VOIP & VIDEO TRENDS FOR INTERNET STARTUPS Yossi Cohen CTO DSP-IP
VOIP & VIDEO TRENDS FOR INTERNET  STARTUPS <ul><li>Overview </li></ul>
VOIP SOLUTIONS AND TRENDS VoIP status VoIP Trends
VOIP STATUS <ul><li>PC VoIP History </li></ul><ul><li>PC VoIP by two parallel paths for personal and business use: </li></...
VOIP STATUS <ul><li>Enterprise </li></ul><ul><li>PC VoIP started as PC phone extension for enterprise </li></ul><ul><ul><l...
VOIP STATUS <ul><li>VoIP Challenges </li></ul><ul><li>VoIP subscription fees are: </li></ul><ul><ul><li>None </li></ul></u...
VOIP TRENDS <ul><li>VoIP Trends </li></ul>
VOIP TRENDS <ul><li>Personalization </li></ul><ul><li>Skype Offers Klonies with Comverse </li></ul><ul><li>More Avatars by...
VOIP TRENDS <ul><li>Mobile VoIP </li></ul><ul><li>Usually free calls between subscribers PC over current Portal VoIP netwo...
VOIP TRENDS <ul><li>Messaging Convergence </li></ul><ul><li>Cerulean Studios’ Trillian Connects to  </li></ul><ul><li>lead...
VOIP TRENDS <ul><li>Connect to Expert/Service </li></ul><ul><li>Palore </li></ul><ul><ul><li>Call and rate services like r...
VIDEO SOLUTIONS AND TRENDS <ul><li>Specialized niche videos </li></ul><ul><li>Video overly advertisement </li></ul><ul><li...
UGC VIDEO TODAY <ul><li>UGC Video Today </li></ul><ul><li>Is this the best video delivery system we can create? </li></ul>...
VIDEO CHALLENGES <ul><li>Portal Video Challenges </li></ul><ul><li>Revenues are mostly based on Advertisement: </li></ul><...
VIDEO SOLUTIONS <ul><li>Solutions </li></ul><ul><li>Specialized niche videos </li></ul><ul><ul><li>Example: 5Min, Café-Con...
TRENDS <ul><li>Recommendation Systems close the loop between content creator/distributors and the users </li></ul>
VIDEO SOLUTIONS <ul><li>Internet Video Trends </li></ul>Future Present Past Process My Customized channel UGC / Pre define...
FINANCIAL ISSUES IN SCALING <ul><li>Revenues models  </li></ul><ul><li>Expenses (Do we really need to speak about it?) </l...
FINANCIAL ISSUES IN SCALING <ul><li>Revenue Models </li></ul><ul><li>Advertisement </li></ul><ul><ul><li>Google, MetaCafe,...
FINANCIAL ISSUES IN SCALING <ul><li>VoIP and Video startup scaling </li></ul>Full scale commercial deployment Scaling 1M u...
FINANCIAL ISSUES IN SCALING <ul><li>Community oriented Startup </li></ul><ul><li>Create a Community </li></ul><ul><ul><li>...
FINANCIAL ISSUES IN SCALING <ul><li>Community Creation </li></ul>Bridging Bonding Community <ul><li>Free Services </li></u...
FINANCIAL ISSUES IN SCALING <ul><li>Expenses </li></ul><ul><li>What Should be the cost of the model?  </li></ul><ul><li>Wh...
FINANCIAL ISSUES IN SCALING <ul><li>IPR Costs </li></ul><ul><li>As engineers we tend to see only development  </li></ul><u...
FINANCIAL ISSUES IN SCALING <ul><li>Ownership problems  –  3 rd  Party IP </li></ul><ul><li>Standard media codec and many ...
FINANCIAL ISSUES IN SCALING <ul><li>Development Models review </li></ul>Deciding which option to choose affects the develo...
FINANCIAL ISSUES IN SCALING <ul><li>Project Mapping into development option space </li></ul>Outsourcing Make/Internal  dev...
FINANCIAL ISSUES IN SCALING <ul><li>Summary </li></ul><ul><li>Pay attention to scalability and IP ownership issues </li></...
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Internet Multimedia Business Models and Trends, Yossi Cohen, DSP-IP

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VoIP and video services are very popular but are they making money? What will be the services supplied by the next Skype or Joost? This lecture review the business models of current VoIP and Video services and try to predict future trends in those fields.



