In These Economic Times, More Video Vendors Relying On The Channel

While the channel, defined as resellers, has always been a part of some online video vendors strategy, in the past twelve months or so, many vendors are now relying solely on resellers for the vast majority of their revenue. Whether I am talking to enterprise video vendors like IVT, Qumu or Polycom or CDNs like EdgeCast, companies in all segments of the video ecosystem are keeping their sales and marketing costs down by using resellers.

For some, this a big shift from twelve months ago where companies looked to the channel for sales, but didn't really rely on it for the bulk of their revenue each quarter. When the economy started to show signs of serious problems and the number of days it took to close contracts grew, many companies realized they needed to reduce their biggest cost, which is usually sales and marketing. For some, the channel is a great model and one that should help them get through these tough times. Solutions that are complex and require a lot of other ecosystem pieces to work, especially in the enterprise, can be sold by one vendor who helps bring all the right pieces to the table. They tend to be able to articulate to the customer who all the vendors are and how their products fit into the total solution being sold. Companies like Cisco, AT&T and others do a fairly good job of bring many smaller video vendors into the picture and helping them ramp their sales pipeline.

While this strategy is working well for some, others are not having as much success. These days it seems that just about every vendor has a "partnership" with every company in the industry. These "partnerships" are nothing more than referral deals and are not done with a true resellers mentality, which is selling and integrating multiple products to the client as one combined solution. The biggest problem with these type of deals is that most vendors are only good at selling their own offerings, and not a third party. They don't have the time or expertise to really be able to sell something they don't control and sales resources are already stretched thinner than ever. While many of these "partnerships" look good on paper and make noise with a press release, the vast majority of them never produce any revenue.

While the enterprise segment of the market really has the channel strategy locked down and the CDN market as a whole is starting to make it work, many of the other segments of the industry have yet to be able to get any tangible revenue from resellers. While this will change over time, many are only looking at resellers now as they want to simply reduce headcount and keep their costs down because of the economy. This may work in the short term as you see an immediate cost savings on the books, but unless they can ramp revenue quickly, the cost savings are short lived.

The channel strategy has always been an interesting model to watch in our industry as it tends to only lead to success for specific verticals or specific products. The good news is that more are making it work and seeing the value in terms of additional revenue. What companies do you see in the industry that are doing a good job via resellers and are showing real customers or revenue from their channel approach?