ArcoStream’s
Company Summary •
Location: Los Angeles, CA
•
Established in 2002
•
Employees: 6
•
Financial: • Cash flow positive, 2007 revenues of $800K • Debt free, 100% ownership by founders, no outside funding
•
Key personnel CEO and Founder: Todd Loewenstein, previous successes at InterVU, Evoke Communications; 12 years in the streaming industry CTO: Russ Foltz Smith, top management and tech experience at Launch (Yahoo), Business.com, CitySearch/IAC, and Pure Video Dir. Streaming Services: Todd Zegras, Akamai and InterVU
Vision for ArcoStream Vision: Serve all the web’s content and advertising Objective: To create the easiest to use essential media delivery system that increases profit for publishers and advertisers.
How we make $$$ Provide applications, infrastructure, metrics and toolsets for
publishers and advertisers; a niche we call Media Services We do these things for our clients: Reduce costs and distribution hiccups Eliminate the need to talk to humans; long distance
direct dial analogy Reduction of labor costs for streaming companies We make money by Serving lots of media files (bandwidth consumption) Revenue Sharing on Advertising (rich media advertising) Run Ad Network Power Ad Networks
Media Services Quadrant Video Ad Network Companies
VideoEg g
Tremor
Revver
Broadband Enterprises
CDNs
EdgeCas t Limelight
24/7
ValueClick
Tacoda
Mirror Image
Advertising.co m
Rhozet Rip Code
Level 3 InterNA P
HeyWatch
Right Media
Traditiona Ad Serving Companies
Zedo
Casale
BrightCove Akamai
Google/DoubleClickAQuantive
Nielsen// NetRatings OneStat
Coremetrics
Encoding and Metrics Companies
Market Opportunity Content Delivery Network (CDN) Space estimated at
$400M in 2008; Internet advertising industry grew to a $11.5 billion industry in the first half of 2008. 1 Of the $11.5 B in advertising, $3.8 billion was devoted
to online video and display advertising, up $600M from the first half of 2007. Online video advertising is projected to be a $10 billion
industry by 2010; 1% of market is $100M! 1. IAB/PWC
CDN Market’s Problem While bandwidth and storage pricing goes down in a
commoditized market, labor costs continue to rise People want to shop online for services and have less human
interaction CDNs make it difficult for companies to post content to the
web; no way to register quickly and automatically post content for web viewing; setting up an account and starting can take 9+ days No company has figured out how to put every ingredient
together
Online Video Ad Market’s Problem Most ad campaigns take 2+ weeks to implement Separate contracts for ad serving and ad sales, encoding,
CDNs, and metrics/reporting Difficult for all the pieces to fit together (i.e. matching the
ad w/ the content immediately following it) No company has figured out how to put every ingredient
together
Our Solution (Content &Advertising Network Delivery EnginE) Our automated content management & ad
insertion/campaign management system cuts production cycle to 20 mins One company does it all (ad sales, serving, encoding, multiple CDNs, reporting and metrics) We serve both the ad and the content behind the ad We have access to all types of meta information on viewing
habits that advertisers find extremely valuable We make the pieces fit together
How are we different? •
We don’t just serve bits; we offer a complete end to end solution
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Account set up takes minutes with us, and days with competitors
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Automation allows for lower labor costs
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CANDEE allows people not just to post content, but to encode it, monetize it using our ad serving and manage their content; many streaming companies have just FTP
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Customer deals with one company for all their needs, not one for CDN, one for ad serving, one for encoding, and one for metrics
Typical Content Delivery Timelime Day 1
Contact various content delivery network companies
Day 4
Obtain pricing; evaluate service offerings
Set up test account
Day 6
Encode video assets
FTP Upload encoded content to CDN for trial
Day 9
Contract w/ CDN; CDN account opened
Reporting set up and content streaming
Our Timelime Minute #5
Minute #1
Sign up for services online; account set up for testing
Take content& upload to network
Transcoder takes 3-5 minutes to produce digitized content
Minute #15
Encoding finished; links available for posting
Add content protection and begin an ad campaign if needed
Minute #20
Place links to content on websites
Begin Streaming
Basic System Diagram Candee Web Interface
Account Management
Ad Server
Analytics
Account Database
Reporting Engine
Yield Management
DRM File Management CDN
CDN
CDN
Infrastructure and Toolsets
Walk Thru Marketing
Marketing pages
The Core
Account set up Basic Media Management and Encoding Ad Server Reporting
Value Added Services
Content Categorization Specialized Metrics User Generated Content Systems
Specific Implementations
Sundance (UGC plus CDN) Monterey Bay Aquarium (live streams, revised metrics) Music Choice (paid services, hashkey)
Ad Server Core Features Account creation for publishers, advertisers and hybrid Invoice creation Ad Invocation (pre roll code) Targeting Placement, Geotargeting Capping and Pacing
Ad Target and Serving Capabilities
Supports Audio, Video, and Banners Can be accessed in standard ad code ways Several API options for integration into players
Media Management
Upload, Storage and Auto Encode Publish to CDN
Reporting
By Account, Campaign, Creative, Placement, Site
3 Year Horizon Dec 2008
Jan 2009
Funding Completed
Hire COO, VP, & Ad Sales; ramp up ops
Feb 2009
Increase marketing; hire more sales and support staff; rollout of new products
Mid 2009
Increase sales staff; booth at Ad Tech, trade events planned for late summer/ fall
Jan 2010
Sales team at 9-10; increase of marketing spending; Ad Tech SF in April
Mid 2010
Sales ramp to more than $2M/month
Jan 2011
Staff grows to 25+; monthly sales approach $4M
2008-12 Financials millions)
(in
2008
2009
2010
2011
2012
Revenue
$.8
$8.5
$26.6
$66.0
$112.3
COGS
($.25)
($3.6)
($11.2)
($27.8)
($47.7)
Gross Margin
$.55
$4.9
$15.4
$38.2
$64.6
Expenses
($.35)
($3.2)
($4.5)
($6.5)
($9.1)
Net Income
$.2
$1.7
$11
$31.7
$55.5
Summary • Established profitable company with real
customers and real cash flow • Looking to raise $1 million by end of 2008 for
marketing and sales, as well as R&D • Efficient Operations and Fund Development • Road Map calls for Hiring VP of Sales, Sales Staff Marketing $$$ going to SEO, Ad Words, Trade events Regular upgrades of all services Addition of new networks to CDN pool