Portland Business Journal: Comcast deal could propel Elemental

Portland Business Journal: Comcast deal could propel Elemental

by Erik Siemers

Date: Monday, July 25, 2011, 2:49pm PDT

Elemental CEO Sam Blackman says a new deal with Comcast will provide a big revenue bounce.

If there’s any growth trajectory worth emulating, it might just be that of the iPad.

Since launching in April 2010, Apple Inc. has sold around 29 million of the devices, defying naysayers of the tablet computer.

Though Elemental Technologies Inc.’s numbers may not be as large, the Portland-based startup says its growth has been a mirror image of the pace of iPad sales since launching its video processing systems to the market one quarter earlier.

It’s no coincidence that one likely has something to do with the other, and that’s largely due to news much like what Elemental released earlier Monday.

Elemental said its server technology will be used by Comcast Corp.’s Xfinity cable TV division to stream on-demand video to PCs and mobile devices.

The deal — in partnership with Seattle-based white-label video publisher thePlatform for Media Inc. — is seen by CEO Sam Blackman as an even stronger market acceptance for Elemental’s technology.

“This is really big news for a company of our size,” Blackman said. “To win the number one provider in the world on their No. 1 strategic push … to be relying on Elemental for that important piece of processing is a huge validation for the company.”

Elemental charges around $26,000 for servers that allow content providers to encode and process video for broadcast to multiple technology platforms.

Comcast, Blackman said, bought “double-digits worth of servers.”

This isn’t the first major customer for Elemental. The company has around 75 customers, and Blackman said around 10 of those bought servers in double-digit volumes.

This one stands out for two reasons. First, Comcast is letting Elemental disclose the partnership publicly, something only 13 customers have allowed Elemental to do (at least without trying to win a price break in exchange.)

In doing so, Elemental gets to tell the market that an industry trendsetter like Comcast has put its product through the paces. Meanwhile, Comcast sends the message to many of its long-time technology partners that there’s a new player in the game.

“This is a way of Comcast saying, ‘Hey guys, look at this great, young company. We’re going to switch to them for this important part of our video viewing experience,’” Blackman said.

Getting back to the iPad for a moment, it’s the proliferation of such devices — and the demand for streaming video content that’s been created as a result — that is at the heart of Elemental’s growth.

The validation provided by Comcast should only spur that growth forward.

Elemental had less than $1 million in sales in 2008, stuck to the seven-digit range in 2009 and 2010, and expects to get near $10 million this year.

“Our revenue is growing at a really good velocity,” Blackman said.

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