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Summary:

We’ve found it hard to find anything in common between the white-label video provider ROO Group and what it has become in the five months since new Chairman and CEO Kaleil Isaza Tuzman joined the company. It’s now called KIT digital, operates out of Dubai, has […]

We’ve found it hard to find anything in common between the white-label video provider ROO Group and what it has become in the five months since new Chairman and CEO Kaleil Isaza Tuzman joined the company. It’s now called KIT digital, operates out of Dubai, has laid off significant portions of its staff, raised $15 million and acquired two companies to take it in new technical directions. ROO Group, the white-label video provider, is increasingly looking like a shell company for Chairman and CEO Kaleil Isaza Tuzman, who joined the firm at the beginning of this year and quickly renamed it KIT digital. But in one of his first interviews since getting involved with the venture, Isaza Tuzman told us that he’s just aggressively honing the company’s core business: enterprise video for a global market. Isaza Tuzman previously was at JumpTV, KPE and govWorks (for which he was immortalized in the bubble documentary, Startup.com). In a phone interview yesterday, he told us about KIT’s acquisition of Stockholm-based Kamera, a mobile video company.


Isaza Tuzman also pitched KIT digital’s global strategy, during which he managed to criticize each of the major U.S. white-label video players for having a local focus. Meanwhile, Brightcove announced today the formation of a Japanese subsidiary with $4.9 million in funding, with three of its investors serving as local sales agents. So maybe he spoke too soon.

Isaza Tuzman also told us about dropping legacy ROO customers, KIT’s future acquisition possibilities, and why he shut down Wurld Media. Keep reading for an edited transcript of our conversation.

Update: Brightcove felt like they were described inaccurately in this interview, and I agreed, so I gave them the opportunity to respond. I am posting the full text of their reply in the comments (as it is rather long), but the core points are that Brightcove has large and well-known customers from all over the world who pay significant amounts of money for the service. Please do give the response a look.

NewTeeVee: So it’s clear there have been a lot of changes since you took over at ROO — new name, moving to Dubai, layoffs, hires, funding, acquisitions. My first question is, what has stayed the same?


Isaza Tuzman
: The key product development team and software have stayed the same. The business processing software has stayed the same. But pretty much everything has changed. We’ve refined the business model — not just media and entertainment focus, but general Global 1000-type of brands. Sixty to 70 percent of our revenues are in Asia Pacific, 20 percent Europe, only about 7 percent in both North and South America. We’ve actually jettisoned 45 clients over the last four months even though we’ve increased revenue by 100 percent.

We really don’t want to compete with the Brightcoves and the Dailymotions, not that that’s a bad sector, but we’re really providing an enterprise software solution. Our average client today is doing about $20,000 month and before I joined it was about half that. Brightcove last reported $225 a month.

NewTeeVee: What do you think are the company’s core technology assets?

Isaza Tuzman: Everything from pretty traditional content management to the back end, all the APIs for social networking, streaming, storage. With the acquisition of Kamera it also gives us publishing capabilities to mobile. If you look at browser codecs there are just three — Flash is 90 percent of the market; Windows 10 percent; RealNetworks, 5 percent. With mobile there are 20 different codecs. Kamera has about 40 different major mobile operators that are in the telco space that they deliver and integrate the software into. It’s the same thing we do, but the codec and transcoding cabilities are appropriate to mobile. They do both off-deck and on-deck mobile.

I think that mobile really differentiates us, and that was the plan from when I came on, especially in the European and Asian markets. U.S. mobile video use is infinitesimal compared to the rest of the world.

NewTeeVee: Who do you expect your customers to be, going forward?

Isaza Tuzman: Different brands have different needs. General Motors, which we do a lot of work with, they don’t produce a lot of their own video content. For them they didn’t have an internal video CMS system, whereas a Verizon or a News Corp. would have that.

NewTeeVee: As you start getting more involved with these branding sites, are you engaging with advertising agencies?

