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17 December 2020

JW Player’s trojan horse approach helping poach Brightcove customers 

You know that feeling when a sports commentator repeats your critical analysis or under-the-breath comment of a match word-for-word, leaving you convinced just for a moment that the room is bugged? Well, Faultline felt something strangely similar while talking to the co-founders of JW Player this week, as a company that has seemingly absorbed so much of our advice since its inception in 2008 – emerging unscathed from a period of OTT commoditization that claimed many of its counterparts and rivals, to the back-end streaming force JW Player is today.

For our final interview of 2020, this was a perfect way to bow out. Without any prompting, CEO and co-founder Dave Otten echoed one of our observations from last week about many video technology firms behaving sheepishly about a boom in business during the pandemic, seemingly feeling a sense of guilt. JW Player is not one of those companies. Like so many of the vendors doing the leg work, JW Player feels a right to celebrate its achievements in a year in which it has experienced live video streaming explode by over 500% since last December.

Anyone unfamiliar with JW Player can be forgiven for thinking, like us, that the company’s priority business is as the name suggests – in the online video player market. While co-founder and SVP Jeroen Wijering was instrumental in creating the open source video architecture that formed the basis for the original YouTube, the player part of JW Player today is more of a “trojan horse” type product, according to Otten.

Some 90% of JW Player’s business today comes once that trojan horse has penetrated the video player walls, welcoming customers into a multi-product portfolio of back-end delivery technologies – covering recommendation software, analytics, APIs, CMS, ad tech and other monetization opportunities for the OTT video space. That is an astonishingly high proportion of revenues coming from the back-end for a company perceived – on first impressions – to be positioned at the opposite end.

From this 90%, customers are primarily interested in its Stream suite, which Otten described as creating true customer lock in, including cloud-based transcoding and APIs for live and VoD content. JW Player has fully capitalized on the live streaming snowball, launching its Live Channels feature in April this year, a month in which it saw a 400% spike in live streaming. Live Channels works by spinning up live streams directly from the encoder in under 30 seconds with replays available in under one minute.

Otten identified a clear turning point for the company in 2013, that helped it survive the uncertain years that followed, when it successfully raised venture capital (of an undisclosed amount), which was invested in building a large open source community. This triggered a surge of users requesting JW Player to show them how their end viewers were consuming video. Eventually, this birthed JW Player’s video intelligence strategy and the analytics backbone supporting the whole JW Player network.

New York-based JW Player now describes itself as an infrastructure-as-a-service video platform able to deliver at scale, and in JW Player we can see many things that OVPs or so-called end-to-end platform providers got wrong over the years. Some simply misjudged the timing of the market – as was the case with Ooyala and Massive Interactive, to name just two recent casualties.

“For basic playback like an OVP on a website, this has been somewhat commoditized,” admitted Otten. “But to do this at scale is really hard, and building a workflow that optimizes is also really hard. Brightcove doesn’t have scale. Ooyala didn’t really have scale either.”

Just a few hundred miles up the road from JW Player, Boston-based Brightcove inherited and has since fully integrated Ooyala technology into its suite, including the OVP business, comprising a CMS and publishing platform, plus analytics and live streaming capabilities, and much of Ooyala’s IP backbone technology too. Otten was particularly bullish at the mention of Brightcove, claiming JW Player has made over $1 million stealing business from Brightcove alone in the last month.

Wijering chipped in, “Brightcove and Vimeo are not investing in analytics. We have everything under one roof, including integrated recommendations too which others don’t have, and our secret sauce is selling ads contextually, while predicting where ads can go.” The only piece of the puzzle not under the JW Player roof are the front-end applications, which are developed by Float Left.

Well, we know a key feature that attracted Brightcove to Ooyala’s technology was the ability to rip out ads from a stream and quickly spin up a VoD title, while keeping ad markers in place to allow for dynamic ad insertion.

Otten outed UK-based Vualto as another company he is keeping a close eye on. It just so happens Faultline only spoke with the video orchestration vendor in September this year, discussing similar themes to this week but with more of a security flavor.

The more this week’s conversation with the two co-founders developed, the more JW Player started to reflect what Kaltura has done so successfully in operator and education markets, but with JW Player plying its trade in the publishing sector – seeing particular growth in fitness and religious sectors as groups gather online. Sports is another big area for JW Player, although there remains some apprehension around what will happen with live sports in a Covid-19 climate.

“We wouldn’t be successful where Kaltura is,” admitted Otten, while in the same breath namedropping TMZ as a customer that JW Player has recently picked from the Kaltura pocket. “We are both taking an infrastructure approach, but Kaltura is more focused on the events side, we are not looking at corporate events either as this is a crowded space,” he added.

With all this talk about OVP commoditization and JW Player doing business so successfully behind the player, we pondered what JW Player might do should the value suddenly fall out of its own player, thereby killing the trojan horse and stopping the flow of business into the more lucrative multi-product back-end? Or perhaps JW Player even has plans in place to eventually sacrifice its own player ahead of such an eventuality – either via sale or giving it away completely free?

Otten was refreshingly honest throughout, including here, suggesting but not confirming that the 200-person JW Player could someday become just JW. “If you had asked me that question four years ago, I would have been very concerned,” he said.

There is no question JW Player has the minerals to thrive without its Player SDK, but the question is whether it can generate new business without the Player positioned as the front door. The obvious answer is that it becomes just that, a front door, and a store owner does not expect to make money from people walking through the doorway.

With last orders being called at the bar, we sought a few 2021 plans or predictions from each of the co-founders. “There has been a lot on our plate since launching live streaming this year, so we will continue to invest here,” said Wijering, citing an intriguing new customer in online PC publication Tom’s Hardware, which has recently started doing live streaming. He therefore expects more lifestyle brands, as well as new business from TV studios building their own OTT propositions, many via niche brands.

Otten chose to answer with his own rhetorical questions, “We are asking how do we use data and our robust recommendation engine? How do we use this knowledge on a personalized basis within an OTT platform?”

As for the product roadmap, by the second half of 2021, JW Player plans to have launched OTT features including DRM protection, continue watching, multitrack audio, series management, offline DRM, multiple thumbnails, and VP9 UHD support. For Live Channels, 2021 will see the introduction of a Live Management API, real-time clipping, channel embeds, event engagement, playlists-to-live, integrated chat, and a delivery only feature. There is also a comprehensive list of updates plotted for the Ads and API portfolios.

Diving into where JW Player’s pandemic-based business has come from, sales in e-learning, fitness and sports sectors grew from 5% of total sales in 2019, to 24% in 2020. This shaved down JW Player’s core publishing business, which went from 57.5% of sales to 40% in this year period, while broadcasting shrank marginally from 26.4% to 23.8%. Ad networks was flat at just a 1% increase to 6.8% of 2020 sales.

A vendor not publicly listed but willing to divulge this sort of detail on its strategic roadmap and sales figures, albeit subject to change based on market conditions, is one with its head switched on.