MediaBizTech

Robert Freeman's whole Media, Business and Technology thing. Sorted.

Roo burns through millions, cuts staff

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21% of employees gone

In a story reminiscent of the dot.com boom, MediaPost have a story about video aggregator Roo losing a ton of money, with their new chief executive Isaza Tuzman saying :

“Historically, the company has not demonstrated the kind of cost discipline that it should given its cash position.”

Roo had US$10m in revenue and losses of $22m and that’s before the year’s even over!

Some of the money went on an odd buy-out of one of their customers in January 2007.  It’s odd, because they don’t appear to have done anything with their purchase since.

Roo’s a company which interests me because it’s an in-betweener.  Content creators on one side and big distributors on the other.

It is essentially a video player which can embed on other sites.  You can put your own video and ads in it and/or you can take video which Roo push through it as well.   Roo gets this video through 3rd parties, presumably on revenue share.

It’s an easy way for video-poor sites to quickly have a large amount of material.

The trouble starts because the stock of 3rd party content is the same.  For every site which takes Roo’s player, the offer becomes slightly less appealing, because the same material is now more widely distributed on the internet and you run a bigger risk of having exactly the same video available as your online competitors.

It’s great for the 3rd party supplier (assuming they’ve a decent deal) but where’s the differentiation for the website who’s just embedded Roo?

Mr Tuzman must get this as he’s looking for something different already:

“Once we have live streaming, we have a much better chance of getting exclusive content.”

Oh dear.  What exclusive content?  For a start this new stuff will still be distributed to the same partners so it doesn’t fix their differentiation issue.

Have a look at this Roo project.  The RooTV name suggests Roo want to make themselves a content brand in their own right.  This is quite a trick to pull off as not only does it risk putting Roo in competition with its own partners,  it’s also going head-to-head with the broadcast TV networks, and the other internet TV companies who are doing the same thing; You Tube, Daily Motion, iTunes store.

Don’t forget that big media around the world is already far advanced in creating IPTV platforms under their own control.  Kangeroo, Hulu, Innertube, to name but three.

Roo remains firmly on my interest list.  It’s one to watch and learn from.

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Written by Robert

23 December, 2007 at 4:25 pm

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