YouTube Challenger Vimeo’s Journey
As Vimeo debuts on Nasdaq, let’s take a look at its journey of exploring its own identity.
There’s a new $7.2 billion debut on NASDAQ. From the stables of IAC Interactive that gave us the dating mammoth Match Group, now comes Vimeo, a video service company.
In an era when videos can be anything - from ads to reels, from movies to live-streams, from concerts to seminars, it is worth asking - what does Vimeo do for videos?
Is it like YouTube? Is it like Netflix? Is it like Zoom?
Well, it has tried to be all of them. And now, it’s none. The company went from “Why do we exist?” to offering a unique “Video Software as a Service (SaaS)”.
Here’s how Vimeo charted its path from being nearly forgotten to turning eyeballs at Nasdaq.
Vimeo started way back in 2004 (the same year as YouTube). But, for most part of the company’s history, it was perceived as the sophisticated twin of YouTube.
While YouTube is free of cost for everyone, both creators and consumers, Vimeo has always asked the content creators to pay up for high quality videos. And naturally, when someone has to pay to showcase their videos, they are going to be much more serious about it. This ensured that the quality of videos that went on Vimeo were more artsy than YouTube. But, ads on YouTube made its monetization game easier and stronger. So, we all know who won this knock-out round.
Yes. Free fodder attracts more flies. While Vimeo was clocking only around 170 million unique visitors per month, YouTube had around 2 billion. (Tweet this)
Now, business is not an easy job. One needs to adapt and pivot, but not get swayed from its true purpose. And, there’s a thin line between the two. (Tweet this)
Alas, Vimeo crossed that line. In an attempt to offer monetization benefits to its content creators, it introduced something called the ‘Tip Jar’ in 2012. The viewers could pay any amount via the tip jar and Vimeo kept 15% of that revenue. The tip jar quickly took the form of Vimeo on Demand for filmmakers to design their own video player. Here, the filmmakers could rent or sell videos at their preferred prices and Vimeo was to take a cut.
Now, one thing lead to another. Soon, Vimeo started pitching its services to filmmakers as better alternatives to Netflix, Amazon and other streaming giants. And, it didn’t stop there.
Vimeo went a step ahead to announce that it would invest $10 million in producing original content. Well, how does that look against Netflix’s yearly investment of $17 billion in originals?
So, you get the point. Vimeo tried doing everything at once. And in the process, it left a void in its own identity. Now, at this very crucial juncture, when the company was moving around like a rudderless boat, it found an anchor.
Anjali Sud, the current CEO of Vimeo, who is leading Vimeo in its Nasdaq debut, joined the company as a marketing director. She drew lines on what the company was, and what it stood for. And, that made all the difference. In her words:
We actually build tools to help you put your content on Facebook and YouTube, and in your secure company portal and on your website and on your blog. And that’s actually how we are successful, and then thereby how we make money. So to me, our goal isn’t to entertain and to then monetize through entertainment. Our goal is to help any business or professional or organization, use video the same way that they use text or image as a powerful way to communicate. - The Verge
There goes a saying, “During a gold rush, sell shovels”. And, that’s what Vimeo is now doing. Communicating via videos has become more lucrative than communicating via text. (Tweet this)
But, not everyone has capabilities to support that.
A corner-side ice cream parlour wants to promote their business on Instagram, YouTube and Facebook. But, do they have the time to build a strategy and make professional videos out of it? An art-instructor wants to give live art-classes to students all across the globe. A company wants to broadcast a highly confidential webinar to its employees. How will they do it?
Vimeo solves all these problems. It has templatized solutions and built-in capabilities. And, it plans to continue investing in building a moat around its tech capabilities.
It still competes with YouTube. Imagine a person who has gathered a large base of followers. If they were to continue hosting their content on YouTube, a major chunk of their revenue will be shared with Google as ad-cuts. In such cases, the creator can now move to Vimeo, start their own OTT and build a thriving business. See how that works?
The company has also drawn stringent lines on what it does not aim to solve. In the words of Anjali Sud:
What we don’t want to do is tell a creator that the way they’re going to make money is that we are going to bring them the audience. That’s I think the key that we don’t want to do, because we just think that is a hard thing, but can we help them distribute to places where they can get audience? For sure. Can we provide them with tools so that they’re better at attracting and engaging an audience? For sure. - The Verge
Give them the shovels, let them do the digging!
The focussed approach has served the company well. It went from an annual revenue of $40 million to an annualized revenue of $356 million. In fact, the company made a cool profit of $3.3 million (three months ended 31 March 2021).
Here’s a snapshot of its performance over the last one year-
So, do you think that Vimeo is on the path to success? Or, does it need more focus and clarity in approach before it becomes the new eye candy?
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