Last week, rumors started circulating that Swarmcast was going out of business and had laid off all of their employees. While the company is not out of business yet, they did make some major layoffs and have changed their focus. I had a call with Christian Wilhelm over the weekend who is the chairman of the company and now runs their day-to-day operations. Christian said that at the end of December, more than 50% of the employees were let go and that about ten people still remain with the company, mostly engineers who work remotely. In addition, all of the executives are now gone, including the founder Justin Chapweske who left over a year ago, although some of the execs are still consulting to the company on a limited basis.
For anyone who followed Swarmcast, they are probably not surprised by the news. Swarmcast has been in the market since around 2002 trying to license their technology platform to enable content owners to do multi-source streaming using standard HTTP delivery. Their most well known client is MLB which has been using Swarmcast’s technology with their NexDef plugin which in 2009, allowed viewers to get HD video and features like DVR when using MLB.TV.
While Swarmcast’s Autobahn platform was unique when they launched in the market, today, multi-source HTTP streaming is the norm. Microsoft and Apple now offer this functionality and Adobe will offer support for it as well later this year. Christian said with these changes in the market, Swarmcast could not remain alive unless they changed their business model and simply had to make an “economic decision”. Instead of trying to license their platform to content owners, the company is now going to focus on trying to get their technology embedded within consumer electronic devices.
While the company will no longer have any VP roles like sales, marketing or business development, Christian said the company only needs to sign up 2-3 customers a year to stay in business. He said that Swarmcast signed two CE manufactures this month and that those two customers alone are enough revenue for the company to be profitable. While he would not say who these new customers are, he did say press releases about the deals would be announced within the next two weeks.
While the reduced head count and shift of focus to CE manufactures may allow Swarmcast to survive, I think the company is going to have a really hard time sticking around in the market with such limited resources. To date, MLB has been Swarmcast’s largest customer but last year, MLB experienced problems with their NextDef plugin which they attributed to Swarmcast’s technology. While Swarmcast denied it was a problem on their end when I interviewed them for the story last year, something Christian reinforced in our call, all that matters is whether or not MLB will use the technology for the 2010 season.
If MLB drops support, one would have to wonder if Swarmcast would be able to keep the doors open, even with the reduced headcount. Christian said MLB has a contract to use Swarmcast for the 2010 season and he does not see any reason why they would not use it, but I’ve put in a call to MLB to see if they can talk about the technology they will be using this year. I’ll update the post if they talk about it on record.
Either way, I think Swarmcast’s chances of surviving in the market as a stand-alone company are slim to none. Even if they sign up a few CE manufactures, how well can they really support them with such a small staff, no office, very few resources and no branding, marketing or exposure in the market? While the company was granted two patents for their technology, I believe their IP has simply become outdated in today’s market. I hate to say it, but I think Swarmcast’s days are numbered.