October 25, 2012 – Synacor is enhancing its ability to unify consumer experience on service providers’ portals with a new HTML5-based technology that extends aggregation of content and apps to all sources a service provider wants to expose without requiring users to leave the provider’s portal.
In the following interview with ScreenPlays editor Fred Dawson, Synacor co-founder and executive vice president of sales and marketing George Chamoun explains this and other advances that are making it easier for service providers to compete in a market saturated with over-the-top options. The goal, he says, is to not only match what’s out there, but to go the OTT market one better by enabling a superior consumer experience through the combination of premium service offerings and app aggregation that only MVPDs (multichannel video programming distributors) can provide.
As described by Chamoun, the as-yet-unannounced service enhancement, resulting from the acquisition of an HTML5 technology company earlier this year, complements other service expansions that now include support for pay TV authorization on social network log-ins, live as well as on-demand TV Everywhere support and video advertising. All this has been driving significant growth for Synacor, judging by its latest earnings report.
With a customer base of over 30 MVPDs, including MSOs like Charter and Suddnelink and telcos like CenturyLink and Surewest, Synacor says it is averaging 20 million unique visitors per month, up 44 percent from a year earlier. Third-quarter ad impressions totaled 11.6 billion, representing a 51 percent increase over last year.
ScreenPlays – Synacor has come a long way since you began talking about expanding your work with MVPDs into the TV Everywhere space. What’s driving the business?
George Chamoun – We make it easier for the programmers, because we’re integrated with several of the MVPDs. And we make it easier for the MVPDs, because instead of having to integrate with every programmer, you integrate once with Syncacor, and then we take care of all the programmer integration.
SP – You integrated with NBC for making NBCOlympics online accessible to your customer’s subscribers. How easy was it for those subscribers compared to someone coming directly to the NBC site and having to sign up with all the processes necessary for authenticating that user as a subscriber to an NBC affiliated MVPD? Were your customers’ subscribers automatically authenticated and able to access the coverage directly? That would seem to be an important benefit, given what I as a DirecTV subscriber went through signing up for the online coverage.
Chamoun – So what you did with DirecTV putting in your user name and password, that process is what Synacor does for Charter, Dish, etc. If you had visited the video portal or consumer portal or email in the last 30 days, then you wouldn’t have had to log in because we would have a cookie on the customer’s PC. So that is one of the areas where we add value. If you’ve already logged in for another purpose, like going into the portal, and you go to the NBC site, you don’t have to log in again.
SP – And that applies to other things you’re affiliated with?
Chamoun – Yes.
SP – What are the other advantages? Given the end user can go directly to those sites what else is happening here that gives you an important middleman role with the MVPDs?
Chamoun – There’s a growing need of aggregation. Let’s start with the consumer. Going to HBO, NBC.com, CBS.com, Foxsports.com, Foxnews.com – think about having 300 bookmarks. It’s almost like a virtual channel changer. That’s not the best experience for a customer to take all their authenticated content and go to every website. Or worst case, on a tablet to have a hundred different links to all these apps.
SP – You’re aggregating this for the MVPDs so that their customers come in and see all these options.
Chamoun – The consumer benefit is all one spot. For the MVPDs’ benefits, there are all these different techniques and technologies to deliver TV Everywhere. One is what’s called embedded players. So HBO actually gives us metadata, and then they give us an embedded video player. The same as what Hulu does. Hulu for the ABC assets gives us the metadata and an embedded player, which is different than what some of the Comcast entertainment group does. They actually ship us assets that need to be encoded and transcoded and put out onto the Web. Live TV will be done more at let’s say a headend or a cloud basis.
So when you think about assets, some video assets are going to be coming from the programmer in real time, some are going to be coming from the headend. Synacor makes sense of all this, because our product is basically an aggregation platform that says regardless of the metadata coming from the programmer, regardless of the video player, the actual video itself coming from the headend or the programmer, we owe it to ourselves to have one place where it all comes together. Otherwise you’re going to have a separate location for this, a separate location for that. That’s not what’s best for the consumer. It’s not the best thing for the programmer, and it’s not the best thing for the MVPD.
SP – Are your customers individually licensing the programming?
Chamoun – Yes. We’re not involved in the licensing process.
SP – So what appears on Charter’s portal may not be the same as Suddenlink.
Chamoun – And HBO may or may not give each one the same thing. If they were to offer some similarities, we already have it done. But I don’t want to represent that they all have the same content.
SP – Are you in a position to say to your customers that whatever you license we can put up here?
Chamoun – Yes. No barriers. Whatever deal they get done with the programmer, we get it done.
SP – This is very much an extension of what you started out doing. Only then it wasn’t about authentication, it was just about finding whatever online content you could put up there to enrich the MVPD’s user experience.
