Insider Interview: Ray DeRenzo of Kinetic

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In a world where everyone claims to be a visionary innovator of disruptive technologies, Ray DeRenzo has in fact been there from the beginning. A die-hard San Franciscan and Golden State Warriors fan (before it was cool), DeRenzo came up through mobile, creating SMS solutions with Vodafone (before people knew what a text was) and mobile video with MobiTV (before people could conceive of streaming). He was more recently with Rovi, the video entertainment technology powerhouse, and is currently managing partner of Kinetic Growth & Innovation Services, a Bay-area consulting firm to early-stage clients across a range of sectors, including streaming video. What’s more, he’s a professor at Hult International Business School and is deeply involved in the personal development initiative for people with criminal histories, Defy Ventures. So if you want to know what’s next, look to DeRenzo.

Q: Your firm places an emphasis on design thinking and Lean methodologies. How can these disciplines best be applied to traditional cable companies that may be struggling with the aggressive emergence of OTT competitors like Netflix?

A: What design thinking is about is putting people at the center of design, and even a cable company can benefit from having a human-centric approach to product development, and Agile complements design thinking. You build substantiation for products, and consumer validation is a key step in that process. So you begin with the prototype, you have people interact with it, you observe what they do and then you refine it. I think we’re long past the days of build it and “they” [the consumer] will come. We’re at the point where we must have “them” build it with you.

Q: Do you see the cable companies adapting to this modern methodology? Or do you see them stuck in the ways of old media?

A: The inference here is that all companies are created equally, but I think there are some that are more innovative, and better practitioners of design theory and design thinking. I look at what Xfinity has done in content discovery and I think that’s a strong validation that they’re ahead of the curve. Others maybe not so much.

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Q: As Netflix, Amazon and other tech-forward companies enter the entertainment space, we start to see a clash of cultures between Hollywood and Silicon Valley. What’s the single biggest cultural difference between these two worlds?

A: I love this question, and if we had several hours and a single malt scotch I could probably opine on this topic for a while. The best analogy I can use is that Silicon Valley is like software: It’s open-source, it’s adaptable, it’s scalable and it’s authored by 22-year-olds in flip-flops. Hollywood is like hardware: It has long development cycles, it puts form over function and it wants to be in control over the finished product.

Q: I understand you’ve been in the tech world for a long time and so much has developed since you began. What moments stand out?

A: I’ve been in digital media for the past 15 years in some manner, since the early days of mobile internet portals. I was first in digital content over mobile devices and then in video content over wireless networks to connected devices. When I was with MobiTV I spent a great deal of time spanning the gap between technology and content creation. We were streaming content to mobile devices when no one understood what “streaming” meant. We were doing Netflix before Netflix.

Q: So timing is key. Was Mobi too ahead of the curve?

A: The innovator’s dilemma! When I look at what Mobi did from 2005 to 2012, I tell people that we created an entire category of entertainment. There was no such thing as mobile video before then. The technology wasn’t there to allow for a compelling user experience. And when MobiTV launched, it was over wireless networks that weren’t designed for data, and it was on devices that weren’t designed for video. It was junior varsity in terms of quality, but the concept was there. Now fast-forward to today and the experience is amazing. Streaming over wireless networks to your iPad or your smartphone, you’re able to watch full-length movies in near HD quality with no buffering or artifacts in the video stream. It is quite remarkable.

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Q: Do you see virtual reality as the next big thing, or will it be a flash in the pan?

A: I think this is the real deal. I was always suspect of 3-D content and 3-D TVs because of how you had to produce content to render a 3-D experience, and also because of cost. But I think VR really could become the next generation of entertainment. Who wouldn’t want to be immersed in the action? You’ll be seeing what Steph Curry sees when he’s shooting a three pointer. Or you will experience a travel destination in 360 degrees, as opposed to just flat images. So, I absolutely believe you’ll see VR become more emergent in the mainstream.

Q: On the video personalization and recommendation side—say, with Spideo—have we cracked that code yet?

A: I believe that you are going to see the next generation in personalization and recommendation technology as well, and it will be touching on the attributes of the content that are deeper than how recommendations are being tendered now. I very much like what Spideo is doing. Historically, the state of the art in recommendations was collaborative filtering. “You would like to watch this because other people liked it.” But with Spideo, by using editorial in the content, describing attributes in the content and then explaining the basis for the recommendation, you begin to reach an emotional level. Once you reach emotional connections, that’s a pretty powerful approach.

Q: Within the recommendation and personalization space, would you agree that engagement is the holy grail within VOD and OTT?

A: I will give you a qualified yes. I do think engagement is the holy grail for any video service, but good content is the foundation of engagement. If the content is lacking, it doesn’t matter how many tools you have, the deeper engagement just won’t happen. So if you have good content and you’re a provider, you should look at how to broaden and deepen the viewer experience. How can viewers share thoughts? How do you help them explore new paths to related content? Content should be like the guest in your house, and you engage with it as you would your friend sitting next to you. You should have a conversation with the content. And that makes it a richer experience.

Q: What types of ancillary services would you recommend for content providers to increase engagement and increase differentiation?

A: I will share with you a piece of advice that was provided to me long ago. If you apply principles of design thinking, if you understand what people are doing five minutes before they use your product and what people are doing five minutes after they use your product, you can then exploit that opportunity by pulling them in earlier and keeping them there longer. It’s what happens in those contiguous time frames. So if you understand these behaviors I think you can create a more personal, more relevant and deeper experience for viewers.

Go to YouTube and see what they do: They pop up a bunch of related videos. Though the average length of a video on YouTube is about four minutes, the average length of engagement is about 22 minutes. Why? Because people don’t have to search for related content. The related content is right there being presented to them. I don’t care if your product is a toothbrush, or a lawn mower, or a movie. If you understand what people are doing before and after they engage with your content, you have the opportunity to build an experience that can extend their engagement with your content.

Photos courtesy of Ray DeRenzo.