Sramana Mitra: Where did you go first when you were trying to penetrate the market?
Mark Hyland: It was the carriers first. That was partly because of the DNA of our CEO. He had worked in the carrier space, in the billing space. He had this idea that the wireless carriers would need with help managing their video infrastructures. He’d come from an outsourced billing world where he’d seen carriers say, “We will never outsource. The two things that are most core to us are our network and our billing, and we’ll never outsource those.” And he lived through their outsourcing both. So, he knew that if the value proposition was right, they would outsource something like video infrastructure or video service platform.
That’s where we pitched. We had some early traction with carriers in Canada. Right away we were pitching AT&T and Verizon and some of the smaller U.S. carriers. Eventually, we got a deal with Cricket, which was innovative and had an interesting user base. Even though Cricket was largely a form of pre-paid, it was a heavy user of the Internet, of music videos, of music all kinds of things like that. Cricket had an interesting user base. Really, that was our first U.S. reference, along with some of the content provider work that we’d done with ESPN and Viacom, MTV, and VH1.
That gave us a platform to start pushing into the states and ultimately, we made the third big bet around 2007 or 2008. At that time – if you remember – there was a lot of emphasis on mobile advertising. We were getting a lot of pressure from our board to get into advertising and support advertising. We looked at it closely, and because of my background from publishing and Web advertising, I knew agencies. I knew whom to speak with. I knew a bit about the business, and I estimated all of the streams around the world that could be played on a mobile device. There weren’t that many. There were a 200 million or something like that. So, translating that with a reasonable cost per million (CPM), you just didn’t get that big a market at that time for mobile video. Then I looked at the pay TV market and found that subscription video was a massive business in the U.S. and around the world with satellite providers, but in the U.S. alone, it was over $100 billion in terms of what was happening.
SM: Subscription video on television sets?
MH: Yes. Cable, satellite, IPTV, Comcast.
SM: Your proposition was to move that to mobile devices?
MH: That was big inflection point in the company. We started to make the shift from focusing on bringing video to wireless operators and instead turned it on its head. We said, “We’re going to bring mobile devices to TV operators, to cable companies,” and so on. In our assessment, the pay TV business was huge and significant and was not going to disappear overnight. We could see the pressure was on it, but it was not going to disappear overnight. We could also see that if you’re a mobile operator, video is always going to be a small part of your business. You care about signing up people for data plans, minutes, and all that kind of stuff.
SM: And the business model of the mobile Internet is a flat-fee business model, so you can’t really charge for extra data too much yet. That’s probably going to change.
MH: I think there’s change in the offing. Ultimately, the networks aren’t free, so there are different ways of trying to cover that cost.
SM: But it’s a problem, isn’t it?
MH: It’s a problem, yes. What we’ve found is that people who were in the TV business cared about making sure that they stayed in the TV business and that their customers could watch their services on whatever platform they wanted. The pitch became what’s now known as the “TV everywhere” pitch, which is, “We’ll help you get your great service, whether it’s live or video on demand on any device to anybody at any time.” That’s where we are now.
It wasn’t a radical change in the company’s vision because we had this idea that video would go on lots of different devices, but it was a substantial shift in whom we were selling to. And it was a little counter-intuitive at the time because we had a lot of pressure saying that video was going to be free. YouTube mobile was getting massive at that time. There were a number of ad-funded startups: Rhythm NewMedia, JumpTap, a variety of others. We had to be a little contrary and look at our analysis and do a bit of a gut check.