FierceOnlineVideo talked with The FeedRoom CEO Mark Portu to discuss the company's renewed focus on enterprise online video and plans for the funding round it drew down in late 2008.
FierceOV: How has The FeedRoom's business been so far in 2009, given the current poor economic situation?
Mark Portu: We certainly feel its effects, but we're still growing, just not like gangbusters. The sales cycles of our customers have become a little longer as you may expect. One of our customers went bankrupt and another told us they simply couldn't pay because they had completely run out of funds, which you never want to see.
We've also seen increased price pressure from some of the newer entrants to the space. The market has gotten more competitive, and that's hitting margins. I'm not sure the group is going to be able to maintain at the margins we're seeing right now, but the FeedRoom is as close to profitability as anyone.
FierceOV: Do you see opportunities for consolidation, or will the competitive landscape simply lead to company failures?
Portu: M&A is a core part of our growth strategy, and we'll be an acquirer. I get a call every two weeks or so from a company shopping for a buyer because runways are running out. Some companies will definitely hit the wall, but others will present good value in the current market.
We look for companies that will help us expand our core offering with solid technology. That's partly why we acquired ClearStory in December 2008, for the strong digital rights management solution it had.
FierceOV: What are some important next steps for continued growth for The FeedRoom and the online video space as a whole?
Portu: I see a big move into applications around video, so instead of just being a platform, offering applications around the video platform that enhance the experience. We're always looking for ways to expand the uses of video through applications, also considering the implications of live video and how that's managed in one simple system. Also, soft metrics are starting to turn into harder metrics, especially with ROI indicators. Also, I think online video is increasing in fidelity and interactivity, so there is every reason that I think the industry will continue to grow.
FierceOV: Mark, The FeedRoom took down a significant round of funding last year. How have you used that capital so far, and how do you plan on continuing to deploy it?
Portu: We want to do more M&A as I mentioned before, continue where we started with the ClearStory acquisition. We also have used the round for business development, technology upgrades to our video platform, and sales and marketing.
FierceOV: Where would you like to see The FeedRoom in one year?
Portu: I'd like to have completed two substantial M&A transactions, and double the size of the company. I'd like to say profitability, and it's certainly still possible, but it has gotten substantially more difficult with the general state of the economy. Another part to the profitability piece, is the fact that our enterprise customers don't have a line item in their budget for what we do. So they are cutting line items in their budgets, and they're asking, "Where does this fit? Is it marketing? Is it an IT expense?" And they end up categorizing it as a net new expense, which are tough to approve right now. This wasn't happening a year ago.
FierceOV: What are some roadblocks to achieving your goals?
Portu: The economy is a big problem, that's no surprise. There is healthy competition, and everyone is staying "at 11" working to move the industry. But I think there is room in our market for more than one company. Also, we've had some of the corporate customers ask to see financial information as we've become a core vendor. This is not a huge problem for us, as we've been around for 10 years and have a seasoned business team. But if smaller, less established companies are getting this question, you could see some companies start to hit the wall. I expect to see rapid consolidation this year as the climate proves too much for some companies.