Video Optimization Company Conviva Raises $15M: Is There Enough Of A Market For These Services?
This morning, California based Conviva, a video quality optimization and analytics platform, announced a series D round of funding totaling $15M, lead by Time Warner Investments. Founded in 2006 as Rinera Networks, the company changed their name to Conviva in 2008 shortly before Darren Feher, former CTO of NBC Universal took over as CEO of the company. The company is not saying how much of the latest round of funding comes from Time Warner Investments, but did say that it was the "majority" investor. To date, Conviva has now raised $59M.
Unlike a CDN, Conviva does not deliver the video themselves but rather works with content delivery networks and content owners as a software based overlay service. Conviva's software monitors the performance of end-users video quality and not only records the experience but can also manage, in real-time, the shifting of traffic amongst multiple CDNs. Conviva has deals with both Level 3 and Limelight Networks who uses their technology and has a nice roster of content owners as customers including HBO, NBC, MLB, Netflix, MTV, ESPN and is also used for a lot of one-off live events like the 2010 Winter Olympics and the FIFA World Cup.
Conviva is one of those interesting companies in the industry because no one really competes with them in the market and as a result, many don't really know what bucket to put them in or how they should be classified. I don't see a lot of companies trying to develop a similar solution to Conviva's mostly because the market size for SaaS based video quality optimization services just isn't that big. That said, if the market grows fast enough and Conviva is the only major player, the company could have a nice exit strategy, getting purchased by a larger entity for their technology. At the same time, Conviva has raised $59M in five years and from what I hear, still isn't profitable. So if the market does not grow fast enough, Conviva could have a difficult time growing their revenue to meet their VCs expectations.
On the surface, I like what Conviva is doing as their whole goal is to improve the video quality for the end-user, in real-time, without anyone knowing what's taking place. Whether it's bad buffering, a frozen encoder or some problem on the network, Conviva's platform brings the intelligence to proactively switch servers mid-stream, change the bitrate and apply policy filters, all on the fly. This is a solution that I really would have liked to have had in the market ten years ago when video quality on the Internet was poor and there were very few ways to correct the problem in real-time. But today, with the quality of video being delivered from the major CDNs getting better each year, I just don't know how much of a demand there is for Conviva's solution, since video quality is only getting better overall, not worse.
Conviva's solution is not affordable for a small or medium sized content owner and that's why to date, Conviva's customers are mostly the larger content brands on the web. That could be a good thing for Conviva if the company can ramp revenue fast enough, but their are also fewer big content brands on the web than there are small and medium sized business, which is probably why Conviva is now working directly with CDNs to have them offer this functionality to any of their video based customers. Content owners I have spoken with who use Conviva's solution like how it works, but many also don't use it exclusively as their only video optimization and measurement platform. For example, Netflix and MLB both have their own internal platforms that offer a lot of the same functionality as Conviva, but Conviva offers them the insight of a third party.
To date the company has done very little in the way of marketing and most of the content owners I speak to haven't heard of the company, don't know what they do, or think they are a simple analytics company – which they're not. The company does much more than analytics and their solution really does work. But Conviva needs to get more brand recognition and exposure in the market and hopefully, they will use some of their new funding to increase awareness with content owners.
I like any solution that's designed to improve the quality of video being delivered to end users, so I'd like to see Conviva be able to become a profitable vendor in the industry soon. But I just don't know how big of an opportunity there is for this kind of service in the market, how quickly Conviva can grow or how much content owners will value this service, and be willing to pay for it. All that aside, Conviva is an interesting company to watch and hopefully soon we'll be able to get a better insight into their business.
Updated: Conviva contacted me to say that the majority of their revenue does not come from live streaming, but that it is mostly recurring revenue from video on demand content.
