Ooyala: The Online Video Startup That Isn’t Out to Destroy Hollywood

“Ultimately, Silicon Valley has to stop trying to kill Hollywood and start helping it evolve.”

So says Sean Knapp, co-founder and chief technology officer at Mountain View, CA-based video management startup Ooyala. It’s not a common viewpoint among Silicon Valley entrepreneurs, who are usually pretty blunt about their disdain for the movie and TV industries. It would be “a good thing if competitors hastened their demise,” Y Combinator founder Paul Graham wrote in a notorious January 2012 post entitled Kill Hollywood.

Graham is hardly alone in that sentiment. This is a crowd that rooted for the murderous aliens in Battle: LA and cheered when a tornado destroyed the Hollywood sign in The Day After Tomorrow. Taking up positions in foxholes first dug during the file-sharing wars of the 1990s, tech entrepreneurs seem intent on proving that code ultimately vanquishes content, and that knowing how to move bits around entitles you to judge which ones are valuable.

“The classic tech-company approach [to the TV industry] has been the inevitability speech,” says Knapp. The speech goes like this: Internet-based video delivery offers viewers far more choice, convenience, access, and interactivity than analog delivery. Therefore, the big studios and networks will eventually see their audiences flee traditional appointment-based, one-to-many delivery media (i.e. broadcast, cable, and theaters) in favor of video streamed on demand to their PCs, mobile devices, and connected TVs. Adapt or die!

It’s the speech that executives at companies like Netflix, Hulu, Boxee, Roku, Apple, and Google have been giving for years. Knapp should know—he and his fellow Ooyala co-founders, Bismarck Lepe and Belsasar Lepe, all came from Google, where YouTube is now busy launching dozens of independent content channels intended to draw viewers away from cable and broadcast TV.

From a technology perspective, the inevitability speech is probably correct. But there’s a big problem: great shows still cost a bundle to make—way more than Hollywood is currently collecting through digital channels. Even if all video went online, Knapp points out, consumers would still want to watch premium, long-form content of the kind that only the big networks and studios can afford to produce.

Ooyala co-founders Sean Knapp, Belsasar Lepe, and Bismarck Lepe smashing a server at an Amazon event.

So from Knapp’s point of view, the main question isn’t how to gin up new indie content. It’s how to get more broadcast-quality shows onto the net—which means helping Hollywood find ways to make online distribution pay. “We fundamentally agree” with the inevitability speech, he says. “But we think it misses the key point, which is that the business needs to evolve and be stronger at the end of the path.”

That’s what Ooyala is all about. I’ve visited the startup’s office in downtown Mountain View twice this year, and while the company is only a couple of miles away from the Googleplex, I can tell that it has a mentality about the video industry that’s light-years away from Google’s. “We fundamentally believe that online video is about premium content moving online,” Knapp emphasizes. “This is something Google and YouTube have not articulated.”

The opportunity to build technology to help studios with monetization was the reason Ooyala’s founders left Google in 2007, even though the search-and-advertising giant asked them to stay. “They said ‘You guys can have your own office off campus, and have as many engineers as you want, and we won’t bug you,’” says Bismarck Lepe, who’s now Ooyala’s president of products. “But at the end of the day it was going to be a Google project and Google’s ideas. We wanted to start something on our own.”

What Ooyala has built is this: A video hosting cloud that can store and stream customers’ high-definition digital video to any screen, whatever the available bandwidth; a big-data backend that can … Next Page »

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Wade Roush is a contributing editor at Xconomy. Follow @wroush

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