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Tough Road for Online Video Vendors

Online video consumption is exploding. But for technology vendors jockeying to help media companies distribute online video, it’s a brutal market right now.

Sending digital video requires many steps, including making sure the video runs on multiple software and hardware systems, tagging the video so it can be searched, inserting ads and more.

Businesses like Verizon and Ericsson have jumped into the market to help TV networks and pay-TV providers, joining existing providers like Brightcove and Comcast’s ThePlatform. But the industry is beset by challenges, including keeping up with constantly evolving technology, a lack of standards and low margins, industry executives say.

Media executives, for their part, express frustration with the technology choices they’re being offered, complaining that few companies, if any, offer what they need to serve a fast-expanding market for online video.

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With other parts of the digital platform like encoding and distribution also likely to be commoditized, companies will focus more attention on new areas like analytics, predicts Mr. Karcher.

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For vendors, working with big media companies can mean tight margins, said one industry executive, noting that big companies aren’t willing to pay based on number of gigabytes consumed.