors. For example, does a cable company want to buy encoders from an Amazon-owned company? Potentially not. By combining Beamr’s perceptual optimization technology with their highly lauded H.264 and H.265/HEVC codecs, they are in a good position to capitalize on the industry consolidation and technology inflection point as we transition from H.264 to HEVC (over many years) and from hardware to software based solutions.

Though network investment will continue, capacities are always going to be under pressure. The ratio of data per pixel used for encoding video will need to decrease, even while the video quality remains at the same level. Perhaps this is why Verizon invested in Beamr. Verizon has highly capable video engineering teams, and they have built a world-class network. Yet the one area that no operator can address independently is video encoding due to the highly specialized and academic skill sets and knowledge required to further develop video encoding technology. Beamr has a team of 60 engineers focused solely on codec development, which I have to believe was not lost on Verizon.

When you look at the accelerating trends of video consumption – and consider new formats like VR and 360, it doesn’t surprise me that Verizon thru their investment arm Verizon Ventures, invested in Beamr. As the market has shifted to software, and some current encoder solutions dont’ provide the needs of the market, I can see Beamr rapidly becoming a dominate encoding vendor.