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How a designer’s side hustle became the backbone of online video

Videos powered by JW Player are watched by more than 1 billion people a month. With $100 million in new funding, the company now wants to double down on its data business.

A number of TV screens

In 2013, JW Player built out a video platform that included hosting, analytics and more.

Photo: Sean Gallup/Getty Images

Viacom. Univision. Fox. Business Insider. World Wrestling Entertainment. Major broadcasters in Europe, Latin America and Asia. Anytime someone watches a video on the internet that isn't being served up by YouTube, Netflix or Disney, chances are it's powered by JW Player.

More than a billion people access JW Player videos from over 2.7 billion devices every month, according to the company, which just raised a new $100 million round of funding to further accelerate its growth. The total amount of funding the company has raised to date is around $150 million.

However, JW Player didn't start out with a careful marketing plan and an illustrious round of funders. Instead, the story of JW Player is that of a quirky hobby-turned-side hustle that almost accidentally became a major backbone of the online video economy.

A transcontinental partnership, and YouTube's first video player

Dave Otten and his business partner Brian Rifkin had a plan. They were going to pack their bags, move from New York to Silicon Valley and launch an online video ad network. Back in 2007, that seemed like a good idea: Google had just acquired YouTube for $1.65 billion the year prior, and online video was starting to take off.

But when Rifkin and Otten started to do their research on the nascent space, they noticed something curious. Many of the websites that had begun streaming videos were using the same piece of software: a simple Flash player from a lone developer in Eindhoven. "It was a freely available piece of code that you could download and post on your own servers," Otten recalled during a recent conversation with Protocol.

The player was developed by Jeroen Wijering, a designer fresh out of school who was using his personal blog to publish a bunch of quirky projects, including an animation of crawling bugs, a wallpaper meant to keep people from loitering in public spaces, and Flash MP3 and video player scripts. Non-commercial use of his Flash players was free; commercial users were asked to pay a one-time fee of $15.

In 2005, Wijering was making about $400 a month with these licenses. By 2007, the number of licensees had grown to nearly 5,000. Among the early users was YouTube, which later went on to switch to its own Flash player. Blip, a then-popular YouTube competitor, was using the player as well, as was Al Gore's website.

Otten and Rifkin decided they needed to talk to Wijering. "We called up [Jeroen]," he said. "We told him what we were trying to do, and he was interested. So we flew to the Netherlands the next week." After a bit of back-and-forth, the trio ultimately decided to team up. Otten and Rifkin scrapped their plans to move West and instead acquired Wijering's software, bringing him on board as a third co-founder. JW Player, bearing Wijering's initials, was born.

When being second or third pays off

As they began to hire developers and build out Wijering's original web video player software, priorities began to shift. "What we learned, getting to know the player community and Jeroen himself, was that the video player itself serves a much broader purpose than just advertising enablement," Otten said. "We begin to almost immediately deemphasize the ad side of the business."

Aside from a small round of angel funding, JW Player's business was initially bootstrapped, and became quickly profitable in a growing and very competitive market. Funded by millions in venture capital and IPO money, competitors like Brightcove and Ooyala were building dedicated end-to-end solutions for a wide range of video publishers and business models that relied on full-fledged apps to ingest and manage their video assets.

JW Player instead stayed focused on ad-supported video publishers, and preferred APIs to heavy back-end applications. "Our whole mantra in those early days was: We're not going to offer everything Brightcove offers," Otten recalled. "Maybe 80%, 90%, that's good enough for most." Otten also readily admitted that the company got lucky on timing. "Being the second mover or third mover was advantageous, because the market took a while to develop," he said.

From software licensing to SaaS to a fledgling data business

In 2013, JW Player raised its first round of institutional funding, and the company began to revamp its business model. Instead of just licensing its player to other companies, JW Player built out a video platform that included hosting, analytics and more. The company hired its own salespeople and began to sell its platform to publishers, SaaS-syle.

This video platform business has since become the biggest money-maker for the company. "We deliver many petabytes of data; 90-plus percent of our business is video platform."

And while that business has been profitable, according to Otten, the company is already looking for the next thing, which happens to be all the data generated by those billions of streams. "The video player can be a really interesting Trojan horse by which to collect all sorts of consumption insights across the network of JW Players," he said. "We see all sorts of interesting insights around how video is being consumed. Did people watch a video to the end? Is an ad rendered? Is it viewable?"

JW Player has already been using some of that data to power its own video recommendation engine for publishers. "That actually paid off in spades for us," Otten said. "We have many hundreds of customers that use it."

Now, the company wants to double down on data to help those same publishers make more money, and help them stay connected to viewers as cookies and other personal identifiers are being phased out. To accelerate this innovation, JW Player will use its $100 million round of funding from LLR partners.

"We think data is the next phase of innovation," Otten said.

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Photo: Bloomberg/Getty Images

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Photo: Kendall Hope Tucker

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