When it comes to online video networks, Google’s YouTube is the oversized and undisputed king of the hill with 1 billion monthly unique visitors. Yet that domination sometimes obscures some of the interesting developments that are afoot the smaller startups also working in the same space. Vuclip, the California-based mobile video streaming network that focuses its efforts mainly in emerging markets, is today reporting that it now has 80 million monthly unique users, nearly double the 45 million it reported back in February, along with 1.5 billion minutes of mobile video served every month across 700 channels+ of content from Disney, Sony and other premium providers.
Backed by $27 million from the likes of NEA and SingTel, the startup’s CEO, Nickhil Jakatdar, tells TechCrunch that with the current rate of growth, it expects to be profitable by the end of 2014, without needing to raise any more money.
That, and Vuclip’s video streaming inventory and the technology underpinning it, are now making the company an acquisition target. We have heard from well-placed sources that Vuclip has been approached both by large portal companies, as well as carriers, looking for assets like these.
On the portal side, it seems that the interest may be in the video platform and the technology — both offering inventory and ways of monetizing it to companies looking to sell more rich-media online advertising. Carriers, meanwhile, might be more interested in picking up Vuclip’s captive video audience as a way of connecting and selling services to mobile consumers. (Reminder: one of Vuclip’s investors is the carrier Singtel.)
Jakatdar avoids commenting on the details of who may have approached the company, but he does admit it has been, and that he has said no for now, partly because he wants to see how much further he can grow the company before it either gets transformed or shut down by a new owner (not uncommon practice in the world of M&A).
“We’re not ready to hand over the keys,” he says, but he also adds that the company is interested in buying more assets itself.
In February, Vuclip made its first acquisition, the mobile video company Jigsee, to expand its own premium content inventory and app capabilities in India, one of Vuclip’s biggest markets. Now the aim is for “a few more” acquisitions in the next year. These, he notes, will be about picking up more technology to improve its platform, rather than to acquire users or content (which it seems to be doing fine on its own steam).
The fact that Vuclip is significantly smaller than YouTube has pushed it to think beyond advertising when considering how best to make money.
Not only does it lack the scale needed to get any kind of decent return on ads placed alongside premium content — let alone those trying to monetize long-tail content — but mobile advertising is still a small-time game, especially in the emerging markets of Asia and Latin America where Vuclip is used most.
Mobile data networks constrained in these parts of the world, and the mobile ad business is simply not big enough there yet. “In the U.S., mobile advertising is only now starting to become an interesting business,” he says — it cracked the $1 billion mark last year — but emerging markets are far behind that.
In addition, Vuclip’s user base is not yet premium enough to merit high CPMs: the majority of devices, he says, are “the Asha’s of this world, not the Galaxy’s,” referring to Nokia’s low-end smartphones and Samsung’s high-end Android devices. That’s changing, of course. In the Middle East, he notes, iPhones are booming on their network; but not fast or big enough to drive a mobile ads business.
And so Vuclip is turning to something else to make money alongside mobile marketing: paid content and carrier billing. The company offers content on an a la carte, bucket pre-purchase, and subscription basis, with one-off and “valuepacks” seeing the most usage, Jakatdar says. Right now, the conversion rate on paid content offerings is between 5% and 6% — meaning of all the video views it sees on its network, that’s the percentage that are paying for the privilege, usually for cents per view.
The carrier billing decision is because these are emerging markets we’re talking about, where users often don’t have payment cards and so cannot hold iTunes accounts and the like.
But while carrier billing, charging purchases to a user’s bill or off a prepaid account, is often touted as a very easy, user-friendly, successful way to charge for content on phones, it also has its challenges.
Interestingly, the company’s projections on breakeven are based on the fact that right now, only 25% of its user base is actually being offered paid content. That’s because many carriers in the markets where Vuclip is most popular are not offering carrier billing yet themselves. Jakatdar says that it will be adding 10 more carriers to the roster this year in Asia before focusing on adding carrier billing in Latin America next year.
via TechCrunch » Startups http://feedproxy.google.com/~r/techcrunch/startups/~3/bmnhH-WvJ5s/
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