Ooyala Raises $35 Million as It Picks Up the Pace in Digital Video

Courtesy Ooyala

There's no shortage of athleticism on Ooyala's team, which includes (left to right) Sean Knapp, Bismarck Lepe, Jay Fulcher and Belsasar Lepe.

(Updated to correct amount raised by Ooyala in sixth paragraph.)

If the migration of old media to the Internet is more of a marathon than a sprint, then the management team at Ooyala Inc. has the legs for it.

Sean Knapp, co-founder and chief technology officer at Ooyala, which helps TV and movie companies put their video content online, was a highly-recruited member of a stacked Stanford University cross-country team.

Fellow co-founders and brothers Bismarck and Belsasar Lepe are no slouches, either. Bismarck was part of a 12-person company team that recently ran a 203-mile race in Southern California. Meanwhile, Chief Executive Officer Jay Fulcher described himself in an interview as a “broken down former football player,” but added that “we’ve got a heavy duty running culture here.”

It looks like their stamina is paying off.

When it was founded in 2007, Ooyala (“cradle” in the Indian language Telugu) was one of a slew of startups developing technology for TV networks, movie studios and communications companies to distribute their content online. Now, it has landed a series of deals with marquee names such as ESPN and Miramax, handling their massive digital payloads while helping them make money on the Web and mobile devices. Bloomberg TV also uses Ooyala’s technology.

The latest deal, announced today, is with Telstra, Australia’s biggest phone company. Telstra, which also offers Internet and pay TV services, plans to use Ooyala’s software to deliver its television content online and to resell it to other media companies and corporations. In addition, Telstra led a $35 million round of financing in Ooyala, which brings the total raised by the Mountain View, California-based company to $79 million.

Fulcher said Ooyala has grown more than 100 percent per year since 2009, and is on track to hit $100 million in revenues by 2014.

“We’re starting to do more seven- and eight-figure deals,” said Fulcher.

The three co-founders come from Google — Bismarck Lepe helped develop the AdSense advertising platform that brings in much of Google’s profits, Knapp helped launch iGoogle and Belsasar Lepe was a systems engineer. They left the search giant in 2007 with big ambitions. Rather than pick off a piece of the digital video puzzle — say, creating a player for streaming content or software for inserting ads tailored to specific viewers — they set out to create a platform that could adjust as media companies figured out the conundrum of trading “analog dollars for digital dimes” when selling lucrative television content online.

“We liked their ability to support a multi-platform experience and a variety of models,” said Mitzi Reaugh, senior vice president of strategy and business development for Miramax, which offers a hundred films via Facebook. She said Ooyala stood out for being able to offer films as free promotions, video-on-demand purchases or for a higher fee for unlimited viewings, as well as for analytic tools to track what people are watching.

While Ooyala has landed some big deals, it will need to contend with increasing competition  as online video becomes more important.
“There’s a tremendous amount of competition, and it’s only going to increase,” said Gartner Group analyst Mike McGuire, potentially from Microsoft and Google. Publicy-held companies already in this market include Kit Digital and Brightcove.

The company is making particular headway in sports. When you watch ESPN’s “Sports Center” clips online, you’re using Ooyala’s streaming software.  It also won a deal with Pac-12 Enterprises, a new media company for the Pac-12 collegiate athletics conference that plans to launch a TV network in August. Besides watching more than 800 events on TV, subscribers to its cable affiliates will be able to watch live coverage on the Web or on mobile devices.

Consumers will be able to set up interfaces — say, to make sure they catch every Oregon State football game or anything to do with water polo — on mobile apps that also enable them to compare notes or trash talk with friends via Facebook and other social networks.

“For the first time ever, Pac-12 fans will be able to see every game anywhere in the nation,” said Gary Stevenson, president of Pac-12 Enterprises. The network chose Ooyala because “they’re not married to one way of doing business,” he said in an interview. “Plus, they’ve got a lot of athletes over there.”

In the final negotiations for the contract, Fulcher put together a slide listing 60 Ooyala employees who had gone to Pac-12 schools.

“They kind of liked that,” he said.

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