Straight to video
- Josh Mehlman
- 3 March 2009
- Page 1 of 2 : single page
Photo credit: Anthony Geernaert
has become a powerful player in the online video business. Josh Mehlman speaks to founders Ron McCulloch and Ian Gardiner about the company’s long road to success.It’s amazing how quickly bleeding-edge innovations become commonplace, then wallpaper. Last month, we oohed and aahed when that geeky guy in the office showed us a new technology for the first time, then two weeks ago we started to use it regularly. Last week, we couldn’t stop using it and yesterday we rolled our eyes as our mum or dad enthused, “Wow! have you seen this great new thing?” Today, we find it hard to imagine what life was like without it.
Online video is a prime example of a technology that now forms part of everyday life, mostly thanks to the phenomenal success of YouTube. Yet the company only formed in February 2005 and didn’t launch its product until November the same year. YouTube has been so successful, the name has almost become a generic term for online video, much as parent company Google dominates the web search business.
In the meantime, Australian company Viocorp has been, somewhat more quietly, changing the way the corporate world looks at online video.
Going on a hunch
Viocorp started in 2002 when nightclub manager Ron McCulloch, now the company’s executive chairman, asked Ian Gardiner, now CEO, to look at commercialising a technology one of his venues in the United Kingdom had developed.
“It was a video kiosk based thing and my partners at the time in the leisure company didn’t really know what the hell I was playing at spending money on it, so I paid for it myself,” explains McCulloch. “Then I decided to come down here to Australia.
“A few months later, Ian decided to come down but didn’t have any concrete plans, so we ended up in a discussion about the technology and I said there might be an opportunity to commercialise it.”
Like somewhat quieter versions of countryman Jimmy Barnes, both men’s Scottish accents are interspersed with the occasional Australian inflection. McCulloch at the time was running Home Nightclub in Sydney’s Cockle Bay Wharf.
“I told Ian, ‘We’ve got some excess capacity on the roof, you can go and have an office up there and see if you can make any sense of this or if we can develop a plan to move it forward’.”
Having an office above a nightclub was not particularly troublesome, Gardiner adds, although coming to work the morning after a public holiday could be tricky if there were people downstairs who still wanted to party.
Although the technology was sound, it only ran on Microsoft Windows systems with Internet Explorer, which limited its appeal, Gardiner says. It also didn’t fit in well with the way people wanted to use it.
“While people liked the notion of video communications, the reality of pressing ‘record’ and having a camera fire up and record them without any ability to edit or make sure they looked good, the market wasn’t really there,” he says.
This was set to change, with unedited and unflattering footage becoming a vital component of YouTube’s success. But it was a harder sell to corporate customers in 2002.
Survival instincts
Looking back with perfect hindsight, Gardiner can count the ways Viocorp’s success was a triumph of optimism: starting a technology company in the shadow of the dot-com crash; betting on bandwidth-hungry online video while relying on Australia’s less-than-world-class broadband infrastructure and at a time when the majority of internet users were still on dial-up connections; and keeping the business going through two years of writing cheques a lot more often than cashing them.
“We had a few customers, the really out there ones who used it, but it was really small beer stuff,” says Gardiner. “I know there were a few moments [where we thought, ‘This is just too hard’.
“The company was bleeding maybe $20–30,000 a month. More than anything, it was an opportunity cost for both of us. I could have earned more doing something else and Ron could have paid off his house.”
Two things kept the entrepreneurs from giving up: faith in the concept and the positive reactions of customers.
“We knew the video and internet space was going to make a lot of sense to a lot of people at some stage, but we started well before YouTube,” says McCulloch. “We tried to hang in long enough to realise where we fitted in. And every time Ian showed these things to people, they got all excited and said, ‘That’s great!’ But it was a long trudge from there to commercialisation.”
Paradigm shifts
The enthusiastic reaction from potential clients led the business partners to make the first of two major shifts in the company’s business model. In 2004, Viocorp became a full-service webcasting company, helping its clients produce video clips and publish them online.
“We took on that positive response and said to clients, ‘We know it’s difficult for you to do it yourself, so why don’t we help you?’” says Gardiner.
“We bought some cameras and employed some people and suddenly we became a full-service webcasting company, so we also took on production of the content.
“That probably kept us going for the next couple of years. We innovated within that; we added features like live broadcasts and synchronised PowerPoint delivery.”
By 2006, the firm had a range of government and corporate clients.
“Certainly when YouTube appeared, it made our lives easier,” Gardiner says. “Suddenly people understood, ‘Ah, that’s what you do’. We started saying we were like YouTube for corporates; it became our mantra. Suddenly the doors started opening.”
The second major shift happened after Gardiner started looking for a way to automate the process of encoding the online video files and packaging them for a range of devices – different computers and media formats, even mobile phones.
“I got the tech team to start looking around for some software to buy that would let us do it, but we couldn’t find it,” he says. “We decided we’d have to build it ourselves because we really needed it so we could be more efficient. The result was really good, better than we thought.
“It wasn’t long after that we had one client ask us if they could use our technology. They said, ‘We don’t want you to make the video for us, but we want your technology’. We said yes, but we had no idea how to price it. We took a stab in the
dark.”
To showcase the technology, which had few customers initially, Viocorp created an online short film festival called Nice Shorts. This was immensely successful and after six months, media and entertainment company Destra bought it out.
