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Oovoo Founder Jay Samit On Monetizing Video Chat, OTT vs Telecom, Low Bandwidth

Jay Samit, the founder of video chat service Oovoo was in India for FICCI Frames, meeting video content providers, and looking to understand the India opportunity, given the country’s growing smartphone sales. MediaNama spoke with him about Oovoo, how it monetizes, how a video chat service works in low bandwidth, OTT versus telecom operators, advertising on video chat, among other serveral things. You can listen to our podcast (and subscribe at  soundcloud.com/medianama), or read the transcript of the interview below.

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MediaNama: What does Oovoo do?
Jay Samit: Oovoo is video chat. We’re at the intersection of social and communications. We allow people across platforms – PC, Mac, Tablet, iPhone, Android, to have up to 12 friends see each other and share life in real time.Facebook are great for seeing what your friends did. Oovoo lets you live life with your friends.

MediaNama: So it’s like Google Hangout…
Jay Samit: It’s like that. We seem to have captured the imagination of the worlds youth. We have 70 million users doing a billion and a half minutes of talking and video chat a month. We’re among the top 100 apps in 120 countries, and as low cost Androids start hitting India, you’ll see voice go away, and the telcos move towards being dumb pipes and people will use text and video. We also have text. We’re among the top 5 text apps in the world.

MediaNama: Video has never been a key medium for communication. It’s been the stuff of science fiction, but most people prefer to call or text.
Jay Samit: Well, “prefer” is a matter of habit. In 1876 when Alexander Graham Bell came up with voice it was revolutionary, but we never had voice communications before that. We are visual creatures, and we’ve grown up with voice. Young people prefer text because it’s more efficient than voice, but video gives you something else – you can see how someone is doing. You can see the new baby. We have soldiers around the world witnessing the birth of their children. You can’t do that with text or voice. And you can share content. So watching the Cricket match with all your mates from college that are spread around the world. Or, instead of sending a viral video and your friend laughing, it’s more fun to share the viral video and laugh together. Or people laughing at how silly they look.

MediaNama: Maybe it’s a silly question, but do we have the networks to support this? If you look at it, even voice over LTE hasn’t yet replaced voice over mobile networks, because of issues of bandwidth and reliability of connectivity.
Jay Samit: We work very hard on the algorithms. We combine the streams. The weakest stream on a call, if that person can only handle voice, they can hear everybody, but everybody else will get to see them. We host in the cloud, unlike Skype which is peer to peer and freezes and breaks. We give you this wonderful cloud experience. A 3G network and WiFi works wonderfully well. We also have 60% less battery use than our competitors.

MediaNama: So how do you make money?
Jay Samit: Advertising. We have that captive attention – our average user spends 200 minutes a month with us. That is more than you are spending with the TV network. So, it’s a wonderful medium, since we know who they are, their age, and their habits, it’s one thing to see an ad by yourself…if we’re talking and we see the new Johnny Depp Lone Ranger trailer, we’re more likely to see it. So shared viewing of ads is more likely to be more powerful in getting a consumer response.

MediaNama: But consumers don’t want advertising.
Jay Samit: Not necessarily true. So, in the US, we didn’t go up with ads in the movies, and you say you’re paying to go to a movie theater, why are there ads? Today if there are ads and the ads are fun and engaging, young people show up early to watch them. So if the ad is tailored to you, if it’s the trailer of a movie you want to see, if it’s a song from a new singer that you like, you don’t look at it as advertising. It’s about having fun advertising and engagement, and that’s on the ad agency to make it fun. We allow people to pay and have the ad removed.

MediaNama: So how many people pay?
Jay Samit: Less than 1%. Very very small.

MediaNama: What brings you to India?
Jay Samit: We’re a top 100 app in 120 countries, and we see India poised to really explode. We have less than a million users in India. There are about 24-25 million handsets today in India that can handle it. But as low cost Androids, sub $50 androids come up, you’ll see an explosion, and we know that video communication is a strong driving need for people. In India, where you have so many people migrating from where they grew up, I see video being powerful in India. And we’re free.

