Whether it is being used as a marketing tool or a mainstream distribution method, consumer demand for online video is rising. KIT Digital president Gavin Campion tells Digital Broadcast how his company looks to turn this demand into revenue.
Last year IP video technology provider KIT Digital relocated its executive offices to Dubai as part of its ambitious plans to establish itself as the leader in its field.
“We moved it here for a number of reasons, we think the region is incredibly strong for a business like ours, it is a much better place to run a global company from given as our regional offices are spread across the world. In the process we have basically ramped up our customer, sales and technical support for our Middle East clients.”
Since then the KIT Digital has also invested heavily acquiring three companies in related fields (Australian content management systems vendor Morpheum, Czech IPTV solutions provider Visual Connection and Swedish mobile TV firm Kamera) in deals worth a total of more than US $21million.
“We acquired Kamera in the second quarter of last year. Our mission is to be the number one, end-to-end technology supplier in our space but to achieve that we needed to acquire a few assets to build out the business,” says Gavin Campion, president of KIT Digital.
“Kamera focused on mobile capability and content repurposing. So this acquisition has given KIT the mobile capability and hardcore content digitisation credentials. A lot of our relationships with clients begin with digitisation and we have that capability from end to end now.”
Kamera has been fully integrated into KIT Digital and the old Kamera brand discontinued.
“It was an important acquisition. Our global head of content, Ola Scholander, came here from Kamera and is now based within the executive, which shows the quality and extent of the integration between the two companies.”
Campion says that the company now has the right structure in place to provide the full array of services required by its clients, but he refuses to rule out the possibility of KIT making further acquisitions in the future.
“We have an ongoing, active merger and acquisition process in the company and we will always seek best practise, pioneering, market leading technology that allows us to monetise a client’s business, connect their brands and their consumers and do so at a profit. Having said that, the world has now changed economically and that in itself presents new opportunities for a company in our position, leading the market place with a profitable business.”
Campion says the company is well placed financially, and is “running on its own fuel”, which he points out is unusual for technology firms in this sector.
The three companies acquired have also extended the KIT Digital’s global reach.
“We said that 2008 would be the year that we became a global company and we have achieved that. Around 35 percent of our business is from the Asia-Pacific region, 56 percent from Europe and 10 percent from the US, which is a good position to be in. The acquisitions made a considerable contribution to this.”
With the company having moved its headquarters to Dubai the Middle East is now set to become a key territory for KIT. According to Campion, the company’s business in the region is likely to be more focused than in other territories.
“We work with print publishers and other verticals, but here in this region we are focused more firmly on the broadcast and telco markets. That is a function of a number of factors. The quality of broadcast services in this region is fantastic. Many of them literally have warehouses full of content. We are helping them to digitise that and then extend it out into the world on new platforms.”
Campion cites underdeveloped internet penetration and the lack of sophistication in many of the existing browser based services as the main reason behind the company’s current position in the Middle East.
“Web traffic hasn’t reached critical mass here, despite tremendous growth. Mobile revenue is tied directly into the operators, and we have companies like Sony Ericsson launching an on deck TV channel. Sadly these services are often only an extension of portal-based capability. I think there is huge scope for more advanced mobile services here. It is interesting that in the US these services are all browser based and the infrastructure for mobile is rather antiquated. In this region we are looking at leapfrog technologies and mobile video will be a key driver for those,” claims Campion.
With more of these new services coming online all the time, Campion believes that the company’s tailored approach could prove attractive, offering operators more flexibility with the option to launch new services “with the flick of a switch”.
“Generally, most of the enquiries we receive at the moment are about STB and browser based technologies with most people definitely flagging mobile for the future,” says Campion.
The slowdown has led some to believe that spending on new technology will be prioritised over the next few years and that established, traditional services will take precedent over what some may view as untried, experimental offerings.
“In times of trouble the first budget that gets cut is the advertising budget and a lot of our clients view advertising as a primary source of income. Excitingly they come to us and say ‘our revenues are dropping, what can we do?’ They are not coming to us and asking to cut their costs, they want to find new revenue streams. The other positive trend we are see is that in times of trouble people move their advertising budgets into more accountable media. People tend to put more focus on the numbers,” says Campion.
In order to ensure KIT’s marketing video solutions meet these criteria, the company has developed a full set of analytical tools, which Campion says can demonstrate and quantify the value of the services on offer.
“There is an underlying truth, behind all this, the consumer demand for IP-based video far outweighs the scale that it is being supplied in. So there is a huge opportunity gap. I don’t think consumer demand for IP video solutions is going to drop, they are going to keep consuming it and the market will keep growing so the only question is how fast can we monetise that opportunity on behalf of our clients and that – to some degree – insulates us from the more mature industries,” claims Campion.
As well as the consumer demand being high, technology tastes are also increasingly sophisticated.
“A lot of our clients believe they can stick a video player on their site and that will be adequate.
Consumers now demand a certain set of tools to go alongside that player; they want to drag the player onto their MySpace site; they want to have sharing tools; they want to be able to set up their own playlists; to have in video chat and so on. If you look at the list of applications available for Facebook then you get an idea of just what is available and that should make some people ask questions about their own players,” claims Campion.
These tool sets and the analytical support behind them are a large part of the company’s offering with the remainder comprising of its content business.
“We repurpose content for people with large archives including AP, Disney and ABC, essentially making it web and mobile ready. This can involve digitising, repurposing, making it web or browser ready, translating and publishing. We translate into 12 languages, including Arabic.
“Arabic is a key language for us moving forward. Partly because of the demand and also due to the desire of the operators in the region to embrace new services and be pioneers.”