When A Digital-First Company Undergoes a Digital transformation - Vimeo
In the past three years, Vimeo has successfully transformed from a "viewing destination" platform for consumers to watch videos to a content creator platform. The market positioning has changed from an online video platform to a "software-as-a-services" company.
In 2004, Vimeo was founded with the intent of providing an advertising-free video streaming platform so that consumers do not have to be interrupted by advertisements while watching. It aimed to provide perfect services for independent creators. In the first ten years of Vimeo, with such a market positioning, it successfully won a niche market response. However, as YouTube almost monopolized the market and more streaming platforms such as Netflix and Hulu emerged, Vimeo had to change its business strategy.
In 2017, after Ajanli Sud, who formerly worked for Amazon and Time Warner (now known as Warner Media), was promoted from marketing director to chief executive officer. As Vimeo refocused its business strategy from investing in original content to offering software and tools for video creators, Sud was the best candidate for it because she managed the core creator business of the company. Once Vimeo positioned itself as the software-as-a-services company instead of the online video-sharing platform. It wanted to become collaboration tool companies like Slack, Zoom, Dropbox in the audio-visual industry.
For video creators, generally, most of the people choose YouTube as the video publishing platform, and professional producers may decide to put on the shelves on Netflix, Apple TV, and other professional entertainment platforms. In a fiercely competitive market, Vimeo has succeeded in creating a unique video-hosting platform operating path with an advertising-free platform development strategy that provides creators with appropriate tools.
At present, Vimeo's well-known large-scale corporate customers include Unilever, Tesla, Lululemon, and streaming music platform Spotify.
Turning the Tide by Changing the relation of YouTube from a competitor to a market partner
In many cases of the digital transformation journey, we can see the changing dynamics of competition and interfirm relationships as it becomes a combination of competitive and cooperative relations called "Co-opetition." [Who are my competitors in the Digital Transformation]
Vimeo's revenue mainly comes from software service subscriptions, including online tools such as video editing and sharing for producers. Among them, the lowest-priced basic service package, asking for a monthly fee of $7, provides data analysis results such as community sharing, network storage space, and video viewing; the most advanced subscription plan (Premium) costs $75 per month. The monthly fee, combined with basic services, includes unlimited live broadcast times, team video editing and collaboration tools, and live Q&A, online polls during live broadcasts.
For Vimeo subscribers, they can not only maximize the effectiveness of their videos through video editing tools but also use Vimeo's community sharing tools to post videos on YouTube, Facebook, Instagram, Twitter, LinkedIn, and on the other community platforms. Also, Vimeo's data analysis tools can be used to obtain the videos' exposure status on each platform.
"We now consider YouTube as a partner, not a competitor. What we provide is to enable video producers to create a complete and successful video distribution strategy." Vimeo CEO Sud said. In this market, Vimeo no longer acts as an endpoint for watching videos but instead transforms itself into a starting point for film exposure everywhere. Sud acknowledged that for most of the company's history, Vimeo was a "viewing destination" like YouTube.
A Bright Future for Vimeo
Since the transition, Vimeo has more than 1.2 million paying subscribers using the company's professional video tools, and the revenue in the third quarter of 2019 has officially exceeded 50 million US dollars. In the United States, Vimeo has been the most frequently visited by users as one of the audio-visual sites. Vimeo became the leader and pioneer in the $30 billion video SaaS market, with more than 150 million members globally as of January 2020.
Actively explore more opportunities in the enterprise market
Vimeo's paid subscription users are divided into two categories:
Video producers (such as documentary producers, yoga teachers, and religious groups) want to operate subscription video channels on the platform.
The large, medium and small businesses use Vimeo Production tools to create educational training and marketing type videos. The latter is the primary market that Vimeo has been actively developing recently.
Vimeo COO Courtney Sanchez said that the novel video platform strategy is already an essential part of business management, and it has begun to emphasize the social media distribution. Vimeo only needs to focus on providing practical tools and ecosystems to help these customers' videos be seen by more people.
To meet the needs of small businesses, Vimeo has facilitated video editing and short video production by acquiring Israel's Magisto, an AI-assist video editing service company. Another strategic move was that Vimeo had launched an online video stock service in 2018, which is similar to Getty Images, which provides online image stock. Vimeo's video stock market can provide enterprises with a more lavish selection of video stock. As a result, it can generate additional revenue in the area of licensing fees for Vimeo.
"Small organizations desperately need to communicate with video, but they have no idea how to do it. They're not filmmakers. They're not an agency. They're trying to grow their business," Sud said. "But in five years, every small business should have a video strategy."
A possible breakout for Vimeo to become a separate publicly-traded company
Vimeo is currently owned by the American Internet company IAC (InterActiveCorp) with a more corporate-focused structure. IAC holds 150 trademarks in more than 100 countries around the world. In the past, many independent companies had been a spin-off from IAC, and they included the travel platform Expedia, the ticket platform Ticketmaster, and a dating platform Tinder.
Since Vimeo still focuses on investing in new services, it is still not a profitable company. Nevertheless, the future is bright as its growth performance is one of the best. Sud said that the goal of IAC is to split Vimeo into an independently operating company. However, at this stage, more investors need to understand that the market differences, and how it differentiates itself from previous competitor YouTube. Now it is crucial to establish its brand image and unique position in the market. Perhaps one day, Vimeo is ready for the future of publicly listed IPOs.