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Video software provider Panopto is gearing up to battle the big boys, as the likes of IBM and Microsoft enter its space.
With the market for enterprise video software quickly evolving, Panopto announced the receipt of a new round of funding to the tune of $42.8 million to expand its business and compete with entrenched legacy players that have entered the market.
The video software market has seen consolidation with Workday acquiring both MediaCore and Zaption, IBM acquiring Ustream and Clearleap, Microsoft recently releasing its Stream video service and a recent eight-figure investment round announced by Kaltura. These moves have led Panopto to gird itself for the long haul. Panopto’s platform provides video content management, recording and live-streaming capabilities.
Venture capital firm Sterling Partners led the Panopto growth round, with existing investors, management and a senior credit facility underwritten by Square 1 Bank.
Eric Burns, co-founder and CEO of Panopto, said the company’s technology came out of a research project at Carnegie Mellon University (CMU) that aimed to make lecture capture affordable and scalable. That effort was successful enough at CMU that in 2007 the team spun off the technology and started a private company that became Panopto, which helped pioneer the categories of lecture capture and enterprise video content management.
Lecture capture is a subspace in the video industry that focuses on capturing presentations and knowledge delivery using video. Yet, the challenge is how to capture a classroom or live business presentation in a way that is useful but doesn’t cost very much, Burns said.
Burns said Panopto started in that space and realized very quickly that there was a much bigger opportunity than just focusing on capture technology.
“We realized the challenges that are faced by universities are the same ones that are faced by any knowledge worker that is trying to record and share presentations or any company that wants to start capturing their expertise,” he told eWEEK.
That suggested an opportunity outside education and into the enterprise space. Panopto also realized the core value of its technology was not just the ability to capture a certain type of content, but also the ability to search and distribute the content being created.
“We like to say our product is a secure video library of an organization’s own information,” Burns said. “We’ve become the corporate YouTube for private video libraries. We like to think of ourselves as part of the third wave of video technology companies.”
The first wave was streaming video on demand, such as YouTube, Vimeo and that generation of consumer video sites, Burns said. The second wave was Hulu, Netflix and all of the paid subscription premium media. And the third wave is the development of private video libraries for organizations.
As the private library space didn’t exist about five to 10 years ago, “We think of this as sort of the third wave, which is why we raised the money,” Burns said. “That is what is bringing the big, traditional vendors like Microsoft and IBM into this space.”
Panopto raised $8 million in its first two rounds of funding and built the company to 100 people worldwide with offices in Pittsburgh, London, Hong Kong and Seattle, and has 700 education customers around the world. CMU has standardized on Panopto and other customers include New York Life, GE Healthcare Digital, Yale University, Brown University and the Wharton School of Business. The company has experienced 20 percent compound quarterly growth since 2012, Burns said.
Based in Seattle, Panopto boasts not only several former Microsoft employees, including Burns, but also the software giant’s product focus. Thus, one of the key areas where the company will apply the new funding is in expanding the R&D team and continuing to make significant investment in products, Burns said. The company also will use the funds to ramp up sales capacity worldwide, invest in marketing and broaden its partnership strategy.
“We see a shakeout going on in the industry where some of the smaller players have been acquired and funded,” Burns said, noting that in addition to the industry moves cited above, business video platform VidYard snagged its own $35 million in funding in January.
“Similarly, some of the smaller players are slowing down or seeking out safer niches or simply struggling,” he added. “So we see in the future there only being a handful of players who are focused on this private video library/internal content creation/knowledge video space.”
In discusssing the company’s partnering strategy, Burns said he hopes to see Panopto everywhere. “We want you to be able to have a ‘record with Panopto’ button and Panopto appears as a core feature set of your unified communications or learning management system,” Burns said. “We want to be anywhere where it makes sense to be able to embed video—to a CMS, a social platform, an LMS.”
Meanwhile, Burns said Panopto plans to pursue additional hardware partnerships, expanding its Panopto Certified program.
“Our technology strategy is to be hardware-agnostic,” he said. “We expect to work with everyone from camera vendors to PC integrators to capture device makers.”
Panopto’s multifaceted video software platform includes a YouTube-like portal for publishing and sharing videos; a search engine that finds any word spoken or shown on-screen in videos; cloud transcoders that convert videos for optimal playback on any device; video recording, screencasting and live streaming tools; a remote recording service; online editor; analytics; and an enterprise content delivery network.