Isaza Tuzman: I think that prior to new management’s arrival we had developed a conflict of interest — I mean a channel conflict — with advertising agencies, because we had an ad sales team. We’ve eliminated that conflict and are now working pretty actively with agencies. We’re a software company in interactive agency clothing, but really at the end of the day we’re providing software. In Asia we just created a partnership with an agency, and I would foresee doing Europe next.

NewTeeVee: So who are the ROO customers that you mentioned that you had dropped?

Isaza Tuzman: Entirely the small customers that you probably wouldn’t even know, kind of the profile that Brightcove works with. It’s not that I think that’s a bad business, it’s just not our sweet spot. We dropped about 40 clients that were doing probably a couple thousand dollars a month.

NewTeeVee: Do you expect you’ll continue to serve old ROO customers like FOX?

Isaza Tuzman: Of course, News Corp is one of our top four or five clients. We’ve actually expanded our business with them in the last month. With News Corp.’s multipoint publishing needs, assets around the world, it really is an appropriate client for us. Other examples would be Verizon, Sony Universal, IMG.

NewTeeVee: Do you think you’ll acquire any more companies in the near term?

Isaza Tuzman: We’re really focused right now on integration. You might see us do something around streaming capability, where we currently work with Pando and Abacast and Akamai. Not one of those companies, but another with those assets.

NewTeeVee: But didn’t you have assets like that when you joined ROO because of its acquisition of Wurld Media?

Isaza Tuzman: I was obviously never with Wurld Media; I shut that down. I don’t want to speak pejoratively, but Wurld Media was attempting to do peer-to-peer streaming technology, and I didn’t see that being a core part of research and development for what we are doing. I’m more talking about nodality, a company that would have nodes set up already that we could plug into.

NewTeeVee: So you mentioned that you don’t think you compete with Brightcove, but who else is your competition?

Isaza Tuzman: All of our markets have competition, often less evolved than in the U.S. In the U.S., or North America, there are so many VC-backed companies that are willing to do business at a loss, and I understand why that exists in the ecosystem, none of us are curing cancer, none of us are developing new ways of fabricating silicon wafers — you’re talking about enterprise software that doesn’t require a dozen engineers in Ukraine. I’m very cash flow-oriented and business-oriented at this juncture.

NewTeeVee: Where do you see this market going?

Isaza Tuzman: I think it’s a pretty straightforward business. If we could get to 200-300 customers out of the Fortune 1000, I think we would have a billion-dollar company, and that would be our big, audacious goal.

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  1. Isaza where is all the money that ROO took from Peer Impacts customers and why cant we play our music any more (DRM Sucks) if you Shut Wurld Media down …..

    I know your reading so can you answer that question seeing that no one from ROO would never get back to me when I called them or emailed them…..

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  2. Hey Liz,

    You know I like your reporting, but I think this particular write up went way, way too soft on KIT and didn’t include enough facts. KIT made too many statements in the interview as if they were facts and were not challenged on them.

    Brightcove has never reported that their average client spends $225 a month. It’s a nice marketing statement for KIT Digital to make, but that’s all it is. Brightcove’s average customer does not spend $225 a month and they have never reported any such number. I challenge the CEO of KIT Digital to back up his statement with a link that proves those numbers.

    Taking a shot at Brightcove as this small company who has customers no one has heard of doing a few hundred dollars a month is just dumb. Brightcove has over 4,000 customers, how many does KIT have? Brightcove has some of the most well-known content creators in the space, especially when compared to KIT, yet KIT wants to dismiss Brightcove as some small player with customers we don’t know. I can name at least a dozen big Brightcove customers off the top of my head, I can’t name one KIT customer. In the last six months, KIT has announced only one customer to the media who is based in Australia. Only 7% of their revenue comes from the U.S., a market they have abandoned, yet they want to say they are better than Brightcove in the same market?

