Some thoughts on barriers to entry, reposted from a post I made on the raging bull board in response to a query from another poster...
The "barriers to entry" question is an important one, and one I've given a lot of thought to. In order to address that, I would suggest we need to distinguish between VDAT's core markets (video content production for advertising, marketing, and corporate communications), and the broader multimedia content market for the Internet and interactive TV. VDAT plays peripherally in the broader market but for the most part has concentrated on what I'll call the marketing space.
(For a broader look at the segmentation of the multimedia streaming market, see my comments on the SI streaming media thread at Message 8695276. As indicated there I see VDAT primarily playing in one subcategory of the content category.)
Within the marketing space VDAT has been building some significant barriers to entry. In any vertical market where they are producing advertising vignettes for suppliers (e.g. HotelView, MedicalView, ResortView), the barrier is their existing library. Take hotels as an example. Their goal is to build the equivalent of the printed hotel directories that travel agents used to use, but using streaming video and targeting consumers as well as travel agents. The more hotels they get, the easier it is for them to sell the next one, and the harder it is for anyone who wants to compete. You are selling participation in an existing library, so the larger the library the more appealing it is to the buyer. That's a potentially major barrier to competitors. Hotelview is the only product that has significant barriers so far, and they're not so great that they couldn't be overcome with money, but anyone who wanted to overcome them would probably first come and try to do a deal with VDAT rather than go it alone -- it would be a heckuva lot cheaper.
A second type of barrier is VDAT's partnerships. In each product area they have locked up one of the two top players in the field as their partner. With PR Newswire selling video news wire aggressively (from what I hear) to its 23,000 accounts, anyone else entering this field will have to overcome much higher selling costs. TravelWeb is the top hotel booking site on the net, and VDAT is their video partner. Interval International, the world's 2nd largest timeshare company, is their partner for ResortView. And so on - great partnerships for most of the products.
A third barrier is the production capability. Aside from CNN, how many companies can you think of that have access, on short notice, to quality film crews in 300 locations around the world? How many have an understanding, developed over six years of trial and error, of how to produce top-quality video that will work in the multimedia world, that will be effective in an advertising world where decision to see a commercial is the prospective customer's rather than the broadcaster's, and that won't degrade excessively when it goes through compression-decompression algorithms? How many have a captive network for transmission of video from source to studio? It would be possible for a would-be competitor to overcome some of these barriers with money, but others will take time -- which is in short supply.
A fourth barrier is ownership of content. There are huge libraries of existing video footage that one could potentially use to compete with VDAT's growing library, except for one small problem. Traditionally when a company or organization makes a marketing video, they license it from the artists rather than buying it – just like if you have a photographer shoot pictures at your wedding, you don't own the rights to the pictures, only the prints you pay for, and it's illegal for you to make additional copies or to rebroadcast (i.e. a video). In order to accumulate video content that can be used royalty-free on the Internet or interactive TV, you have to film it under agreements with your videographers, actors, voice talent, etc., that give you essentially unlimited rebroadcast rights. VDAT is doing that – whereas to my knowledge no one else has even focused on the issue. But now that infringement lawsuits are starting to be filed and won against advertisers for re-use of footage in a medium for which it was not licensed (i.e. the Internet), advertisers are beginning to realize that they need a business model that eliminates this risk. Anybody can copy VDAT's business model here, but they'll have to start from scratch in accumulating video footage that's royalty-free.
So in conclusion, I see some potentially large barriers to entry under construction (and partially built) in VDAT's core market space.
If we broaden the content universe to news and entertainment, the picure surely changes. Here the major existing networks and studios already have large barriers, and I don't see VDAT trying to attack them. I only see VDAT playing in this market selectively. They will have resources that smaller independent studios might call on; and they can perhaps play a role in broadcasting conferences and similar events because their cost structure (given EDnet local crews) is so low. But these types of things are on the periphery of the business models of the existing networks and studios. Those companies will be concentrating much more on attacking the new-media companies that are trying to produce news and entertainment (can you spell AOL or MSFT?) and I have a hard time seeing them get excited about the smaller, one-off markets where VDAT is poised to excel.
So from where I sit, VDAT's end game has to be ownership of the infrastructure to support multimedia advertising, marketing, and corporate communications. Anything else will be tangential and probably non-strategic in the long term. That's where VDAT's barriers to entry lie. And while it's not as sexy as broadcast.com, the numbers don't lie -- it's a massive business already, and video on demand will open it up much further -- because while today's video advertising market is limited to the large companies that can afford broadcast TV, tomorrow's market can support the smallest companies who want to do one-on-one marketing. VDAT could be a multibillion dollar company, and hugely profitable, just within this "niche."
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