Long way up

If you miss an episode of BBC show Long Way Down and want to catch up with the adventures of Ewan McGregor and Charley Boorman as they travel from Land’s End through Africa on their motorbikes, the chances are you’ll be using technology from London start-up Streamburst. The brainchild of David Parsons and Robert Bjarnason, Streamburst is an ecommerce retailer that offers TV and films for download in multiple formats. It teams up with content owners – such as Big Earth, the production company behind Ewan and Charley’s motorcycle adventures – to establish white label stores as well as running its own download site.

So far so familiar, as video downloading is a booming market for mediatech start-ups. Where Streamburst differs is that its downloads are free from digital rights management (DRM) restrictions, using a watermark as an alternative to locking them from unapproved use. What that means is that once you download the DVD-quality file, the responsibility is on you as a consumer to stay within the copyright restrictions laid down by the publisher.

You’ve got to admire the company’s bottle. This is an area beset with vested interests for the major studios and TV producers, which have so much at stake in protecting their content from piracy. Parsons admits it’s been a hard sell to content owners, as well as the investment community, but despite early resistance, the tide is slowly turning in its favour. Many now admit that technically, DRM is failing to protect content – and once the business side takes on board this message, Parsons expects a major move towards Steamburst’s model.

“There is a shift,” he says. “At the time we launched no one was going down this route; they were all using restrictive DRM. Now they’re putting accountability into the hands of the customer.” The trend has even seen music giant EMI announce the removal of DRM restrictions on its music downloads, and video downloads from others are expected to follow. “Restrictive DRM is essentially dead. They’re coming round to our way of thinking,” says Parsons.

An internet pioneer
Prior to founding Streamburst, Parsons spent 12 years as an internet “pioneer”, developing some of the early workflow solutions for corporate websites before setting up a design agency. “I was very interested in early versions of Flash, and in looking at video content on the internet. That’s how it started to come about.”

After teaming up with Bjarnason, the two were initially looking at providing video for download to mobile phones. “There was a requirement through a client of mine to do clips to mobile phones,” says Parsons. “But it wasn’t quite the right time to be doing it. There were no flat rate download schemes for mobile content at the time so it would have cost somebody an arm and a leg to download a little clip. It got us thinking. We were seeing all these devices coming out from iPods to mobile handsets and we wanted to look at supporting them with video.”

Bjarnason had set up the first ISP in Iceland in 1993, syndicated it in Denmark a year later, then exited through a sale to an Icelandic telco in 1997, so he was familiar with the process of establishing a start-up. With Parsons’ vision and CTO Bjarnason’s practical experience, Streamburst was formed in September 2006, and Antonio Borges and Ron Fogelman joined shortly after.

From the outset, the company set out to offer three key differentiators: its anti-piracy solution; a decentralised distribution network which sees it setting up “digital vending machines” for affiliate websites; and an integrated advertising platform, providing it with an additional revenue stream. “What we realised was there was a place for legitimate DTO [download to own],” says Parsons. “We look at the pirate networks as our competitors rather than iTunes. If you look at iTunes compared to the size of pirates, the pirate sites are a lot bigger.”

 “What we are trying to do is give a better and simpler service than the pirate networks to try and reclaim a percentage of the people who have turned to casual piracy because there’s not a better legitimate solution out there.”

Keys to success
The company’s patent-pending personalisation feature includes a five-second introductory sequence at the beginning of the viewing with the customer’s name on it. It then watermarks the content, which means piracy can easily be traced back to the user. While Streamburst launched with its own watermarking feature on the audio side of the content, it’s now in the final stages of testing with watermarking on the visual side through a partnership with Dolby Cinea. Cinea had a strong reputation in the right markets from providing the watermarking for the Academy Awards and Baftas screeners, the DVDs that go out to the judges.

From the distribution perspective, the company is currently talking to one of the major UK broadcasters and a big studio in the US. At the same time, it’s trialling an ad platform with six of its partners. Streamburst has developed a self-selecting advertising platform where customers can choose to take a download from a particular advertiser – or take an ad-free download at a higher price. Advertisers bid for keywords and audience demographics, providing a variety of price points for the user. For Long Way Down, for example, the full price might be £1.35 while an advertiser sponsored version might be 50p. Streamburst hopes ultimately to set up an online auction, in a similar way to Google adwords.

Working capital
Inevitably, one of the biggest challenges for a self-funded venture like Streamburst is bringing working capital into the business. Joining the g2i programme provided the company with a better perspective on the UK investment market and gave them a well-grounded view on all aspects of developing a business. “The g2i programme was a great experience, firstly from the exposure to the various people we met through the programme but also to learn from people that have done it before.” 

Joining the g2i programme...gave them a well-grounded view on all aspects of developing a business

The g2i consortium highlighted several areas where Streamburst had not placed sufficient focus, such as intellectual property. Although the company already has three patents pending, it is now looking at filing in different territories based on the advice it received from the g2i team.

Parsons also learned the importance of making the right first impression in the investor pitch. With several practice sessions under its belt, the company was selected by the g2i team to pitch at one of its "Meet the Companies" investor events – a valuable opportunity to present in front of an audience including the likes of Katalyst Ventures, London Seed Capital, New Media Spark, Google, Oracle and Samsung.

The g2i team was also able to facilitate an introduction to the Telegraph, which featured Streamburst in a recent Business Club article giving it great exposure and raising awareness.

The company has been engaging with the investment community for the past few months, and Parsons concedes it’s been an uphill struggle, since investors are unsure about how the market is going to pan out. “It comes back to education and it’s quite a difficult thing to explain what we do,” he says. “The content owners are coming round to our point of view – they’re seeing that DRM isn’t working and I think we’ll see the same thing with the investors as well.”

In addition to the lessons learnt with g2i, Parsons says it was helpful to meet other innovative companies on the programme and to share stories. “There are a lot of creative and innovative businesses coming out of the UK at the moment, particularly in the tech space. You can really feel the atmosphere for it. It would be nice to see the intensity matched on the investment side - I think there’s still a bit of a gap at the moment but that will change.”

Another boost came in the recruitment of Rob Lackey, former CFO of Video Networks HomeChoice, who oversaw the financial side of the company’s sale to Tiscali. “It’s good to have someone with his experience come on board and nail [revenue projections] down to a very granular level.”

Top of page