Viddy...how many users do they really have?

As someone who's tracked and run Internet video startups, the massive growth of Viddy earlier this year impressed me but also set off my "it doesn't seem right" gut instinct. Now that I'm no longer heads down running www.synctv.com, I had a little time to really dig into this.

So how did Viddy go from 15,000 uniques/month* (quantcast) in March to over 1M uniques/month in April, less than a month later? I've seen this happen many times before, but not in the "create a video and upload it" space Viddy, Tout, SocialCam, etc play in. As interesting, how did Viddy crash so hard only a couple months later? Was it a fad? Did something else affect their popularity?

Video is not like photos. A picture is fast to upload and fast to "consume". Video takes a lot longer to create (at least interesting videos!) and take a lot longer to consume. As anyone who's posted a video knows, it's not easy to create an engaging video your friends/family/social network will actually watch.
So back to my question: how did Viddy grow and then shrink so fast?

I looked at a number of factors, and the most likely scenario I've discovered is this. Viddy's growth happened at the same time as their integration with Facebook's open graph API and when Facebook wasn't restricting how many layers of friends would be exposed to the video. Even better (or worse, depending on who you are), the various user tracking companies (Alexa/Quancast/Compete) seemed to count every single person who got/clicked the video as a Viddy "user". In other words, I upload a Viddy clip I made to Facebook, and all of my friends see this instantly. Then, if they click on the video, my friends' friends could (depending on your settings)  also show up as Viddy "users". As you can imagine, this leads to massive virality.

But should someone who's not even signed up or using Viddy be counted as a user? I argue that the only true users are those who either create content using Viddy's service and/or regularly use the Viddy site to view videos. Someone who get's a video they know nothing about shouldn't be counted as a Viddy user, should they? At the very least, knowing how many users are really using the site vs users who just got the video because of Facebook's API implementation, is important to measure Viddy's true growth.

Now how about that steep drop off? Well, interestingly enough, it also coincides with Facebook's tightening of its API virality. Viddy videos will now no longer penetrate several layers of "friends of friends", and voila...Viddy is back to a steady state of 60,000 uniques/month for the past 3-4 months.

So hats off to Viddy for getting investors to plow money into them based on...um...creative user numbers. They have a lot of smart people there, and now have a large rainy day fund. I'm sure they'll reinvent themselves and get those numbers up again. I just hope that next time, the growth comes from actual users of their service, not these amped up numbers.


*Yes, I know, all of these tracking services are inaccurate, inconsistent, etc. However, used as a rough traffic guide, they do the job...somewhat.

OTT: Getting media to devices

The madness of Silicon Valley is it's eternal optimism and willful ignorance for why "it can't be done". This applies to the OTT (over the top) market space in spades. How many years have we been talking about getting our media outside of the usual cable/TV paradigm? Many. Companies bought in this space haven't amounted to much in profit/revenue. As examples, Comcast acquired thePlatform for $80M in 2006, while Y! acquired Maven Networks for $160M and both haven't produced much for either acquirers.

One of the biggest challenges has been around the content distribution rights, with Hollywood and large broadcasters holding back for fear of 1) the cable companies' wrath, and 2) their innate aversion to unproven distribution paths. Link this with the technology challenges and consumer's slow change in media consumption patterns and you have a recipe for lots of promises, not much action (aside from some juicy exits for startups). 

It's only in the past couple of years, with the advent of Netflix, Apple, Hulu, and now Amazon's very public push into devices that we're seeing real traction in this space. I tend to believe that it is the explosion in video-capable devices, the plummeting complexity of internet video, and the availability (finally) of some reasonable bandwidth that have combined to produce real change. We are seeing real services being rolled out with real adoption. Netflix, Apple, Hulu, Amazon have each committed heavily to win in this space.

So this begs the question: what do content producers do, how about the cable companies, telcos? Well, surprise, surprise, there is a maniacal push for each to build their own distribution mechanisms and offer OTT video. There are many billing plans: subscription, VOD, PPV, Ad-supported but they all have several aspects in common.

1) They all talk about getting media to end-user devices other than the traditional TV/PC. iPhone, iPad, Android, Roku, Connected TV, etc. These are the new battlegrounds for media delivery.

2) They all have some degree of anytime/anywhere, extending the promise that TIVO & Co brought with the advent of the DVR.

3) They all have limited content. ;-( Yes, the content guys are still reluctant to let their content go over new pathways. Understandably so. We're in a new era where the toll booths and roads are just being built. Content producers want to be the toll booth collector & distributor, only they also want to keep their traditional cable revenue streams going as well.

So to sum up: We're finally seeing meaningful traction in the OTT space. Netflix, Apple, Hulu, and Amazon are leading the way. Everyone wants a piece of the action and are pushing out OTT services that target new video-capable devices. Immediate winners: tech companies with OTT capabilities.

I'll dig into the main players - destination sites, content producers, cable, device manufacturers, and telcos -   in my next posts.