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Summary:

Just a few years ago, Move Networks was a high-flying startup with what seemed like unlimited possibility. The company had succeeded where many video technology startups (and some incumbents) had failed to deliver — by providing high-quality video streams to the end user without having to […]

Just a few years ago, Move Networks was a high-flying startup with what seemed like unlimited possibility. The company had succeeded where many video technology startups (and some incumbents) had failed to deliver — by providing high-quality video streams to the end user without having to worry too much about how much bandwidth was available. It raised about $70 million and even nabbed a few deals with major broadcasters, being chosen as the default video technology for streams from ABC.com and Fox.com.

But despite a good amount of early traction, the company failed to deliver on its early promise. With those broadcasters now abandoning the technology and Move Networks shifting focus to sell its technology platform to Internet service providers to deliver IPTV services, it’s worth looking at where the company failed in serving major media customers.

So what went wrong? For one thing, Move Networks never reached critical mass on the consumer side of things; despite early success with ABC, Fox, the CW, and others, many media companies shied away from the technology because it required a plugin that not many consumers had installed. This created a vicious chicken-and-egg problem: How do you get people to install the plugin if it’s not being used to deliver good premium content? And how do you get good premium content unless people already have the plugin installed?

Many people will point to the need to install the Move video plugin as a barrier to entry for the technology. Flash is still seen as the go-to video technology, in part due to its ubiquity in consumer computers. Adobe claims that its plugin is installed in 98 percent of Internet-connected computers; by comparison, Microsoft’s Silverlight is now installed in about half of all Internet-connected computers, according to RIAstats.com.

In addition to the lack of an installed base, using Move Networks cost a premium compared to other web video technologies, requiring custom encoding equipment and the use of its platform for management of video assets. As a result, the cost of deploying the technology was mostly out of reach for all but major media companies.

Former employees I’ve spoken with have told me that Move lacked the strategic direction necessary to take advantage of the two years or so worth of technology advantage that it had when it first nabbed those first media customers. Move made a number of investments in engineering personnel to create alternative revenue streams, in both its “platform” business — what would be a precursor to its current IPTV strategy — and in advertising. But none of them really seemed to stick. The company topped out at about 180 employees at one point, before scaling back drastically with two big rounds of personnel cuts that ended up cutting headcount roughly in half.

Advertising was a particularly tough nut to crack for Move; because most video ads are built to support Adobe Flash, the Move player could not natively support them without having the ads permanently stitched into the video file itself. With no good way to dynamically insert Flash ads into the Move player, most programmers that relied on its technology for video delivery simply layered a Flash player on top of the Move player, which showed ads during planned commercial breaks.

Meanwhile, the other big players in online video caught up to what Move was doing. Its big advantage was HTTP-delivered adaptive bit-rate streaming, and it led that segment of the market for a few years before Microsoft and Adobe were able to offer similar capabilities with updates to their web video platforms. With the release of Silverlight 3 and Flash Media Server 3.5 last year, Microsoft and Adobe are able to deliver video that is close to the same quality as Move’s, using similar adaptive bit-rate technology.

Move isn’t necessarily done for; its video technology is still being used by The CW and for Comcast’s Fancast Xfinity TV Everywhere deployment. Furthermore, its acquisition of Inuk Networks and its focus on providing a platform for ISPs to deploy IPTV services could still catch on, particularly for ISPs who want to try their hand at rolling out video services in markets where they don’t have physical broadband infrastructure. The company already has one such deal, with Cable and Wireless’ international subsidiary, to roll out IPTV services to broadband subscribers in markets where it would be cost-prohibitive to build out a cable plant.

The company has also assembled a pretty strong management team, led by former DirecTV COO Roxanne Austin, who was partly credited with that company’s turnaround in the early 2000s and took over as Move’s CEO last summer. Austin has recruited some other folks from her DirecTV days, including founder and former CEO and Chairman Eddy Hartenstein, who recently joined the board, and former DirecTV VP of business affairs Steven Cox, who joined Move as its executive vice president for strategy and business affairs.

But Move’s days as a competitor against Adobe Flash and Microsoft Silverlight are over. It might continue to support existing media customers — at least, for as long as they want to stick with the Move player — but it probably won’t be out fighting for that business.

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  1. Funeral Director Tuesday, January 26, 2010

    If Move Networks added customers like they do board members they would have zero problems.

