This week, Limelight Networks announced it was laying off 16% of their workforce, or approximately 100 people. While it’s never good to see people lose their jobs, Limelight’s new management team needed to make drastic changes to the business to re-focus the company. New management typically takes the blame for layoffs but it’s simply because prior management didn’t take the necessary steps needed to put the company on a path to the proper growth and profitability.

Purely from a numbers standpoint, Limelight didn’t have the revenue to support such a large headcount. The company ended 2021 with $230.2M in revenue and had 618 employees. Two customers, Amazon and Sony, account for 48% of their revenue. The company missed both their Q3 and Q4 guidance and ended the year with 527 customers, down from 599 the year before. Also, when compared to other similar vendors in the market, Limelight’s sales team was nearly two times larger, but didn’t have the revenue growth to support it. Over the past four years, Limelight’s average revenue growth was just $11.5M per year, going from $184M in total revenue in 2017 to $232M in total revenue in 2020. The company’s gross profit percentage fell from 43.7% in 2019 to 30.4% in 2020. Simply put, new management needs to make some drastic changes and it starts with headcount.

Outside of the numbers, Limelight also had operational issues from a sales, product and technical standpoint that prior management never addressed. Limelight hasn’t had a full-time CTO in more then five years, which is unheard of for a CDN vendor selling a technical service. The company also has no dedicated Chief Product Officer, which is negatively impacting Limelight’s product road map and ultimately what sales could sell into the market. Limelight also needs to improve their cost structure, which is something the new management team is laser focused on and once done, should save them a lot of money. I won’t go into specific details, but the way Limelight deploys capacity in certain regions is simply not efficient from a dollars standpoint when compared to other CDNs.

Based on some of the changes new management has already made, Limelight is expected to benefit from an annual cash cost savings of approximately $15M. Limelight ended 2020 with nearly $47M in cash and cash equivalents, so the company has capital. The focus for new management will be around guaranteeing better performance at scale (with the right cost structure), offering a new products and a clear product road map, diversifying revenue so they aren’t dependent on two customers for half their revenue, and becoming profitable. In 2020, Limelight’s GAAP net loss was $19.3M, so that’s something they need to improve on so they can get to cash flow break-even or better.

Changes are never enjoyable when it involves layoffs, but in this case it was a necessary task Limelight’s new management team had to accomplish, so they can put the company on a path to faster growth and profitability.

Thanks to John Clifton and Tim Meredith for having me on “The Tech That Connects U‪s‬” podcast, where we discuss some of the latest OTT business models; subscriber projections; what the future of the conference business looks like in a post-Covid-19 world; and how I got started in the industry. Great chat talking real-world happenings in the streaming media industry. Listen to it below or on Apple Podcasts and Spotify.

On Monday March 22nd at 1pm ET, I’m moderating a session as part of BitmovinLive on, “Encoding Workflows Best Practices: How to Scale for Quality and Cost.” Come join this unique conversation with no pitches or demos, just real-world information on the best practices you can apply to improve your OTT video offering. With speakers from Blizzard and Sinclair Digital, we’ll discuss how broadcasters and OTT streaming services are prioritizing optimizing their encoding stack to improve their Quality of Service (QoS) while keeping costs in check. Bring those burning questions to our panel and be part of the discussion. You can register for the event here.

Since HBO Max launched last May, the tech team has been busy adding a lot of improvements and has rolled out enhancements around personalization, higher-quality video, navigation/design and video playback. Personalization has been a big focus and HBO Max is now using a mix of human-powered discovery and underlying data, along with bespoke tools including an enhanced video player, to also provide parental controls and a unique kids experience. As a user I can verify firsthand that the service has gotten some awesome improvements. It’s great that HBO Max is willing to share so many details on how they are improving the overall viewer experience, something other OTT services don’t talk about, but should. The following is a list of improvements made to the HBO Max service since launch.

Updates rolled out this week include:

• New in-line video for tvOS users, providing content previews throughout the page and communicating emotional context of content
• Re-introducing the restart button to connected TV, delivering an elegant restart experience
• Homepage personalization with component selection and rerank allows each user to see the most relevant trays and titles within each tray, tailored to them through a combination of human curation and data intelligence
• Chrome redesign that allows users to see cleaner, more modern video player controls on mobile and tablet
• Technical enhancements and bug fixes including 50% faster page transitions and browse menu, allowing users to get to the content they want, faster

Updates added since launch include:

Personalization

• “For You” Tray | Each user sees a different selection of content in a tray personalized to them
• Age-Targeted Kids Profiles | Kids profiles launch directly into a homepage curated for their age
• Kids Character Navigation | Browsing via character row directs kids to curated character pages, featuring favorite franchises unique to HBO Max including Sesame Street and Looney Tunes
• Multi-language Playback | Users can watch their favorite shows and movies with more audio and subtitle language options on select devices, with more coming soon

Enhanced Viewing Experience 

• 4K Ultra HD, HDR 10, Dolby Vision and Dolby Atmos capabilities were introduced to the platform with select titles, beginning with Wonder Woman 1984, and will continue to expand across additional programming and devices; we plan to support these formats for all of the films released from the Warner Bros. 2021 film slate

Design and Experience

• Skip Intro, Promos, and Recaps | Viewers now have the power to skip intros, promos, and recaps, getting them right into the content itself and enabling a seamless binge experience
• Improved Content Details Pages | Captivating imagery to draw users in and a more intuitive layout for trailers, clips, extras, and more
• New Hero Unit with In-Line Video | Larger artwork that amplifies our content on the homepage with full bleed imagery and engaging in-line video

