Virage Then And Now

Besides an intimate understanding of video workflows and a command of the technology, one of the assets Virage invested in heavily and early was brand equity. Five years since the introduction of intelligent video, the company’s name is very well known and well regarded in the digital content management market.

Approximately 400 strong, Virage’s customer list reads like a Who’s Who of modern (especially North America-based) business. Leaders in their industries like Bear Stearns, Boeing, Compaq, The Coca Cola Company, Dow Chemical, Empire Blue Cross Blue Shield, General Electric, General Motors, Halliburton, Honeywell, KLA-Tencor, Kraft Foods, Lockheed Martin, Microsoft, Morgan Stanley, Motorola, New York Stock Exchange, Pfizer, Saint-Gobain, Schlumberger, Thomson, Toshiba, UBS Warburg, Whirlpool, and Xerox have implemented Virage technology. In the media and entertainment sector, brand names like Bloomberg, Canadian Broadcasting Corp. (CBC), CBS, CNET, CNN, ESPN, FOX Sports, Martha Stewart Living, MGM, Paramount, PBS, Reuters, Turner Broadcasting, Warner Bros., and Yahoo! are Virage customers.

Despite these customers’ purchases and its solid brand equity, the company has been operating under a dark cloud of uncertainty for over a year. Deals closed through some 125 channel partners are very small compared with direct sales (direct sales accounting for over 80% of the business). Virage’s biggest challenge has been to engineer enterprise products that could fill the demand created by its tremendous brand equity. First it tried with Virage Media Management System (VMMS) launched in 1996 and quietly put to rest a few years later. In 1999, Virage Interactive Service was created to compete with Convera’s NBA streaming contract. The service was a drain but didn’t secure the expected customer commitments. Without compelling new products to bring to customers and the market, revenues were flat at $3 to $3.2 M per quarter for the end of 2001 and the entire 2002 fiscal year. Cash strapped, Virage struggled with how to expand its revenue opportunities despite the tight economic conditions facing high technology companies since 2001. As James Crabtree, managing director of private investment firm Waller Sutton LP, puts it "specialization is, on the one hand, critical to a company’s early financial success, and on the other hand, when the same company seeks to expand its customer base to broader markets, the same specialization can be limiting."

In his current role as CMO of WebWare Corporation, a leader in the Digital Asset Management space, Montalvo remains bullish about Virage’s technologies. "WebWare has recently completed some of the most advanced media publishing projects in history. We have integrated Virage into Scripps Network, National Geographic, and Martha Stewart, among others. And we see nothing but opportunity ahead. Our pipeline is filling with some of the largest and most sophisticated video publishing and asset management systems to date," he explains.