Chamoun – If you think about it, it started out as your email. Going back to 1997 until today, the front door to the Web was your email. You checked your email before you did anything else. We were doing that, and then we layered a portal on top of it, and then bill pay and my account. Those things haven’t gone away. The email hasn’t gone away. My account and bill pay haven’t gone away. TV Everywhere is going to be a driver, but so is email and voice mail. Our product is where it all comes together. You need one portal layer technology where it all comes together, whether it’s aggregating video from multiple sites, aggregating email, my account and bill pay. We owe it to ourselves to have one user experience.
SP – Where is the content actually residing?
Chamoun – Some of it is coming from the programmer. Some is coming from us and our cloud, and some is coming from, let’s call it the MVPD’s cloud. And that’s actually one of the value propositions Synacor provides. We don’t think the deals are all going to be the same. With one programmer, if you want the content, it’s going to come on a certain way; with another programmer it may come a different way. It also may be different outside the home than inside the home. So these are all different rules that we make sense of for the consumer.
SP –That raises the whole question, if it’s all coming from different places, different origin servers, how does the consumer know what types of devices can be used to access any given type of program, because it’s being streamed from different places and there’s no central point for transcoding and fragmenting for streaming any of this?
Chamoun – All the consumer knows is when you show an asset, it works. The consumer doesn’t have to go and figure it out. They need to go to that one spot where it all is, and if they see there are movies from HBO, they know it’s going to work on their Internet connection.
SP – I’m assuming you’re supporting more than just PCs and Macs.
Chamoun – We are. The primary differences on the iPads and iPhones is that some of the content presented to us is in Flash. So if it’s being given to us in Flash, it won’t work on an iPad or an iPhone. It will work on some of the Android tablets and smartphones. So with that one caveat, for iPads and iPhones that don’t support Flash, what would work versus what wouldn’t work would be the downloaded apps from the programmers, the HBO Go downloaded app, versus the video portal aggregated by the MSO. I’m hoping those are just near-term things that are all resolved over the next few years with other techniques beyond Flash to syndicate contact.
SP – How does the consumer know what they can get on any given device? Is it just they click on it and it’s not available?
Chamoun – We can encourage them to download a programmer’s app. It depends on what our customer would like us to do.
SP – And, of course, this gets into the whole content protection realm where the source of the content is also supplying that content protection, I assume.
Chamoun – Right.
SP – That would seem to raise all kinds of complicated questions about coordinating on the DRMs, coordinating on the streaming across all these different sources. Are you playing some kind of role in straightening all that out?
Chamoun – If you think of some of the base things, there are some technologies like Flash and Silverlight and other technologies that the programmers are using in order to syndicate the content. So as along as that customer has the supporting technologies, which they would have downloaded when they went to either CNN.com or they went to Hulu.com or they went to any one of the sites. In most cases customers over time get the right technologies like Flash and Silverlight on their devices. We’re just one of many people providing video content on the Web.
So you are right, each one may be using different technologies, but over time the customers generally get the appropriate plug-ins downloaded to their experience. If they don’t have that specific plug-in, we prompt free to download, and it takes a couple of seconds. And that customer doesn’t ever have to think of it again.
SP – Basically you’re not taking responsibility for protecting this stuff or how it’s streamed other than if it happens to be hosted on your site. Otherwise, it’s up to all these people to fulfill their obligations to the end user to have something out there that’s generally in the common weal and to do their own content protection.
Chamoun – That’s right. I mentioned there are some programmers that are doing some of the encoding and transcoding and DRM based on what they’ve told us to do. But that’s not the majority. The majority of that work is either being done by the programmers or the MVPD.
We think of our role as more of an engagement platform where it all comes together. While there’s a bunch of technologies to do the encoding and transcoding, whether in the headend or in the cloud – we’ll see many techniques come and go over the next ten to twenty years – what we’re saying is you can keep changing all that stuff in the background, and let’s provide a beautiful consumer experience that’s simple and that brings all the metadata to help the consumer to find what they want to watch in the different ways they can watch it. The stuff behind the scenes will keep changing, and while that’s all changing we deliver one beautiful experience from all the places.
SP – What happens now as we go to live programming in the TV Everywhere mode? Up to now most of TV Everywhere has been stored content. Now it’s started to move into streaming live to tablets and what have you. How does that change anything?
Chamoun – It’s one more important use case that should all come together with this extended VOD content in the cloud and with all the other applications. We think live brings up an important use case of why MVPDs need a broad engagement platform, that when you click on the live functions it plays, but then the other stuff is also there. Otherwise, you’re going to have a live TV app, HBO Go, Turner and CNN type app, and separate apps for your account, bill pay and email, and you’re going to start to confuse the heck out of customers because they’re going to end up having an app for everything. What we’re trying to evangelize is all of these are important. Live TV is important.
