Indianapolis Star

by Daniel Lee

In one week — Feb. 16, to be exact — Fishers-based online video startup Cantaloupe TV jumps into the software business.

The new product, called Backlight, is designed to help customers manage and enhance their use of online video.

That’s not the way it was planned when the company was created about three years ago. But as we all know, little in life goes according to plan.

And what’s true in life is true in business.

This is the story of how one startup is adapting on the fly as it fights for profitability. Cantaloupe’s experience, though, offers potential lessons for businesses of all sizes and types caught up in this nasty economic downturn.

Cantaloupe’s core product remains producing and selling what it calls online “video stories.” These are short videos, typically 2 to 4 minutes long, that clients post on their own Web sites. For instance, Cantaloupe produced a video for the Indiana Heart Hospital about its cardiac catheterization lab. (For more examples, go to http://www.Cantaloupe.tv.)

The idea is to build a business around the rapid expansion of online video; the niche is to provide professionally produced videos for organizations wanting more than just photos and text on their Web sites.

Each video story takes three to five people and at least 10 hours to produce. Cantaloupe charges about $3,000 for each video.

“We want to provide an engaging, meaningful emotional connection throughout video,” said Stacy Billanti, Cantaloupe’s president. “We see that continuing to drive our business.”

Cantaloupe planned to start off in the Indianapolis area, and then expand to Chicago, Cincinnati and other markets. The time and travel involved in sending teams to other states proved to be a challenge, especially as the economy slowed.

“It’s just harder to do than we had originally anticipated,” said Mark Hill, Cantaloupe’s chairman and a local venture-capital investor.

Cantaloupe’s revenue, which had been growing at a fast clip, fell by about 50 percent during the second half of last year, Hill said.

But around that same time, the startup came up with another idea: Develop a software service that organizations could use to help manage their use of video. It could be exporting a video to a PowerPoint presentation, posting it to a blog or sending it via e-mail or to YouTube.

Cantaloupe quickly added a few software engineers to its staff to create Backlight.

Customers will be able to access Backlight over the Web for an annual fee starting around $5,000. Hill said Backlight provides a product that is more easily scalable than the company’s video production.

However, Hill and Billanti said video production is still key to their business. Hill said in 2009 Backlight likely will provide no more than 20 percent of revenue.

A new market is emerging for companies like Cantaloupe that find the right approach, said Mike Bloxham, director of insight and research at Ball State University’s Center for Media Design.

“Online video is a pretty sexy place to be right now,” he said.

Most people may still think of online video as strange stuff on YouTube or news clips on media sites. But a business-to- business model also is emerging.

So what’s the lesson in Cantaloupe’s fight for survival? Business is about people.

“That’s why VCs and angel investors invest in people, not ideas,” Hill said. “The idea is never where you’re going to land. You need the right people who are going to morph it in the right way.”

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