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.