SP – Are some of your customers going to live yet?
Chamoun – Sure. Some will be going to live. What we’re evangelizing is for our platform to sit in front of all that. Let’s say they’re going to handle live themselves from their headends. That should be presented in the same engagement layer as everything that’s there today. All of that should come through one user experience.
SP – There have been all these licensing hassles with live, but apparently it’s starting to settle out as to how to go about it.
Chamoun – Mainly in the home, I believe. So there are business rules. You’re going to be able to get parts of TV Everywhere when you’re in the house, and parts when you’re outside the house. And the user experience layer needs to know all that.
SP – Where do you see the upside now for you guys? How does advertising come into play?
Chamoun – We’re doing well selling advertising. We have a whole ad sales team that’s selling ads on the home pages of the products. And the ads are getting more and more interesting, because there are both ads and companion device video ads. Obviously one of the things TV Everywhere does for us is where there is inventory available, we can sell not only display advertising, which we’ve been doing for many years, but also start to introduce more video advertising. So that’s a potentially good upside opportunity for Synacor.
SP – How important is that advertising to you?
Chamoun – We make more of our money from search and advertising than we do fees. It’s pretty important to us. If you look at the amount of money our customers are spending with us, for some of them we’re a profit center; we’re not a cost center. They’re getting all this great technology. We’re not your typical vendor. We’re out there trying to get user engagement. We have a whole marketing team that provides marketing support.
SP – So that is a shared revenue stream on the advertising.
Chamoun – Yes. We have an ad operations team that is managing the ad operation so that the MVPD can sell some of the inventory, we can sell some of the inventory, and then third-party ad networks and ad exchanges can sell inventory.
SP – Do you have enough experience at this point in the vein of seeing what TV Everywhere is doing with the end user to drive traffic, to create better value and revenue on the advertising side compared to former models you had out there? Is there a big surge potential here or is it just kind of an ongoing growth?
Chamoun – I’d say it would be an ongoing lessons learned and opportunities first. I don’t see this as a surge at this point. I hope there would be. There was an ad National Geographic bought recently that was beautifully done hosted on the home page portal, before you ever get into TV Everywhere. It was beautifully done with video and a companion ad. I looked at it and said this is exactly where we’re all going.
It’s not just us doing it. I would expect those same ads are on Hulu and other sites. I don’t know how much on the ad side we’ll be reinventing wheels and opportunity. I think that’s generally already happening. We’ll be a beneficiary of the better ads that are coming. Programmers and other parties want their advertising in the TV Everywhere umbrella. And with us being one of the major traffic centers versus online for that, we should have some longer term benefit as that all matures.
SP – How are you dealing with the app space that’s developing around TV programming and movies? Are you getting into companion device apps?
Chamoun – When you say companion apps, companion app functionality would be one component of an overall strategy, no different than TV Everywhere content, my account, bill pay, email or voice mail. This all needs to live somewhere. Otherwise you’re going to have a companion app app; you’re going to have a TV Everywhere out-of-the-home app, a TV Everywhere in-the-home app. If you look at some of the big telcos, you’ll see all of a sudden they have a bunch of apps. You go to the app store, and it looks very silly.
We acquired a company called Carbyn, which is an HTML5 platform. And this HTML5 technology can live in the browser or from a downloaded native app. So think of it as a presentation layer that comes in right from the browser, Safari browser, Chrome browser, IE browser. Now we’re shaping this product for the use cases we all need it for.
Carbyn is a user experience layer that’s optimized for all devices. If I search for a TV program, I get it. If I click on an app not available from the MVPD, maybe it’s available on Hulu Plus.
SP – The MVPD would be exposing these options even if they’re competing content sources.
Chamoun – That’s right. Think of the consumer, how confusing it is today. You talk about TV Everywhere. Even when you talk about live, it’s just one more way to watch. But live doesn’t give you past feeds; it just gives you the recent one. It doesn’t give you that whole longer tail.
Obviously there are people paying for Netflix and paying for Hulu Plus, and that’s partially because people have a limited amount of time to just watch live. They have some time for live and some time for catch up, and for the consumer it’s really hard, because how do you know between season two and season one where to go? One season Charter has the rights to; one Amazon has the rights to. Pretty confusing. So what Synacor did, looking at a series, we see the different options from the aggregators who have the licenses to different seasons and make them available in one place.
Today, if I click on Amazon I leave the MVPD and go to Amazon’s website. Carbyn is a technology platform that assumes not just video, but actual applications and experiences are going to be coming from multiple providers. Rovi might provide something. TiVo might provide something. HBO might provide something.
An example I’m showing you is a 60 Minutes app, which they built for the Chrome store. We’re getting a 60 Minutes HTML5 app through the cloud and into Synacor, but imagine it’s Charter or Suddenlink or whoever. And it’s not just video content; it’s a full-blown app. So they could include social media types with their brand if this was one of the popular shows going on right now
SP – So everything is brought to the MSO’s site.