    The article didn’t mention that for months now, no one can get any real details on the KIT Digital site about what they offer? No demos. No product sheets. No case studies. Nothing. That would be fine except that they called Brightcove out at least twice in the article for being a small player, yet they don’t even have the basics on their website.

    When you asked, “Who do you expect your customers to be, going forward?” he didn’t even answer it. He said customers have different needs but didn’t even say what vertical the customers would be coming from.

    The CEO says, “If you look at browser codecs there are just three — Flash is 90 percent of the market; Windows 10 percent; RealNetworks, 5 percent.” First of all, those are not browser codecs. He does not even use the terms correctly. Second, where is that data from? And when he says “we’ve increased revenue by 100 percent”, over what period of time is he talking about? Again, lots of vague statements.

    No one put any trust in ROO when they were around. It was all talk, lots of marketing fluff, a confused product offering, no focus, a company that was run from abroad and very little revenue. What’s changed? New management who does not grasp the market, makes inaccurate statements about other vendors, runs things remotely from Dubai, gives no info on their website and to date, has no clear vision. I can’t even find a statement on their home page of what they are? The website makes a reference to IPTV solutions, the CEO says they are focused on “enterprise software” but also says “mobile really differentiates us” and also says they do “content management”, “ASPs for social networking”, “streaming” and “storage”. But then he says “at the end of the day we’re providing software”. That’s about an un-focused as you can get.

    He also says, “there are so many VC-backed companies that are willing to do business at a loss”. Right now, KIT Digital is doing everything at a loss, but we’re suppose to look past that why? And worst of all. They did $3.5 million in Q1 revenue yet stated at the end of the interview they could be a “billion-dollar company” with “200-300 customers out of the Fortune 1000″.

    Who can’t see through all of this hype? It’s ROO all over again.

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  3. Hi Dan,

    Thanks for the criticism. I do think it’s important to let KIT and Isaza Tuzman speak for themselves to an extent — like you said, it’s really hard to tell what’s going on around the company. And it’s nice to hear it in his words rather than me prettying it up.

    A couple notes: He did specify verticals, I ended up cutting those for space. Also, I criticized the lack of info on the company website and he promised a new version would be much better.

    However, regarding Brightcove, you’re right, I let Isaza Tuzman get off a few too many potshots, and I’ll correct those items. I’m talking to Brightcove about that right now.

    Thanks,
    Liz

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  4. It’s obvious Rayburn hates Roo/KIT. Maybe has to do with the fact they are Dubai based, don’t know.
    Liz, I think it is totally unfair to refer to the company as a “shell” for the CEO.

    This is an insult to the sputnik Agency people who lace it up every day working for their clients.

    Rayburn would be well served to visit the site and look at their recent client wins.
    Instead of shilling for Brightcove and defending a company that did not even ask for his help, he should do some research on KIT and refine his argument.

    I suggest neither of you have studied the recent SEC filings. Perhaps you should.

    Disclaimer- Roo/KIT shareholder, not affiliated with the company.

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  5. No coincidence the stock dropped 12% off it’s high of the day with large sell orders sitting on the ASK at almost the same time Rayburn’s comment was posted.

    Hermes reported today they took a 5% stake in Kit Digital today, purchasing over 2 million shares.

    The market it seems prefers the uninformed opinion of an industry writer to professional investment houses?

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  6. I respectfully suggest you reword the first paragragh of your blog post.
    According to defintitions I pulled from the web the term “shell company” is defined by some as follows;

    —Definitions of shell company on the Web:

    a corporation without assets such as those established by white-collar criminals in bond swindles, money-laundering operations, mutual-fund …
    http://www.asisonline.org/library/glossary/s.xml

    A limited company that has never started, or has ceased its trading activities (eg a subsidiary transferring its business to its parent or a fellow subsidiary), but has not been dissolved. Annual returns are still filed, but the accounts state that the company did not trade during the year. …
    http://www.payontime.co.uk/collect/collect_glossary_s.html–

    I suggest too the stock was potentially materially affected by a combination of your referrence of the company as a “shell” and the follow up comment by Mr. Rayburn.