VoIP Bizmodel - main problem is the erosion of per minute prices. Solutions include:

* Personalization/Avatars/Socialization
* Connection to other people/experts – Kasamba, Bitwine, Jyve and other ClickToCall solutions



Other Trends:

* Twitter - Extended Presence/Micro Blogging
* Converged IM and VoIM solutions
* VoIP over Mobile (Fring, iSkoot, EQO)

Issues: Identity management



UGC video - business models is based on advertisement: text advertisement and content wrapping, no personalization or focus. Solutions include:

* No specialization => Specialized videos like 5Min - expert short instructional video – better focus for advertisement
* Content wrapping => Video overly advertisement - a bit better CTR than content wrapping
* Nothing to publish?=>Artificial Content placement, video tagging
* Social discovery web sites

Issues: How to filter content, centralize web search, create personal recommendation platforms, work on all three distribution channels

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Internet Multimedia Business Models and Trends, Yossi Cohen, DSP-IP

  1. 1. VOIP & VIDEO TRENDS FOR INTERNET STARTUPS Yossi Cohen CTO DSP-IP
  2. 2. VOIP & VIDEO TRENDS FOR INTERNET STARTUPS <ul><li>Overview </li></ul>
  3. 3. VOIP SOLUTIONS AND TRENDS VoIP status VoIP Trends
  4. 4. VOIP STATUS <ul><li>PC VoIP History </li></ul><ul><li>PC VoIP by two parallel paths for personal and business use: </li></ul><ul><ul><li>Enterprise Phone switches offered PC VoIP extensions </li></ul></ul><ul><ul><li>Large IM Portals offered VoIP </li></ul></ul>
  5. 5. VOIP STATUS <ul><li>Enterprise </li></ul><ul><li>PC VoIP started as PC phone extension for enterprise </li></ul><ul><ul><li>Avaya </li></ul></ul><ul><ul><li>Cisco </li></ul></ul><ul><ul><li>Nortel </li></ul></ul><ul><ul><li>Connegy </li></ul></ul><ul><ul><li>Tadiran </li></ul></ul><ul><li>Personal VoIM </li></ul><ul><li>Large portals with IM clients started offering VoIM </li></ul><ul><li>Single Client IM </li></ul><ul><ul><li>IRC, ICQ </li></ul></ul><ul><ul><li>AOL AIM </li></ul></ul><ul><ul><li>MSN Messenger </li></ul></ul><ul><ul><li>Yahoo! Messenger </li></ul></ul><ul><ul><li>Jabber </li></ul></ul><ul><li>Converged IM </li></ul><ul><ul><li>Meebo </li></ul></ul><ul><ul><li>Trillian </li></ul></ul><ul><ul><li>Gaim </li></ul></ul>Yack!
  6. 6. VOIP STATUS <ul><li>VoIP Challenges </li></ul><ul><li>VoIP subscription fees are: </li></ul><ul><ul><li>None </li></ul></ul><ul><ul><li>Very low per minute rates </li></ul></ul><ul><ul><li>Low Monthly/Yearly Flat rate </li></ul></ul><ul><li>Client acquisition costs are very high </li></ul><ul><ul><li>Vonage–$150-200 according to CEO interview </li></ul></ul><ul><ul><li>Offerings of “VoIP subscriber for sale” $ 200 per head </li></ul></ul><ul><li>Churn is very high </li></ul><ul><ul><li>No Differential factors: if I’m on a 19.99 flat package I could turn to a different vendor for 18.99 </li></ul></ul><ul><ul><li>(Ask Vonage) </li></ul></ul>
  7. 7. VOIP TRENDS <ul><li>VoIP Trends </li></ul>
  8. 8. VOIP TRENDS <ul><li>Personalization </li></ul><ul><li>Skype Offers Klonies with Comverse </li></ul><ul><li>More Avatars by </li></ul><ul><li>Combots </li></ul><ul><li>WeeMe </li></ul><ul><li>IDT </li></ul>
  9. 9. VOIP TRENDS <ul><li>Mobile VoIP </li></ul><ul><li>Usually free calls between subscribers PC over current Portal VoIP networks </li></ul><ul><li>Lower than standard rates for mobile calls </li></ul><ul><li>EQO - Widget for MySpace for Mobile </li></ul><ul><li>Fring – Leading Israeli Mobile VoIP Company </li></ul><ul><li>iSkoot – Deal with Skype Mobile </li></ul>
  10. 10. VOIP TRENDS <ul><li>Messaging Convergence </li></ul><ul><li>Cerulean Studios’ Trillian Connects to </li></ul><ul><li>leading IM services: </li></ul><ul><ul><li>MSN </li></ul></ul><ul><ul><li>ICQ </li></ul></ul><ul><ul><li>Yahoo </li></ul></ul><ul><li>VoIM convergence </li></ul><ul><ul><li>Farsight </li></ul></ul>
