In recent years, as TV companies and producers pushed to launch streaming services and deploy IP infrastructures, Zixi has been at the center of that tectonic tech change, offering end-to-end software solutions to more than 1,400 customers as well as providing 400 plus integrated partner offerings that enable reliable broadcast-quality video delivery over IP networks.
Founded in 2006, Zixi’s growth has been backed since 2011 by Schooner Capital, who helped it capitalize on a growing demand for streaming and IP technologies and expand its client list to include Amazon Prime Video, AWS Elemental Media Connect, Fox, Fubo, MLB, Net Insight, NHL, Paramount, Roku, SKY, Univision, Wurl, YouTube TV and hundreds of other media and entertainment organizations globally.
In June the company reached another important milestone in its development with the private equity group Clearhaven Partners, acquiring Zixi. As part of the deal, Zixi’s executive leadership team, which has remained in place, joined Clearhaven and also became investors.
In this Q&A, TV Tech spoke with John Wastcoat, senior vice president of strategic alliances and marketing at Zixi about the Clearhaven deal, the company’s new strategies and their view of the broadcast, streaming and media landscape.
(The following is an edited transcript.)
TV Tech: Let’s start off with Clearhaven’s investment in Zixi. What does that mean in general terms for the company’s future and its plans?
John Wastcoat: Probably the best place to start is with why we did a transaction now.
The answer to that is our existing investors have been with us for a really long time and helped us grow into the world leader that we are. It's a fund called Schooner Capital that was run by Vin Ryan, who was a major investor, CEO of Iron Mountain. What he did with the Fund for many years was use his stock from Iron Mountain to fund transactions.
But about two years ago, the Iron Mountain stock ran out. So they started to think about what other businesses in their portfolio were ready for a transaction and [at Zixi] we started to target doing a deal so that they could start investing in some other businesses.
Schooner Capital was really great. But we've now got a different partner in Clearhaven Partners. They have made a significant investment to take managing control of Zixi, along with the Zixi management team who co-invested with them.
Clearhaven is a firm with a great deal of experience and expertise in scaling software organizations. They already have some positions in other companies in the entertainment industry, like Wowza and SundaySky. So they really get it.
With them, we're going to be able to better serve our customer base and possibly look at some complementary acquisitions that will accelerate our growth.
TVT: Does their investment mark any shifts in your corporate strategies or your market focus in the future?
JW: It's not going to be a change in strategy. It will really be a matter of better executing. We can grow the engineering group to be able to innovate and possibly bring on some complementary technologies as some tuck-in investments.
They're going to help us grow, and they've also got a broad network of resources from their portfolio companies. We can all help each other share best practices. So, it's going to be about executing at higher velocity going forward.
Zixi will still be looking to continue to do a lot of business with legacy broadcasters that are moving from satellite to in the cloud. We do a lot with digital-first OTT providers—Google and Apple+ and Amazon Prime video—and with sports leagues, MLB, NHL. We want to grow those relationships, find similar ones in other geographies and continue to take advantage of our markets, which are growing by 30% a year according to an independent study we did.
TVT: Are you looking at closer ties with the companies in their portfolio in terms of integrating technologies?
JW: In terms of our sister companies, they're going to remain sister companies. Early on, Clearhaven decided that they weren't going to merge us together because we have different customer bases and different technology stacks. But we are looking at technologies that they have that could help us move more quickly and to innovate that might be beneficial to us. We're just a few weeks into this, so we're, we're just starting to explore those relationships.
TVT: Earlier this year, you reported some revenue and operations figures, with recurring revenue from the OTT growing 100% year-over-year while broadcaster customers grew 30% and Zixi’s SDVP was involved in broadcasting over 1.5 million live sporting events. So let's talk a little bit about each of those areas. In the streaming, OTT sector, there's certainly a lot of challenges facing some of the players in that, in terms of trying to attain profitability and reduce costs. Churn levels are really high. The ad market is seeing good growth but there are lot of players fighting for those ad dollars. How do you see that landscape these days and what are you doing to help your clients address some of the trends?