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  2. I can’t believe that they were overlaying a flash player just to show ads. For so long I wonder why their software was so buggy that it would play the ads and the content at the same time and now I know. An inelegant solution to say the least. Of all the video players out there, Move has always caused the most crashes.

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  3. a good history lesson, but some of your conclusions lack context:

    1) move’s plugin was far from a limiting factor; 98% install base from flash is irrelevant if exit rates of the move plug-in install page are negligible. were they? i’m not sure. but you need to compare install base percentage of those who are even interested in watching online in order to make an accurate comparison.

    2) ad uptake isnt just made up of technology. there is a sales/inventory side to that equation which you completely ignored. abc’s ads are interactive, right? so why wouldn’t abc use flash? hardly a knock on move.

    3) in terms of limiting their customer-base, so what? when a 2-minute clip only needs a few seconds to get a large enough buffer to play through, their technology doesn’t offer any advantage. so there’s no reason for that kind of customer to even consider move networks in the first place. but that’s a different problem and completely unrelated to their pricing ;)

    But I’m not sure what to make of the tv business play. The only time i see them in the news is if they’ve hired or layed off. Does that constitute progress? I don’t know, but I’m rooting for Boxee!

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    1. Funeral Director Tuesday, January 26, 2010

      Boxee is DOA.

      Aver made a bonehead move to do a rev share for content. This means he has opened himself up to having to pay minimum guarantees, like everyone else does, if he wants to sell anything of value.

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  4. Move’s biggest problem was definitely not the player, but rather a company that didn’t know what they wanted to be and didn’t know how to turn technology into a product they could sell.

    They were working with CDNs to support their technology, but then were also competing with those same CDNs since Move was also selling direct to content owners. Not smart. They said they worked fairly with all the major CDNs, but once Level 3 made the investment in Move, most of Move’s business went to Level 3. As a result, many of the other CDNs then stopped promoting Move’s platform to their customers.

    They also bet big on their deal with Microsoft, which at the time was thinking about using Move’s technology for what ended up being SmoothStreaming. But Microsoft decided not to work with Move on it and did it on their own, which was a major blow to Move and soured the relationship. Move was also suppose to be integrating some ad tracking technologies into Silverlight, which didn’t end up happening either. Move clearly over-extended themselves and didn’t have the resources to deliver.

    And if you spoke to John Edwards, he’d also tell you that Move was working on trying to get their own servers placed inside content networks like Disney and inside MSOs. Move had way too many business models, not enough focus and not a single person even know Move had a platform for broadcasters. Move spent nearly all of their time marketing the videos they had delivered for their customers, instead of marketing the platform they had that made it all possible.

    Move is a classic example showing that the best technology is not what always get adopted and that without being able to take technology and turn it into a product you can price, package, market and sell, the technology is not worth anything.

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    1. Move also appears to have let their strategy get hijacked by Inuk Networks, the company they acquired last year. One of the mysteries about Move will be why they allowed a company that according to PaidContent UK (http://paidcontent.co.uk/article/419-iptv-firm-inuk-gets-rescue-buy-out-from-move-networks/) was on the verge of bankruptcy to become so core to their strategy.

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  5. Twitter is abuzz that Move Networks just laid off even more people!

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  6. [...] personnel cuts come as Move de-emphasizes its streaming media business, a decision that has resulted in some of its larger media customers looking for other vendors to [...]

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  7. [...] fact Move lost all these high-profile customers may have a lot to do with issues related to pricing and the overall direction of the company; the fact however that those customers went right back to Flash, and not to [...]

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  8. Company has let go of it’s last employees and are selling the remaining assets.

    http://twitter.com/movenetworks

    Want some slightly used company assets and some amazing video streaming IP rights? $150,000,000 and it’s yours! Foosball table included.

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  9. Move Also failed to figure out how to make adaptive streaming work in CE and with H.264. That was their technical failure not the plugin … their biz model and rude way of talking to customers is what really did them in.

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    1. Agreed . The biggest bunch of jerks to deal with . However , since the change , ESPN 360 ( or 3 as they now are named )
      sucks. The quality of playback is very low quality , even as the Quality meter reads to be at it’s highest level . And its in 4:3 aspect ratio most of the time , skips , drops audio , etc .

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  10. [...] Lawler Jun. 30, 2010, 2:30pm No Comments       We’ve written about the struggles of Move Networks in the past, but with the news today that it has laid off all its employees and is looking for a [...]

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