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Vimeo CEO Anjali Sud on Why They Gave Up Trying to Imitate Netflix’s SVOD Model

Less than a year ago, Barry Diller and his senior team at IAC still believed they could successfully launch a version of Netflix for indie programming. The idea: to springboard a subscription-video package off the company’s Vimeo service, which attracts some 240 million viewers each month and has been pumping out internet video since 2004.

But the company suddenly pulled the plug on the venture in June after coming to the realization that building anything close to a Netflix model wouldn’t come cheap.

In fact, Vimeo’s foray into subscription video would have been cost-prohibitive by thrusting it into competition with rivals that have much deeper pockets, explains newly appointed CEO Anjali Sud — who previously ran the company’s creator business unit — in an exclusive interview with Variety, her first since being named top exec by IAC chief Joey Levin in July.

“When we set out to do [subscription video-on-demand] several years ago, it was a little bit different — at the time, you could spend millions on a compelling service that was going to solve a problem for consumers,” Sud says. “And now, with not just Amazon, HBO, Hulu and Netflix but also Facebook and Apple and others [buying premium content], those stakes have gone from millions to billions.”

Now that Vimeo has abandoned its SVOD ambitions, the company is returning full bore to its roots, with its sole mission being that of empowering creators to produce, distribute and make money from their videos. The client roster also includes media companies: Vimeo recently inked a deal with Lionsgate to help power two of the studio’s over-the-top services, Kevin Hart’s Laugh Out Loud and Tribeca Shortlist.

The shift in strategy has let Vimeo redeploy the product and engineering personnel who had been working on the subscription service to other initiatives, Sud says.

Those initiatives include the launch of a premium live-streaming video service by the end of 2017, which by far has been the No. 1-requested feature from its user base. “We are not building a Facebook Live or YouTube Live,” Sud says. “This is a professional-level live-streaming service for anyone who’s hosting professional events.”

Vimeo is assembling a group called Creator Labs, an internal R&D incubator focused on emerging storytelling formats like augmented and virtual reality. In addition, the company is developing mobile-centric video publishing tools and planning to expand in international markets with localized services (more than 50% of Vimeo creators live outside the U.S.).

And it’s aiming to build a complete end-to-end video workflow system, starting from an initial idea through collaboration and editing to one-click publishing to social media.

“Really, in the last couple of years, we haven’t been able to fully focus on executing toward creators, so that’s what we’ll be doing,” says Sud, who before joining Vimeo in 2014 worked at Amazon and on Time Warner’s M&A team.

The financial impact of pulling the SVOD plug has been minimal, according to Sud, affecting only a few of Vimeo’s nearly 250 employees.

Among those who were let go was Alana Mayo, former vice president of production at Paramount Pictures, whom Vimeo had recruited to head original development. Vimeo hadn’t gotten much further than optioning some scripts; those projects are reverting back to the creators who pitched them. “We were planning in the next 12 to 18 months to start to incur significant costs around content,” Sud says. “That is no longer happening.”

The new CEO sees Vimeo’s sweet spot as supplying the tools and tech for creators in the middle of the market who need a more full-featured offering than YouTube’s and Facebook’s mass-market platforms, and a more affordable solution than the high-end hosting and streaming services of companies like Ooyala or Disney-owned BAMTech.

Vimeo pegs the addressable market for video-creator services at nearly $10 billion worldwide, although the company generates just a sliver of that, with an annual revenue run rate of around $80 million.

Besides the sheer cost of acquiring content, Vimeo’s launch of an SVOD service would have presented other business issues. For example, it would have driven the company to try to retain viewers on its service — in conflict with its creators’ desires to distribute their content anywhere. “Now,” Sud says, “I think we just have the clarity of focus.”

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