JW: It's going to be a high growth area for us. They do have challenges, but we do help them in a number of ways, including, to better monetize their content. They're looking at more ways to do that with ad tech, and we've got a lot of integrations into our software that help them there.
We also provide the lowest total cost of ownership. Using Zixi actually drives down their costs because of lower need for compute or egress [resources]. Then they're able to use those savings in different parts of the business, like acquiring new content.
And that's happening a lot with the OTT platforms. You see people acquiring rights for sporting events, primarily rights the legacy broadcasters had. They are using those rights to drive new sources of income for them, and that only helps us. At the same time, it means we’re helping them reduce costs. We're helping them with new features and functionality in our software to make that content more easily consumed. So we're good partners to them. We drive down costs as they battle for eyeballs.
TVT: How do you see the broadcast market and where we are with the transition from satellite IP video?
JW: It's happening slower than we would have thought or we would like, but it's still happening. Most legacy broadcasters are switching to IP, and they are developing and rolling out their own streaming services for the content. But it's slower than we would want and it's probably slower than they would want, because there is a cost saving to it.
So, it is an industry that has been slower to change but that's going to continue to grow. I think over the next couple of months going into IBC, you're going to see some announcements from us about some new and bigger customers that are finally taking a bigger bite out of that transition.
TVT: Why do you think that's gone a little slower than expected?
JW: Well, I think it goes back to fundamentally the fact that if you are a broadcast engineer, you get fired when there's a black screen. What they have has worked, even if it's more expensive or not as modern or as flexible. So, they’ve been slower to adopt change. But the economics of it are forcing their hand, and the synergies with the streaming offerings are making those changes mandatory. It's accelerating, and we're glad for it.
TVT: As you mentioned a lot of sports rights are streaming right into streaming. How do you see that trend developing?
JW: The streamers are making active moves to get those content rights, whether it's, you know, the NFL, or the NBA rights are up right now. It's highly competitive because sports is the one thing that you know people are going to watch. That’s why these guys are all focusing on it.
Netflix, for a long time, didn't want to get into the live business because they needed properties that could be applicable worldwide, but now, they're accelerating their investment and offerings. And Amazon just keeps being aggressive in trying to get all of the stuff that they can, and being smart about driving subscriber growth. Everybody's decided that it's a streaming world and the sports leagues are maximizing that right now. They're making good money repackaging those rights with more competitors that are fighting for them.
TVT: Zixi has also been reporting significant growth in the Zixi enabled network ecosystem of partners. How do you see the future of that effort?
JW: It’s very important for us, because our customers are looking for complementary technologies to their Zixi network that they can plug in and that will work in the end-to-end workflow, whether it's, you know, cameras, encoders, decoders, QA systems, playout, cloud infrastructure. They don't want to have to waste a lot of time by testing each individual piece. A common customer will know that we’ve tested these products in the partner network and that when they plug it in, it's going to work. That improves time to market, and it means that they’re going to be in good shape with whatever they've got now or that they are using to future proof themselves.
We are going to continue to emphasize that. We put a lot of effort into working with our partners. We've got dedicated resources to developing and maintaining our APIs to quickly solve problems.
There is an engineering investment from our technology partners that they have to make so we try and make it as easy technically for them to do that. And we are sharing the documentation so that our joint customers can see what they're getting and know how it works very quickly.
TVT: Sustainability and the environmental impact of streaming has become a much bigger issue in recent years. How do you see the progress in that area and what are you doing to help? Obviously there has been progress but there is still a long way to go.
JW: I think to be very blunt, organizations only care about sustainability, or can only care about sustainability when there's a cost savings associated with it. They're not going to pay extra to realize any gains.
What Zixi does is severely reduce the amount of computing resources that people have to have. If there is less required, it saves all our partner companies actual dollars and the output into the world is less. So, they can claim a cost win, and they can claim a sustainability win.
With each version of our software, we improve on that. We are drastically becoming more efficient with every version. And that is dramatically reducing the footprint that our customers have to have.
We are doing a lot of other things like having an emphasis on remote training and not having to have people on planes. But you know, the real thing that people are taking advantage of is those dramatic efficiencies that are saving people money and improving their footprint.