  11. 11. VOIP TRENDS <ul><li>Connect to Expert/Service </li></ul><ul><li>Palore </li></ul><ul><ul><li>Call and rate services like restaurants or plumbers </li></ul></ul><ul><li>BitWine </li></ul><ul><ul><li>Connection to experts </li></ul></ul><ul><li>Kasamba </li></ul><ul><ul><li>connect to expert, bought by LivePerson for $ 40M June 2007 </li></ul></ul>
  12. 12. VIDEO SOLUTIONS AND TRENDS <ul><li>Specialized niche videos </li></ul><ul><li>Video overly advertisement </li></ul><ul><li>Video understanding and tagging </li></ul><ul><li>Media discovery </li></ul>
  13. 13. UGC VIDEO TODAY <ul><li>UGC Video Today </li></ul><ul><li>Is this the best video delivery system we can create? </li></ul><ul><li>A $1.4B system? </li></ul><ul><li>Where are the Videos I like?? </li></ul>
  14. 14. VIDEO CHALLENGES <ul><li>Portal Video Challenges </li></ul><ul><li>Revenues are mostly based on Advertisement: </li></ul><ul><ul><li>No Focus or Ad personalization per </li></ul></ul><ul><ul><ul><li>Content </li></ul></ul></ul><ul><ul><ul><li>User </li></ul></ul></ul><ul><ul><li>Low CTR </li></ul></ul><ul><ul><ul><li>Clients wants to see video and not buy Cola or a new phone </li></ul></ul></ul><ul><li>High expenses </li></ul><ul><ul><li>“ CDN costs are killing us” </li></ul></ul><ul><li>Personalization – Nada ! </li></ul><ul><ul><li>Aggregated search mechanism - No </li></ul></ul><ul><ul><li>Personal recommendations – No </li></ul></ul><ul><ul><li>“ Save” option </li></ul></ul><ul><ul><li>Low stickiness </li></ul></ul>
  15. 15. VIDEO SOLUTIONS <ul><li>Solutions </li></ul><ul><li>Specialized niche videos </li></ul><ul><ul><li>Example: 5Min, Café-Confidential in Metacafe </li></ul></ul><ul><li>Video overly advertisement </li></ul><ul><ul><li>Example: YouTube - August 2007 </li></ul></ul><ul><li>Video understanding and tagging </li></ul><ul><ul><li>Examples: VeoTag, Blinkx </li></ul></ul><ul><ul><li>Better Search results </li></ul></ul><ul><ul><li>Better Advertisement targeting </li></ul></ul><ul><li>Social discovery web sites </li></ul><ul><ul><li>Discover people with the same taste </li></ul></ul>
  16. 16. TRENDS <ul><li>Recommendation Systems close the loop between content creator/distributors and the users </li></ul>
  17. 17. VIDEO SOLUTIONS <ul><li>Internet Video Trends </li></ul>Future Present Past Process My Customized channel UGC / Pre defined channels Broadcast Pre defined channels Distribution Lean back Lean Forward Text search of clips Lean Back – open loop Consumption UGC + Legal Premium content + Meshups UGC content + Stolen Premium content Premium Content Content type
  18. 18. FINANCIAL ISSUES IN SCALING <ul><li>Revenues models </li></ul><ul><li>Expenses (Do we really need to speak about it?) </li></ul><ul><li>IPR Issues </li></ul><ul><li>Development issues </li></ul>
  19. 19. FINANCIAL ISSUES IN SCALING <ul><li>Revenue Models </li></ul><ul><li>Advertisement </li></ul><ul><ul><li>Google, MetaCafe, YouTube and most of Web 2.0 services </li></ul></ul><ul><li>Subscription fees </li></ul><ul><ul><li>Business service – LinkedIn </li></ul></ul><ul><ul><li>Content download - Rhapsody music service by real </li></ul></ul><ul><li>Per interaction model </li></ul><ul><ul><li>iTunes – per song payment ~ $1 </li></ul></ul><ul><ul><li>Guba – per video payment ¢45-99 </li></ul></ul><ul><ul><li>Requires attention to client retention </li></ul></ul><ul><ul><li>Requires very low cost of billing handling (~¢1 ) </li></ul></ul><ul><li>No revenue model – Exit </li></ul>
  20. 20. FINANCIAL ISSUES IN SCALING <ul><li>VoIP and Video startup scaling </li></ul>Full scale commercial deployment Scaling 1M users Commercial Dev. + Beta 100K users Garage +Alpha 10K users Idea Web 2.0 development
