Accedo CEO and cofounder Michael Lantz is most comfortable when he’s exploring the outer edge of the video experience. Back in 2004, he and partner Fredrik Andersson, SVP of business development, scanned the horizon of emerging internet TV technology and saw an opportunity to challenge the existing market. They came up with Accedo, a video solutions service that would usher in the next generation of the TV experience. In the 12 years since, Accedo has built a list of first-class customers including Netflix, Fox, Sky, Roku, Discovery and Disney.
Always looking ahead, Accedo struck a deal this spring with Brightcove to create a cloud-based turnkey OTT solution, OTT Flow, geared for media companies and content owners. Then, in June, the firm received a capital injection of $10 million from SEB Private Equity and brought in industry legend James Ackerman as chairman. More recently, the fast-growing video service announced plans for a Brazil office, further anchoring its global presence. Accedo is clearly positioned as a go-to video experience provider for now and the future.
Q: You began Accedo all the way back in 2004. What was it that made you want to reinvent the TV experience more than a decade ago?
A: Back then TV was boring. Everyone was doing the same thing. Everyone was repackaging various TV channels and selling them back to the customer. When internet was released for TV back in 2002 or 2003, it was offering new possibilities of interacting with your TV, but the companies who launched those offerings were still just copying the old-fashioned linear TV packages. So we felt there was room for a company to specialize in the truly interactive experience of TV.
Q: So you were very forward-looking. But so much changes in 12 years. What caught you most by surprise?
A: We really thought the next evolution of TV would be a living room development with set-top boxes, rather than with mobile phones. What we didn’t foresee was the mobile revolution. At the time, mobile was very much just a feature phone. This was before the smartphone era.
Though we did have mobile in our business plan at the beginning, it was the speed of the change that was surprising. The quality of the networks changed much faster than we thought. Then, in terms of penetration, we had assumed that only the top 10 percent of the market would use premium phones with video on the go, rather than 50–60 percent of the total population, as it is at the moment.
When we finally realized that mobile was going to be one of the key outlets of the premium video, we decided we had to go all-in on mobile. Mobile is now 60–65 percent of our total revenue. It has been a huge growth driver for us over the past five years. Then, the pay TV expertise makes us a bit unique because we compete with mobile specialists who have no experience in the TV ecosystem.
Q: As a founder, at what point did you think, “Wow, this is really going to work!”?
A: The first time we actually thought this would succeed was in 2007, because that’s when we got our first VC funding. We saw the change of growing from a 10-person company to a 25-person company, and that was the first realization that we would be a more permanent fixture. From there we have grown every year, so it has been sort of business as usual, though very rapid. Our primary challenge has been operational scalability.
Q: Accedo is very good in front-end UX and UI across multiple technologies. Meanwhile, there are companies that are very strong in back-end API technology. Is it a mistake to try to compete in both spaces?
A: I don’t think it is a mistake. This ecosystem is so complex, so it’s difficult to draw the line and say someone is only a UX company, and someone is only an API company. In order to deliver the UX we need to have certain back-end modules to help deliver those front-end components. Similarly, the companies that have the video distribution modules also have a front-end interface, because they need to make sure that whatever video they are distributing is displayed well. So I think it goes both ways, and I think that’s probably the way it will be for the next 3–5 years.
Most markets go through a cycle of best-of-breed vendors, and then suddenly one vendor provides the entire stack from back to front. I think we’re in the best-of-breed stage, which is great for us because we’re a UX-centric company. But I think there will be an end-to-end solution eventually, which is both a threat and an opportunity for us.
Q: Thinking back to your mobile experience related to speed and penetration, what are your thoughts on 360-degree video, virtual reality (VR) and other emerging video technology?
A: I was just writing an article on immersive TV, so it is immediately on my mind. I think the challenges with VR are the same as the challenges with 3D. It changes the underlying use-case of TV so much that it requires an early adopter to really get their head around it. Then, as soon as it’s a use-case change, it takes a long time before it becomes mass market.
So I believe it will be 10 years, at least, before any VR will be mass market. We have several of our customers experimenting with VR at the moment because it is such an interesting use-case, and everyone can see that in 10–20 years there will be plenty of opportunities.
But what’s interesting with 360 is that it’s a poor man’s virtual reality, if you know what I mean, because you don’t need the consumer devices. So just by using your normal devices, whether that’s a smart phone or PC, or set-top box, you can create a more immersive feeling of being on site. So that offers specific challenges in terms of UX, but once consumers get their head around it, it’s a beautiful way of adding value, especially with a live event. I strongly believe that there will be a big breakthrough very soon.
Plus, I think monetization-wise, the additional production costs for 360 are not that great a difference, so it is quite cost efficient. The challenge is more on the distribution side, how to get this to low-end devices. VR is a different story, of course, because the production costs are huge, and the distribution costs are very high. So I think 360 is a good first step.
Q: We like to talk about the relationship between engagement and content. What are some of your thoughts on balancing these two critical elements?
A: I am constantly telling my business customers, normally a digital service provider will spend 60, 70, 80 percent on content, and the remaining on things like technology, customer service and billing. But you have to add some value for the consumer as well.
So if you’re spending 70 percent on the content, there’s 30 percent that should be spent on user engagement. So, I believe the content will always be the most important part of any service, but what everyone is under-investing in is the user experience. Of course I’m a bit partial in this discussion, but there is plenty of room for improvement among most of our customers and everyone in the market.
Q: There have been so many big content deals reported in the press recently. What is your take on what is happening here?
A: I am fascinated about this consolidation trend in the tech industry. The Verizon and Yahoo deal is just one example. When we the look at the broader picture of these consolidations, there’s this underlying war between the distributors and the content providers. In this model, Verizon is a typical distributor and Yahoo (or many of Yahoo’s assets) is a provider. There seems to be a desire to build a new type of company that can address all the consumer needs, and gather all the data that this can provide. I am not convinced that this is the right approach, but I can see that everyone is struggling with what will be the role of the content company in the future.
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Photos courtesy of Accedo.