Marke Andrews
Sun
Babak Maghfourian, CEO of VideoClix, provides a new way for consumers to learn about products though a simple click. Photograph by : Ward Perrin, Vancouver Sun
Back in 1999, Babak Maghfourian was watching television at his parents’ Paris apartment, when he clicked on Fashion TV.
Watching the women parade up the catwalk, Maghfourian — an expert in interactive technology and a graduate of the B.C. Institute of Technology — wondered what would happen if you created an interactive technology so a viewer could click on items in the catwalk show and get information on the model, the dress, the hat, the shoes, the camera of the ringside photographer.
Is there money to be made from such a technology?
Oh yes, there is. With an initial $50,000 investment by an ex-classmate, and another $1.1 million raised from family and friends (and, later, several more millions of dollars from venture capitalists), Maghfourian created VideoClix, an interactive video system that allows viewers to access information as they play a video on their computers.
Take a look, for example, at the James Bond GoldenEye segment on the VideoClix website at www.videoclix.com.
You can click on the actors, their clothing, the car, the car’s global positioning system, the helicopter, and find out where to buy them.
This all happens to the right of the video, which keeps playing in real time.
In another video on the site, clicking on items directs you to where to find them in stores.
Basically, you select what you want to know about, without having to sit through 30-second commercials.
“Nobody watches commercials,” says Maghfourian from his Water Street office in Vancouver. “People switch the channel on TV, and on computers people have learned to ignore banners and flashing graphics.”
In 1999, the world wasn’t ready for this technology, because there wasn’t a lot of video online. Back then, most of the software made by Maghfourian, CEO, and business partner Alex Curylo, CTO, was for educational institutions.
But the field has exploded in the last three years, with Google, Yahoo, YouTube spreading digital content to broadband and mobile devices. All of these big players have sought ways to earn income from advertising, but YouTube did a survey and found that two-thirds of viewers would watch less if they had to watch advertising pre-rolls with the videos.
The trick is to find a non-intrusive form of advertising, which is exactly what VideoClix provides: the viewer is in control of what ads he or she wants to see.
VideoClix really got off the ground when it licensed its technology to Disney, Lucasfilm, Dreamworks Interactive and Sony BMG. Apple started streaming VideoClix content on its website, which has 5.5 million viewers, and to Apple’s iTunes.
Other companies have tried similar technologies in the past, but they failed because they used proprietary technology that forced the viewer to download the software. VideoClix has caught on because it uses existing QuickTime and Flash players, so you don’t have to install additional software.
VideoClix has three ways it makes money from its service. The first is licensing its technology, selling an annual or per-project licence to new media companies and advertising firms which integrate that technology into their own content. The VideoClix technology allows licensees to see how many times their product was clicked on, how long it was looked at, and where the viewer lives. Annual licence fees range from $49 to $5,000, depending on the use of the technology.
VideoClix also gets paid on a cost-per-click (CPC) basis, which ranges from one to five cents a click.
The second money-earner is content production. VideoClix will create original content (fashion shows, trade show highlights, music videos) or “re-purposing” existing content. In the latter case, it can take an existing music video and then cite objects in the video (musical instruments, headphones, clothing, hair products). VideoClix earns initial revenue from companies that want their product included, and further revenue on a cost-per-action (CPA) basis; getting a two-to-five per cent share of sales of products in the video.
The third business unit, which VideoClix will launch in the next few weeks, is video auctioning, whereby a video owner can upload a segment to VideoClix, which tracks and lists objects in the video and then offers that list to potential advertisers to sponsor. Revenue from this would be a shared with the content owner.
“Once this third business unit is launched, we foresee that will be one of our most profitable producers,” says Maghfourian, 40. “We believe this is the right time and the right place to market a different viewing experience . . . to change the status quo.”
Microsoft estimated the online advertising business is now worth about $14 billion US, a figure that is sure to rise.
“We have to focus on what’s the most profitable channel that we can go after,” says Maghfourian, who identifies entertainment, fashion, real estate and U.S. military computer-based training systems as the most lucrative.
VideoClix has contracts with Apple and Yahoo, and is negotiating with YouTube and Google. Maghfourian says it has not yet earned back its startup capital, but thinks that will come soon enough.
© The Vancouver Sun 2007
