On Tuesday, Kerry Trainor stepped down as CEO of Vimeo, a company whose current market position and business future is murky despite the various big wins accumulated under Trainor’s tenure. The news came as a rippling shock to the majority of employees but for the senior team, Trainor’s exit was an imminent outcome on a fast-ticking clock. “Four years is a long time for someone to be at any company, especially a company like Vimeo. It was just time,” said one insider. Hours after the news, sources told VideoInk that the company had a bittersweet moment as the highly respected Trainor briefed the team on next steps.
“It is an emotional decision and it was not an easy one because I love Vimeo to the core,” Trainor told VideoInk in a phone interview. “The part that makes you proud is you look at the great people you work with and you can turn to them confidently and say “You guys got this.” When you can look back at a chapter of growth like this in all dimensions — the product, the team, the brand — that’s what you hope for.”
The biggest question on people’s minds — aside from who his successor will be — is where Vimeo travels from here. Over the last few years, under Trainor’s tenure, the company has seen remarkable growth in revenue, audience, and staffing to support that growth.
In 2013, it was reported that Vimeo had hit over $40 million in revenue, and according to Deadline, present projections for Vimeo revenues stand at around double that number. But according to interim-CEO Joey Levin’s letter to shareholders earlier this year, Vimeo has still operated at a “net loss” over the last couple years, though it’s a business that presents the strongest potential in the IAC portfolio, alongside Tinder. As it stands, Vimeo has two obvious pathways.
On the first path is Vimeo’s ability to double down on its existing position as a platform for more premium content and talent than UGC-competitor, YouTube. Over the last year, Vimeo has invested sub-$100 million on developing and producing its own original slate. At VidCon 2015, Vimeo touted a slate of direct-to-fan feature films and series from influencers like PJ Liguori, Wong Fu Productions and JennxPenn. Many of those, according to sources, underperformed despite Vimeo’s stable of over 280 million users. Still, Trainor notes there’s still a commitment to acquiring originals. According to one insider, discussions amongst the board have hit a standstill around whether IAC is prepared to empower Vimeo as a premium subscription streaming service akin to Hulu or Netflix.
“On programming, we don’t intend to get into the multibillion dollar war on content,” Levin noted in his letter to shareholders. “Our efforts here will be targeted…We will help some creators finance their content, and we will commission specific work that aligns with our audience based on consumption patterns, but we aren’t going to outspend the competition.”
If fact, if Vimeo stands a chance for competing with even the smaller premium subscription services, it would need to have a minimum commitment of $100 million in content acquisition budgets alone, according to a couple industry executives familiar with similar budgets. That budget would still pale in comparison to the rumored $150 million fronted by Fullscreen for its new service and the confirmed $5 billion Netflix will spend. And that’s disregarding the engineering team that Vimeo would need to develop a stronger product, and the marketing spend required to hit a meaningful tipping point on user acquisition.
Regardless, the margins around programming as well as ownership of IP for international and secondary windows, are stronger than Vimeo’s second pathway — pushing deeper into the VHX model of standing up subscription businesses and maintaining the current direct-to-fan business model.
As VideoInk has noted, subscription streaming services for indie creators are a long-tail game that need to hit massive scale in order to drive meaningful revenue, a reality that Levin remarked on in his investor note as well. In other words, Vimeo would have to be prepared to stand up thousands of subscription channels to scrape enough revenue to drive the entire business.
And, while Trainor was responsible for taking the business from 40 employees to 200 today, and over 5x growth in revenue overall and 4x in audience, sources inside the company have said that a primary issue for Vimeo’s current position in the market has been lack of commitment to either path. IAC has said it would continue to commit budget but where that budget gets directed is a point of consistent debate amongst the higher ups.
“The ambition for Vimeo remains extremely high. It’s one of the reasons why for me it’s been a tremendous run of growth,” added Trainor. “That’s because [IAC has] been willing to invest in this platform. We’ve grown the value of this company very, very significantly multiple times. Vimeo is absolutely ripe for continued investment and I’d expect nothing but that from IAC.”
Despite these two diverging roads for Vimeo’s business, the reality and perhaps hardest question to answer is — why does the world need Vimeo?
In the coming days, we’re going to start to answer that question.