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  7. If myself, Liz or any other reporter affects a stock price based on reporting real facts, then we did our job. You are also confusing facts, with opinions

    I don’t see any of you shareholders arguing with any of the facts I posted. Can any of you show us where Brightcove announced their customers spend on average $225 a month? Can you back up, with references many of the things the CEO is quoted as saying? We’re reporters, we want to see facts, not marketing statements.

    I have visited the site, where are the links to their “customer wins”? Case studies? Product sheets?

    Liz and I own no shares in KIT, so we have no vested interest in having to “hate” any company.

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  8. This is a great article, awesome job Liz. It is feeling alot like Techcrunch, I just submitted on Digg and the Twitter nation.

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  9. Actually Dan I thought you were an analyst not a reporter. Your analysis of Kit Digital today in the comment section above may indeed have moved the stock.
    Not sure if your negative commentary or Liz’s comment about it being a possible shell company is more harmful.

    Both were very unfair.

    Let’s examine your comment.

    “Taking a shot at Brightcove as this small company who has customers no one has heard of doing a few hundred dollars a month is just dumb. Brightcove has over 4,000 customers, how many does KIT have?”

    If you read their recent press releases you would know they claim as clients;

    K-Mart
    NASDAQ
    Sensis
    NYPost
    The Sun

    Just to name a few.

    You said;

    ” I can name at least a dozen big Brightcove customers off the top of my head, I can’t name one KIT customer”

    http://kit-digital.com/news/launched.aspx

    You also asked;

    ““Who do you expect your customers to be, going forward?” he didn’t even answer it”

    I suspect for competitive reasons he will not tell a blogger, or any journalist who he is courting. As a shareholder I consider this as prudent.

    You say;
    “He also says, “there are so many VC-backed companies that are willing to do business at a loss””

    He is right isn’t he?

    Finally.

    “Right now, KIT Digital is doing everything at a loss, but we’re suppose to look past that why? And worst of all. They did $3.5 million in Q1 revenue yet stated at the end of the interview they could be a “billion-dollar company” with “200-300 customers out of the Fortune 1000″.

    Who can’t see through all of this hype? It’s ROO all over again”

    This is the core of my gripe with your commentary. The CEO has claimed consistantly since he came on board in January that he sees the compnay becoming profitable by the end of the year.
    This is mentioned in more than one SEC filing.

    Who would believe this hype? Investors with an eye on the sector that understand B2B web video solutions providers can’t keep up with the demand of the market.
    Perhaps you read the recent revelation that 50% of the Fortune 1,000 don’t have video on their sites.

    You should know this is pure opportunity for players like KIT and Brightcove.
    Why did he take shots ay Brightcove? I am guessing to stir up some discussion, perhaps grab some attention.
    I don’t speak for them, I am only a small investor holding some shares in RGRP.ob.

    In the course of trying to get some attention I doubt he intended to be called a shell and untrustworthy.

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  10. If anyone has a blog, and they are reporting on news, as a business, they are a reporter.

    You listed 6 KIT customers but still didn’t answer the question. How many does Kit have compared to Brightcove?

    You say “The CEO has claimed consistantly since he came on board in January that he sees the company becoming profitable by the end of the year.” I didn’t question anything about being profitable. I questioned the Billion dollar statement. So good try in trying to deflect the statement he made, the one I questioned, which you did not address.

    So you are saying, that as an investor in the company, you think it is good practice for Kit to made inaccurate statements about another vendor in the space in the hopes of “trying to get some attention”. That’s a poor way for any company to try and get attention.

    I have no vested interest in KIT, I don’t need to try and convince anyone of anything. If Kit does or does not make money, I don’t benefit either way. You own shares so you have a vested interest in trying to highlight the company. Conflict of interest.

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