Deal Radar 2009: Nokeena

TV still rules. According to Nielsen, in 4Q08 the average US household spent more than 151 hours per month watching television compared to slightly less than three hours watching video on the Internet and about 3.75 hours watching video on a mobile phone. But as watching online media becomes more common, it seems likely that consumers will increasingly demand solutions that deliver higher quality viewing experiences. Nokeena, founded in 2008, is one company that is trying to provide such a solution. Nokeena‘s new media infrastructure solutions deliver online media in way that provides a television-like viewing experience and dramatically lowers delivery costs.

The Santa Clara-based startup was founded by Rajan Raghavan, Prabakar Sundarrajan, Kumar Narayanan and Jaspal Kohli. When the four started out, there was no solution specifically designed for handling media delivery challenges. The founders identified challenges that included scaling media delivery infrastructure, delivering a TV-like experience and interoperating with other pieces of a media ecosystem. Further, many publishers and distributors could rely on only home-grown solutions or open source software modified to work for media delivery since the proprietary hardware solutions available were large chassis and very expensive.

Today Nokeena announced its first product, Media Flow Director, a purpose-built software appliance that combines ‘deep media intelligence’ and open architecture to provide complete flexibility to providers. The solution runs on generic x86 servers so that customers can use their existing infrastructure hardware. Nokeena claims that the software can dynamically adjust the bit rate to end-users’ connectivity, hence providing a buffering-free, stutter-free TV-like experience. It has an open architecture so that media providers do not have to adopt any new systems; they can use their existing storage systems, content management systems and industry-standard players. The company stresses that content and service providers can use Nokeena’s solutions to lower their delivery costs. In fact, content publishers and distributors such as Break Media have already deployed the Nokeena Media Flow Director to support online video delivery to customers.

Nokeena estimates its total available market (TAM) to be over $1 billion by 2012. The company calculated the TAM based on media traffic being delivered on the Internet and the amount it would have charged if it had been delivered with Nokeena’s solution. The revenue model is based on delivery capacity-based licenses along with maintenance and support. Once the Flow Director is installed on a system, the customer can smoothly increase the capacity by installing a higher capacity license, with no forklift upgrades needed, up to full 10Gbps capacity on one system. Further, Nokeena is forming delivery partnerships with delivery network and cloud providers to offer content publishers the flexibility of using a delivery network instead of or in addition to their own infrastructure. The company may include support for subscription-based licensing to fit better with service provider business models.

Nokeena’s two main targeted segments are content publishers and service providers. The company plans to gain traction in three phases: first, it will target content aggregators and content delivery networks, who do the entire infrastructure themselves; second, it will concentrate on content owners, Telcos and ISPs; and finally, it will concentrate on hosting providers and enterprises. Nokeena is currently selling through a direct sales force but expects to sell through service providers and resellers within a year’s time. Further, it expects to be sold as an OEM product by large storage and infrastructure vendors within the next two years.

Nokeena raised a $8.7 million Series A from Clearstone Venture Partners and Trinity in August 2008. Since the company is in its launch phase, it could not comment on traffic or customers. However, it did say that it has multiple customers and is in early discussions with several vendors regarding OEM business models, none of which has been disclosed at this time.

It appears that the company will have a hard time distinguishing itself from CDN vendors like Akamai, and at least with its current positioning, the differentiation does not come across with any level of clarity.

Suggested Reading:
Deal Radar 2009: Kaltura
Deal Radar 2008: ON24
Sharat Sharan’s On24: Lead Generation Through WebCasting (Part 1)

This segment is a part in the series : Deal Radar 2009