Chamoun – Right. This is a technology to power parts of any one of our customer’s sites.
SP – In terms of bringing that stuff in, is it up to them? They make the deal, and they get that app in there, and you just do the functionalities to get it there?
Chamoun – That’s right. It’s no different than the way TV Everywhere works today. This is going to take it from TV Everywhere as meaning just video streaming to TV Everywhere meaning third parties can build great apps to include video and social media and things around their brand. HBO Go is a great product. If you look at some of the Turner products, they’re great products.
SP – So basically, these things that are starting to emerge now, like the Conan O’Brien apps with an online component to what they do, they become more easily accessible to the MSO’s subscriber through the affiliation with Synacor.
Chamoun – The online components they’re building shouldn’t just be on the Turner site. It should also be brought to you by, inside the cable operator’s video portal, and it should be on all the devices. Today there isn’t a technology layer that helps them to do all that. That’s why we’ve been investing in this technology platform. Doing that sounds good, but actually accomplishing it is hard. So we bought a company, and now we’ve been devoting a lot of resources building up this platform. This platform is simply an aggregation technology.
SP – Is this ready to start marketing? Are you selling this to your customer yet?
Chamoun – We’re articulating to cable operators right now that we’ve just completed the technology. We first acquired the company in January. We just completed version one of the technology. And now we’re out there articulating the benefits of the platform. I’m giving you a sneak peak. It’s very new.
SP – This is a three-legged thing where, if they see the benefit, they’ll say, okay, I’ll go to Turner and see if we can work this out.
Chamoun – That’s right. The other thing is the benefit to the IT teams of the carriers. What we’re pitching is broader than just TV Everywhere. It’s an engagement platform for all the MVPD’s services. TV Everywhere and companion apps, bill pay, my account, email – they should all live together in one somewhat common user experience. One vendor might be building a companion app. Another vendor might be doing the DVR function. Another might be doing a programmer’s app. One might be doing the live TV in-the-home app. Synacor is where it will all come together.
SP – This gets back to the kind of ACR (automatic content recognition) thing that Turner is doing. Are you saying that kind of app can come in here, and therefore that app is more prominently displayed through the cable operator to the TV Everywhere user, who then is given an opportunity watching that program on television to have that app on their tablet or whatever? And that automatically syncs up because all of that backend stuff is supplied through the app provider, not by you?
Chamoun – That’s right. We’re making life easier for the consumer. What we’re all doing right now is way too hard for the consumer. The apps are great. A lot of money is going into all these apps. But are we really making life easy for the consumer? I think great product companies take the time to make it easier for the consumer. That’s one of the primary reasons we’re investing in it, because we actually do believe we’re going to make life a lot easier for the consumer.
Number two, we’re going to make it a lot better for the MVPD, because it keeps the value with the MVPD. The MVPD is no longer involved in the brand communication with the consumer as they go to all these third-party sites. And for the programmer, we think it will actually drive more traffic.
SP – This exposes the app to more people and therefore achieves what the app was meant for in the first place.
Chamoun – We look at this as a total win/win. It’s coming along beautifully. It’s bringing in beautiful metadata and third-party apps right into the product. It provides the app right into the user experience. It really looks gorgeous.
We’re out there saying we’re ready to start talking. The fact that we’re doing all this in the browser is just unbelievable. You hear all these different things about native versus HTML5, but you’ve witnessed yourself how the user experience layer works.
SP – You’re not depending on a site being HTML5 compliant. All the talk about HTML5, the really big thing is this capability. It’s about what’s happening in the browser.
Chamoun – People ask me, can you really do all this? Now I can show it to you. Does native feel any different to you? I’m really proud of the team. We have a very significant R&D on this.
It would be very hard for any of our customers to do this on their own. The big guys, like Comcast, can if they want to, and they’re not a customer of ours. But for many of the other ones it’s hard to devote several dozen people to just an HTML5 platform.
SP – Especially when they’ve got several dozen people they need to devote to advertising, to this, to that, to everything that’s so complicated and difficult to launch. It’s getting nuts out there. But it’s fun to see so many newcomers to the marketplace stepping in with ways to short circuit all those efforts so that some of the smallest operators can leapfrog into this next-generation environment with a fraction of the effort the big guys have been laboring with for years.
Chamoun – Right. And we’re hoping those technologies can be plugged into Carbyn. We don’t see us competing with the way they’re encoding or transcoding at the headend. We see ourselves being where it all comes together. That’s how we’re positioning ourselves in the ecosystem. And that helps us from the advertising perspective, because we will have a lot more traffic.
SP – George I thank you so much for taking the time.
Chamoun – My pleasure.