Ustream got its start in 2006, long before live video streaming was considered a viable market. Now, five years later, live video is big business and Ustream is one of the biggest providers, both of user-generated video streams and major events. We got a chance to talk with Ustream president and co-founder Brad Hunstable in the company’s San Francisco office to discuss the company’s evolution and opportunities for future growth, as well as how it sees growing competition from some big-name players.
Brad Hunstable: Ustream was started by me and a buddy of mine from West Point, John Ham. We served our time in the Army, and one of the things we took away from that experience was that people who go over there, the way of life is very challenging. You typically work 12-on, 12-off, and in the Army you’re typically gone for 18 months straight. It creates a situation where you have loved ones back home and you’re constantly making a trade-off about which family member to call. They all want to talk to you, but you may only have 15 minutes a week to call them.
We started out how to solve that problem. We thought, “Wouldn’t it be a cool way for you to use video so that you could call home and speak to everybody at once, and they could see you on video in a one-to-many fashion.” That’s the concept that we started with.
Since then, we’ve evolved to things much greater than that. We no longer consider ourselves a communication tool. But the concept of one-to-many broadcast, where people from all over the world are interacting at the same point in time with you or a piece of content, is still a fundamental problem we solve.
We’ve seen amazing growth. Already this year, we’re at 110 percent growth year over year, in terms of our viewer hour metric, which is the most important metric for us. The reason for that is, we’re mostly advertising-based, and you’re able to do pre-rolls and mid-rolls throughout that broadcast, especially with live streams. In broadcast hours, we’ve seen a 79 percent increase year over year.
As far as evolution, there have been changes on a couple of fronts. On the technology front, we’ve started making a big push on the television. We closed a deal with Panasonic, so now we’re going to be on all the Panasonic TVs, and we’ll shortly announce deals with other TV manufacturers — they should be announced by Christmas. We announced a Verizon 4G preload deal to be on Android phones. We launched our iPad application, and we were one of the first, we think, to make a really wonderful app built for the Honeycomb experience. We didn’t see any other companies really making an effort to develop on Honeycomb, and it is probably the best product this company has ever put out.
Hunstable: When we started, we were in Palo Alto. When we first launched the product, we just kind of put it out there, and in the beginning we were happy if anyone used the platform. We built it open to drive that adoption. We are evolving and trying to drive the media side of the business more so perhaps than some of our other competitors are. That’s mostly because we’ve gotten a lot of traction and we see a lot of opportunity there.
We’ve announced deals with UFC — we’re the only ones doing pay-per-view there. We have major sports leagues out of Europe, mostly on a pay-per-view or subscription basis for soccer or for rugby, even curling. One of the big World Cups will happen live on Ustream, one of the African soccer tournaments will happen live on Ustream. So in the sports world, we’re seeing a lot of adoption. That’s very different than the guy in the garage band that we had back five years ago.
That was a deliberate evolution of our strategy, so we opened an office in Hollywood. You think back four or five years ago and Hollywood and Silicon Valley didn’t really get along. I think that’s changed over the last four years, and there’s a lot more collaboration. So we were hoping to bridge that gap and started to do deals with the studios for red carpet events. Now that’s a multimillion dollar production business.
GigaOM: Where are you on the international front, especially in Asia after doing your financing deal with Softbank?
Hunstable: Today we only have one office in Asia, in Tokyo. That’s part of a joint venture with Softbank, so it has its own CEO and local staff. But they’re doing tremendously: They’re the No. 1 live-streaming company in Japan, and they have done major high-profile events like large concerts with big artists to streaming the Japan baseball games and other major sports deals.
It’s all part of a broader strategy to move into Asia. We saw some right before us enter Japan that failed, so we wanted to do things differently and partner to create an independent entity. They use all our technology, though. Eventually they’ll move into Korea, then to China, then to India and maybe some of the other countries.
GigaOM: Now that you’re targeting these big events, how much do your consumer broadcast tools matter?
Hunstable: It matters for us because for every stream that happens on Ustream, we make money. So we’re all for the consumers’ broadcasting. It’s interesting: We just had a hurricane on the East Coast and we had hundreds of these streams. The feeds weren’t the Weather Channel, but they were being pulled in by the Weather Channel and CNN. This happens all the time. We think there’s always going to be a place for that, and we think we can bridge the two. There’s something very special about having an open platform, where you can have everything from puppy cams to the eagles. But we definitely have a premium focus and it’s a big business for us.
GigaOM: When you look at some of these nonprofessional broadcasters, at what point do they become partners?
Hunstable: We’re trying to work closer with content creators. We have some programs in place. The inflection point for us is generally when you start popping up on our analytics tools, showing that you’re getting a lot of traffic. The Eagle Cam, for instance, got something like 200 million views in two months. That one did great, and we’re now working with him closely to launch a Hawk Cam and maybe even a Bat Cam to see what bats are like.
The animal stuff might not be as sexy as a red carpet, but there’s something very valuable about seeing something like that and learning about it and discussing it if you’re an educator. We had letters from kids all over the office about the Eagle Cam. So that stuff’s never going to go away, and we’re going to do more of it.
GigaOM: How much of your business is advertising versus licensing your tools versus professional services or production?
Hunstable: Most of the revenue today is from advertising, by far. The production business, however, is one we started two-and-a-half years ago that has seen 200 or 300 percent year-over-year growth. It’s ramped for us very nicely, and it’s a very strategic business for us to be in, because cameras and audio are still somewhat complicated, especially if you’re trying to produce something well.
The other part is what we call “user pay.” Either the user pays for technology or the user pays for content. It can be pay-per-view or subscriptions for sports or other content. User pay for technology would be like for broadcasters paying for advanced tools. If you don’t want our logo on our player or you just want to use us as a CDN, it’s set up as a SaaS model.
GigaOM: Are you worried about competition, particularly coming from some of the big players, like YouTube?
Hunstable: We’re not ones to ever discount the competition, but having done this for five years, if we listened to what people said five years ago, we wouldn’t be here. There’s always Microsoft, what happens when Microsoft enters the business? Or Yahoo? Yahoo actually got into the live-streaming business and got out because it couldn’t scale.
YouTube’s in it, but my opinion is that its implementation isn’t that great. And what it’s doing live is fundamentally different than what we’re doing: Its user acquisition strategy is different, its adoption strategy is different, the monetization is different.
Just because a company has all the money in the world doesn’t mean it’s going to be good at something. You see countless products released by big companies that aren’t that great. I don’t lose a ton of sleep. We know what everyone’s doing because, you know, only the paranoid survive. But you can’t be frozen by fear.