Navigation

• Connected TV Navigation Redesign | A left-hand, always visible menu with movies, series, and hubs exposed at the top level of navigation
• “More Like This” Tray | On all Movies & Series detail pages, viewers can see related titles while browsing through the content library
• “Just Added” Tray | Highlights content recently made available on the platform
• Search Suggestions | Search suggestions are now available to viewers on CTV and tvOS, enabling the elevation of popular searches for series/movies, brands and genres, easing the search experience for viewers

Video cloud platform provider Kaltura has filed their S-1 and will be going public under the symbol of KLTR. It’s expected they will IPO sometime in Q2. I’ve read through the entire document and here’s some of the key takeaways:

• $120M in 2020 revenue, with year-over-year revenue growth of 17%, 21%, 27% and 30%, for each quarter last year. 2019 total revenue was $97.3M. Year-over-year revenue growth was 12% in 2018, 18% in 2019 and 24% in 2020.
• Net losses of $15.6M in 2019 and $38.7M in 2020 and adjusted EBITDA of $4.0M in 2019 and $4.3M in 2020.
• At the end of 2020 Kaltura had “approximately” 1,000 customers, who combined, have over 100 million media assets on Kaltura’s platform.
• For the years ended December 31, 2019 and 2020, Vodafone accounted for approximately 12% of Kaltura’s revenue in each such year, and their top ten customers in the aggregate accounted for approximately 27% and 29% of their revenue in 2019 and 2020.
• Revenue from “Enterprise, Education & Technology” was $80.4M (67%), with “Media & Telecom” accounting for $39.9M (33%) in 2020 revenue.
• The company grew revenue by 24% in 2020, while only increasing sales and marketing costs by $3.9M in 2020, compared to sales and marketing costs in 2019.
• At the end of 2020, “approximately” 61% of their revenue was generated from customers in the Americas, 31% from customers in EMEA and 8% from customers in APAC. 81% of revenue came from customers who were with Kaltura as of December 31, 2018.
• For the years ended December 31, 2018, 2019 and 2020, the lifetime value of Kaltura’s customers exceeded five, seven and eleven times the cost of acquiring them.
• Customers include 25 of the US Fortune 100, more than 50% of U.S. R1 educational institutions, including seven of the eight Ivy League schools and some of the largest global media companies and telecom operators.
• As of December 31, 2020, Kaltura had 378 full-time employees in Israel and 584 employees in total across 22 countries on five continents.

I’ll have a more detailed blog post up shortly that gives an overview on Kaltura’s business and competitors.

AT&T announced that it has sold a minority stake in DIRECTV to the private equity arm of TPG. The two parties will establish a new company named DIRECTV (“New DIRECTV”) that will own and operate AT&T’s U.S. video business unit consisting of the DIRECTV, AT&T TV and U-verse video services. Following the close of the transaction, AT&T will own 70% of the common equity and TPG will own 30%. AT&T will net $7.8 billion from the deal, valuing DIRECTV at at $16.25 billion. AT&T acquired DIRECTV for $48.5 billion in 2015, or $67 billion when you include debt.

TPG will contribute $1.8 billion in cash to New DIRECTV and has secured $6.2 billion in committed financing from its bank group, $5.8 billion of which is expected to be paid to AT&T in cash plus the assumption from AT&T of $200 million of existing DIRECTV debt. The New DIRECTV will be jointly governed by a board that has two representatives from each of AT&T and TPG, as well as a fifth seat for the CEO, which at closing will be Bill Morrow, CEO of AT&T’s U.S. video business.

AT&T and New DIRECTV will have commercial agreements in place that will give New DIRECTV video subscribers continued access to HBO Max and to offer bundled pay-TV service for AT&T’s wireless and internet customers. Once the transaction is completed, existing AT&T video subscribers will become New DIRECTV customers and will be able to keep their video service and any bundled wireless or broadband services, as well as HBO Max, plus any associated discounts. The NFL SUNDAY TICKET content deal on DIRECTV, will be a part of the New DIRECTV company.

ViacomCBS held their big streaming service reveal for the March 4th launch of Paramount+ and the company didn’t disappoint. There was a lot of news to digest from the event, both in the volume of new content they highlighted coming to the service, as well as the back catalog of movies and TV shows that will be available. But the biggest news was the announcement that popular Paramount films will come to the streaming service 30-45 days after their theatrical run. All others will come to the platform at a later time, with the company saying some as early as 90 days. Here’s some other key takeaways:

• Paramount+ will have two packages in the U.S., an ad supported offering at $4.99 a month (coming in June) and a “Premium” offering for $9.99 a month. Premium will get you access to live TV with news, local content and more live sports
• Expect 65-75 million subscribers globally for Paramount+ by 2024. That goes along with their projection of 100-120 million MAUs for Pluto TV and an estimated total streaming revenue of $7 billion by 2024
• Paramount+ will have access to MGM films, due to their deal with EPIX, extended through the end of 2023, giving Paramount+ the new James Bond title No Time to Die, amongst other films
• All Paramount+ original series will be made available in 4K with HDR and Dolby Vision
• Similar to CBS All Access, some content will be available for download to mobile devices
• By summer 2021, Paramount+ should have more than 2,500 movies
• A TV show based on the Halo game, being produced by Showtime, will debut on Paramount+ in Q1 of 2022

At some point, ViacomCBS will have an archive of their launch event available on their website here.