  21. 21. FINANCIAL ISSUES IN SCALING <ul><li>Community oriented Startup </li></ul><ul><li>Create a Community </li></ul><ul><ul><li>Socialization </li></ul></ul><ul><ul><li>Information sharing </li></ul></ul><ul><li>Community Bonding/Gluing </li></ul><ul><ul><li>Socialization and search tools </li></ul></ul><ul><ul><li>Stronger relations and interactions between community members </li></ul></ul><ul><li>Bridging Communities </li></ul><ul><ul><li>Creating mutual interest spaces </li></ul></ul><ul><ul><li>Bridging technological Gap </li></ul></ul>Create Communities Social Service
  22. 22. FINANCIAL ISSUES IN SCALING <ul><li>Community Creation </li></ul>Bridging Bonding Community <ul><li>Free Services </li></ul><ul><li>Goals </li></ul><ul><ul><li>Group creation </li></ul></ul><ul><ul><li>Group Scaling </li></ul></ul><ul><li>Identity </li></ul><ul><li>Connection </li></ul><ul><li>Basic communication </li></ul><ul><li>Presence </li></ul><ul><li>Premium Services </li></ul><ul><li>Goal </li></ul><ul><ul><li>Revenues </li></ul></ul><ul><li>border crossing </li></ul><ul><li>Presence – Mood </li></ul><ul><li>Personalization </li></ul><ul><li>Cross technology services </li></ul><ul><ul><li>VoIP<->PSTN </li></ul></ul><ul><ul><li>VoIP over Mobile </li></ul></ul><ul><ul><li>Free WLAN </li></ul></ul>Technology oriented premium bridging services Community free services
  23. 23. FINANCIAL ISSUES IN SCALING <ul><li>Expenses </li></ul><ul><li>What Should be the cost of the model? </li></ul><ul><li>What is the delta-expense between 1M and 10M users? </li></ul><ul><ul><li>Linear </li></ul></ul><ul><ul><li>Semi-linear </li></ul></ul><ul><ul><li>Flat </li></ul></ul><ul><li>Linear Cost </li></ul><ul><ul><li>IP and Patents for media coding and processing </li></ul></ul><ul><li>Semi linear </li></ul><ul><ul><li>Support, Infrastructure </li></ul></ul><ul><li>Flat </li></ul><ul><ul><li>Development costs </li></ul></ul>
  24. 24. FINANCIAL ISSUES IN SCALING <ul><li>IPR Costs </li></ul><ul><li>As engineers we tend to see only development </li></ul><ul><li>For large scale deployment, IPR (Royalties) are the largest expense (ask Adobe and Skype) </li></ul><ul><li>Payment for IPR: </li></ul><ul><ul><li>Codec Patent rights (G729, G723.1, MPEG4) </li></ul></ul><ul><ul><li>Developer royalties for companies developing our: </li></ul></ul><ul><ul><ul><li>Signaling </li></ul></ul></ul><ul><ul><ul><li>Multimedia codecs </li></ul></ul></ul>
  25. 25. FINANCIAL ISSUES IN SCALING <ul><li>Ownership problems – 3 rd Party IP </li></ul><ul><li>Standard media codec and many algorithms used for media coding are protected IP and requires payment to patent owners. </li></ul><ul><li>Although after the community is large enough there are revenues from premium services, they do not cover IPR costs </li></ul>Revenues IPR Costs How to finance this gap? Subscribers Revenues IPR Costs Subscribers
  26. 26. FINANCIAL ISSUES IN SCALING <ul><li>Development Models review </li></ul>Deciding which option to choose affects the development cost, scaling costs and TTM Cons Pros Development Time-to-market Development risks Large initial cost Create IP for the company No Royalties / 3 rd costs Internal Development IPR if exists Relay on other companies Time-to-market Low initial cost (royalties) No development risks Buy Hmmm… Low development risks Time-to-Market No Royalties / 3 rd costs Outsource
  27. 27. FINANCIAL ISSUES IN SCALING <ul><li>Project Mapping into development option space </li></ul>Outsourcing Make/Internal development Buy Development risk Long-term/IP cost Time-to-Market Develop + Consulting
  28. 28. FINANCIAL ISSUES IN SCALING <ul><li>Summary </li></ul><ul><li>Pay attention to scalability and IP ownership issues </li></ul><ul><li>Rapid Development </li></ul><ul><ul><li>Use open source for rapid prototyping and demos </li></ul></ul><ul><ul><li>Buy or outsource whatever you can’t develop fast. </li></ul></ul><ul><ul><li>Don’t get stuck because on technology issues </li></ul></ul><ul><li>Mix technological breakthrough, product features, client behavior understanding and innovative GUI to get ahead of the pack </li></ul>Biz Model Technology Scaling Idea
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