MediaNama: What kind of partnerships are you seeking in India?
Jay Samit: Really getting the word out, explaining what’s different and what’s available, and finding which telcos we can help increase their marketshare.

MediaNama: But there’s a battle between telcos and OTTs, right? They want OTT’s to pay them for the services being provided to consumers for free. What does a telco get out of partnering with you?
Jay Samit: Loyalty, brand, marketshare, so they can grow their business.

MediaNama: Anything else beyond that, because I don’t see those as significant issues right now in India.
Jay Samit: Then I don’t need a partner. We’ll go straight to the people. We have a viral app, because you cannot make a video call to yourself. By definition you’re telling your friend to get the app, and so on. It’s like going back to college and being in the dorms. People stay on for hours. They may not say a word for hours.

MediaNama: You were mentioning something about content as well. How does that work?
Jay Samit: Right now, if there were two of us talking, we add a third window, and the users control what is in it. They can share a YouTube video, post their own video, watch whatever they want to watch with their friends. It’s up to the consumer. This summer we will open our API’s so that developers can develop their own applications with video in it. So they might want to start a dating site. There’s a company that’s taken our video (platform) into Poker, and you can see all the players.

MediaNama: Why would you go after the consumer market versus an enterprise market?
Jay Samit: We started 10 years ago in the enterprise market. It’s not that exciting a market. It’s not that big, and it’s now moving to the consumer market where you can make much more money reaching 70 million people, a few million people making business meetings.

MediaNama: Who has advertised with you so far?
Jay Samit: Major movie studios, Proctor & Gamble, Kraft, Kimberley Clark, car companies, all the big brands.

MediaNama: What has been the consumer reaction to being shown ads?
Jay Samit: Phenomenal. We had ET coming out from Universal Studios coming out on Home Video, and 8 million consumers interacted with the brand. They chose to interact with the brand. We’ve had millions of people change their TV station because someone pops into Oovoo and tells them a TV show is going on at that point in time.

MediaNama: How does this work? Is there an overlay, a break in the video stream?How do you deliver ads?
Jay Samit: Depending on which platform you’re on. We did this with a major star, where if you and your friend were on a call, then another person would pop up. All of a sudden, a celebrity like Howie Mandall pops up on the call. And Howie says ‘Hey, don’t want to interrupt the call, but my show is on NBC. And people enjoy that.

MediaNama: That’s intrusive.
Jay Samit: You could view it that way, or you could see it as fun. Maybe there’s a cultural difference there. No one is doing…the purpose of Oovoo isn’t about going after that business person like Skype: lets have a call at 2pm to discuss trade in Afghanistan. This is that you’re hanging out all night. For Halloween, we did this thing were a beautiful blonde girl popped into your call and she’s talking like teenagers do, and you can’t get a word in, and you stop her and tell her she’s on the wrong call. She freezes and in full CGI turns into a Zombie, crawls up the wall of her dorm, hangs from the ceiling and we go Happy Halloween. It scared the living daylights out of everybody, but it generated 3 million people who called their friends to do this to their friends. So people like that. In a version that is coming out in June, we’re adding beauty filters and video effects, so we’re making it more fun.

MediaNama: How does mobile work for you versus web?
Jay Samit: We’re about 70% mobile and growing. Mobile is just exploding.

MediaNama: How is mobile versus rest of the world?
Jay Samit: Same number: we’re around 71% US

MediaNama: What’s your target market outside the US?
Jay Samit: Global domination. (laughs) Everywhere that there are smartphones, we should be there.

MediaNama: Not “everywhere where there is bandwidth”?
Jay Samit: We’re used on the iPod Touch. We’re the number one app on iPod Touch. We’re hugely popular on WiFi. So you don’t need a cellphone bill. You could spend your whole live between school and work and never have to pay a cellphone company a penny.

MediaNama: How do you compare with Facetime?
Jay Samit: Facetime is a technology that is good if you have an iPhone and they have an iPhone. But if you don’t know what the other person has, then it’s kind of a dumb technology. We work between Android, and iPhone and PC and any browser. We’re the number one utility app on Facebook. You can just see which of your friends are on Facebook, and click on them and start an Oovoo call from within Facebook.

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