By Patrick Hoge, Reporter – San Francisco Business Times
Ustream Inc. has found a business model that is turbocharging revenue growth — selling live Internet video streaming technology services to professional users such as music festival promoters, media companies and even corporations holding press conferences.
The paid service is not new, but last year demand took off, and Ustream CEO Brad Hunstable said his company’s revenue is on track to double this year from 2012’s $24 million.
Not only that, but Hunstable predicts the 6-year-old San Francisco company will be profitable by the end of 2013.
“We’ve got the tiger by the tail,” said Hunstable, who co-founded Ustream in 2007 and took the top job last year. “We’ve built a real business.”
The revenue surge is driven by Ustream’s paid software-as-a-service offering, which now makes up the largest part of its business. The company also continues to power free, ad-supported streaming for use by anyone.
The good news comes after a period of readjustment for Ustream, which rocketed to prominence with massive user growth, but then hit a bumpy patch marked by co-founder John Ham’s departure in late 2011 and the downsizing last year of Ustream’s San Francisco office — though not staff — to cut costs.
The company has since grown by 10 employees in San Francisco, adding key executives from other tech companies and bringing the local headcount to 65. There are more than 200 employees globally, including 15 in an office in Los Angeles and a concentration of engineers in Budapest, Hungary, where co-founder Gyula Feher lives.
A West Point graduate, Hunstable conceived of Ustream because as an active member of the military deployed overseas he had not been able to see his brother’s rock band perform, and he realized that many other service men and women were unable to witness important family events. Today, the platform delivers video to more than 81 million viewers globally every month, Hunstable said.
Ustream’s growing ability to globally transmit video to large numbers of concurrent viewers with increasingly rich interactive and social tools is now proving attractive to a wide variety of paying customers, including Salesforce, Samsung, Logitech, CBS News and Viacom. Last week, Ustream said the Bonaroo and Outside Lands music festivals will use its platform.
“By end of next year, I want to have 95 percent of the Fortune 2000 as customers,” Hunstable said. “We’re laser focused on this. The market is massive.”
In February, Sony Corp. livecast the introduction of its PlayStation 4 gaming console/streaming device on Ustream, and there were 8 million global viewers, with a peak of a million viewers at once.
“That’s starting to approach the size of a prime-time TV show,” Hunstable said.
Sony also revealed that PlayStation 4 users will be able to livestream sessions of video game play over the Internet, something that millions are doing through San Francisco startup Twitch.tv.
Discovery Communications sees an opportunity to expand programming and make money. This week, the company announced a eleven new cameras that capture live video 24 hours a day of animals ranging from ants and cockroaches to penguins.
Discovery had prior animal cams linked by Ustream that drew huge numbers of viewers, including a penguin cam that got 200 million views, said Micah Gelman, Discovery’s director of digital video operations and strategy.
Already, advertisers have signed on to sponsor animal channels, including Merial, the maker of Frontline flea and tick treatment for pets, and Orkin, which makes products for killing household pests.