Can video streaming companies work together to come up with unified video database for search engine? The video streaming companies are moving toward forming coalition to stand against the domestic major portals to give themselves a chance to regain market dominance.

It is no news that domestic major portals are constantly upgrading video streaming and search engines for multimedia files. Having lack of video streaming DB, they had to rely on subcontracts with video streaming companies to bring in cheap or cost free files.

However, with the continued growth and popularity with domestic major portals supporting their own contents, video streaming companies are raising concerns to its current position in the market. They are working with entertainment industry for the exclusives, upgrading their sites with UCC uploads, and enriching the community functionality with various other ways to better quality and increase their content stockpile.

Nevertheless, struggling to find marketable products, video streaming companies are still relying on the flourishing major portals to get their share of exposure if any. Introduction of Naver Play, Daum’s TVPot, Yahoo’s Yami and upload feature from Cyworld all gave added pressure to the commercial video streaming companies to come up with better content and strategies.

Overseas investment to Pandora TV, suggesting unified video streaming DB
In midst of these, news of Pandora TV receiving overseas investment brought pleasant shock to the related industry who are struggling with copy right legality issues and lack of marketable brand products.

Pandora TV will receive Funding ($6 MIL) with agreement reached from Venture Capital Consortium, Altos Ventures (Silicon Valley, US), which to be utilized on future ‘Mobile Pandora TV’ service and its overseas operations.
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Bottom line, Pandora TV with the received investment aims to unite all video streaming companies. To control market dominance by the major portals and to ensure safe net for them, Pandora plans to spend up to one million dollars to setup common database that can be shared by all video streaming companies.

The major portals are the biggest enemy the video streaming companies are facing today. In the event the major portals get their own video streaming platforms, with sheer number of users they have, it can really hurt the already struggling commercial video streaming companies.

Pandora TV marketing director Seung-Ik Hwang said, “funding received from the overseas investment help increase manpower and strengthening our brand image. I believe working together to establish a common database for video streaming search engine is essential to overcoming our current situation.”

Small to Medium business looking for their own survival
Simply put, Pandora TV wants to form a common DB index just for the video streaming industry even if it is not a collaborative effort. Combining the DB with upgraded search engine can mean completing a true ‘Video Streaming Portal’ for the industry.

In addition, Pandora TV will take responsibility for costs to erect new search engine and its infrastructure and operating expenses. Of course, fair amount of profit sharing without adding in their initial investment is in consideration.

If Pandora TV’s plan is right, current video streaming companies will probably become video streaming portals and bring new order in the market. It can also relieve heavy reliance just on the major portals. In truth, Naver and Daum getting most contents currently and with their administrator controlling, it’s only natural phenomenon for them getting most of user’s attention.

This effect is very sensitive issue for the internet industry itself. Users converging on major portals really does hurt small to medium internet business firms. There ought to be some kind of government policy to promote growth and safeguard such businesses but actual responsibility is not up to the government but rather in related businesses. That is why collaborative effort between the related businesses is crucial.

The major portals are also keeping close eye on the current situation. They realize the current market trend with the portals dominating the UCC video streaming (using their community based approach) the video streaming companies are cornered. Yahoo! Korea’s ‘Yami’ team director acknowledges, “Major portals are operating at an adequate level even without CP contents and what they are planning can’t be avoided but it’s not pleasant news to us.”

Smart reaction from portal and mutual understanding can be an obstacle
Pandora TV is leading the movement first but formulating unified DB won’t be that simple. Number of major video streaming companies in domestic Korea is just five, which are Pandora TV, Damoim, Mgoon, Diodeo and Gretech’s iPOP. Current rivalry and competitive nature of the business, working amongst them with deciding how to share profit could be problem for them.

The plan is doubtful. There isn’t any previously known success story with above mentioned similar cases. A good example can be found with Korean Online Newspaper Association’s unified content archive system, ‘Aqua Project’. It‘s launching this coming September but with many complications and mishaps already, with just few partners giving serious support to the project.

Moreover, with existing business arrangement with major portals, to participate in a new risky project itself is an obstacle. In most cases, profits are generated by linkage to the major portal’s search engines and to giving that up is not an easy option.

Mgoon’s CEO Byung-Hyun Woo said, “We agree with Pandora TV’s intentions but frankly, there are just too many variables in the equation. Besides this plan we should look other ways like applying RSS, Tag function and adapting latest system found in Symantec’s website.”

Better business products means less dependency to portals
As aforementioned, things like forming the unified DB, utilizing the Symantec’s website are some of the ways they need to do to dig itself out of the hole. What’s more needed is to find a way to come up with better profitable products. Ultimately, the heavy dependency to portals clearly indicates their lack of profitable products. .

‘youtube.com’ does not compete with Google or Yahoo but it is also facing the same situation with not enough lucrative ideas. According to the article from Cnet.com, the company has not officially announced next business plans in more than one year since the establishment. ‘Guba’ and others also face similar situations with little more than break even performances.

Recently in US, ‘Eefoof.com’ came out with profit sharing program. Anyone uploading the video will receive his share of the profit according to number of hits it receives. With marketable ideas like that, the video streaming industry will shift their focus from eye catching contents to promoting higher quality in UCC video that can reshape the profit margin for the video streaming industry.

On the contrary, in domestic Korea’s case, the video streaming related profitable ideas are coming-out one-step ahead of the US market. A good example is with Pandora TV’s case. In last April, it launched pilot service that offered one-minute long video that carried 15 second long advertisements. Sales figures of modest $120,000 from last April jump to $600,000 in May and in June it jump to whapping one and a half million dollars with sales forecast of $3 Mil in this month.

The rest of market also offers C2C model to deal with users on individual basis. Most popular uploads to these sites include teacher made class lectures and one teacher in particular, auctioned them off and profited $40,000 in just one week.

The video streaming businesses should keep close eye on the current market trend and continue to put out various new products. In addition, having open mind to establishing a common DB isn’t really that bad. The regular portals on the other hand should also come up with vital strategies to stay one-step above.