Modavox, Inc. (OTCBB: MDVX), together with its subsidiaries, engages in the production and distribution of audio visual technology products over the Internet in the United States. The company provides programming to various channels through its VoiceAmerica Network and World Talk Radio Network. It also offers BoomBox Radio Platform, a solution for Internet radio broadcast production, distribution, and advertising delivery that allows organizations to create, manage, and monetize Internet Radio content; and BoomBox Video, which is a solution for Internet television broadcast production, distribution, and advertising delivery that enables organizations to create, manage, and monetize Internet Television content. The company was founded in 1999 and is based in Phoenix, Arizona.
Modavox develops and licenses interactive broadcasting technology products that enable customers to create, control, and produce revenue from internet delivered content. The company's technology product line provides exclusive Internet TV & Radio, Enterprise, and Advertising applications for customers Worldwide. Modavox markets its products to content providers and advertisers seeking better returns on ads.
Modavox has developed interactive broadcasting platforms and e-portals for clients including Walt Disney Co.'s ABC Disney Inc., Apollo Group's University of Phoenix Inc., Johnson & Johnson, Genentech, IBM, Motorola, Allergan (AGN), Merrill Lynch (MER), Hollister Inc., St. Regis, Four Seasons Hotels, Sudler & Hennessey, NAACP, Arizona State University, University of Arizona, Georgetown University, State of Arizona, State of New Mexico,The Arizona Republic, The Detroit Free Press, Village Voice and the New York Times.
Modavox corporate headquarters are located in Phoenix, Arizona. It operates production facilities with commercial satellite, redundant Internet content delivery network (CDN) connectivity and production studios in production facilities in San Diego, California, Las Vegas, Nevada and Phoenix as well as a technology development center located at the University of Arizona Science & Technology Park in Tucson, Arizona.
Modavox's product lines are provided through two operational divisions: (1) Modavox Network and (2) Modavox Interactive Agency.
Modavox has several products within it's Network Operation:
The Interactive Division is broken up into three sub-divisions:
Software as a Service or ("SAAS") is a business model of software deployment where an application is licensed for use as a service provided to customers on demand. Modavox licenses its technology products to customers and generates both upfront and recurring revenues for services rendered. At the initial point of sale, Modavox is compensated for the development of branded technology products including its Interactive Communications, e-Learning and Video Advertising platforms for a broad range of customers including news media outlets, pop stars, celebrities, bands, internet icons and small business entrepreneurs. Additionally, customers pay licensing and hosting fees to Modavox on a monthly or annually basis.
According to an IDC report titled "U.S. Software On-Demand Delivery Model 2005-2009 Forecast", SaaS customers customers are becoming increasing comfortable with the on-demand delivery model. The report indicates that "the cost-savings benefits surrounding software delivered on-demand have resonated with the marketplace and customers are now looking at on-demand delivery of software to help increase employee productivity and efficiency within customer organizations." As many as 73% of large companies say they have adopted or plan to adopt SaaS solutions in the next 18 months  and the convergence of entrepreneurship and internet technologies has Modavox marketing its products to a broad range of customers using a differentiated marketing segmentation strategy. Analyst firm Gartner predicted that by 2011, 25 percent of new business software will be delivered by SaaS.YouTube, who streamed 6.4 billion videos to over 100 million U.S. viewers in the month of January 2009. The most common way viewers find a video (about 45.13% of total views) is direct navigation to a video site (i.e. going to YouTube and running a search or clicking around the featured or related videos).
The most popular online video of all time is Evolution of Dance, which has received over 115 million YouTube views. Online videos can have a plethora of uses such as NBA star Chris Bosh campaigning for NBA All-Star votes on YouTube to Ron Paul's grassroots campaign to become the President of the United States.. Overall, 62% of online video viewers say that their favorite videos are those that are “professionally produced,” while 19% of online video viewers express a preference for content “produced by amateurs.” Young adults (those ages 18-29) with internet access are also among the most voracious video viewers. Three in four wired young adults (76%) report online consumption of video, compared with 57% of internet users between ages 30-49. Less than half (46%) of internet users ages 50-64 watch or download video and just 39% of those age 65 and older do so. . Below are some statistical findings from Pew Internet about the audience for online video:
The growth of internet videos has a direct correlation with the sales revenues of technology platform providers such as Modavox. Especially since 62% of online video viewers say that their favorite videos are those that are "professionally produced", a growing number of online marketers will either seek to retain full-time video producers or outsource the work to SaaS providers including Modavox. Customers most likely to retain SaaS providers for online video platform solutions are the video content providers that seek to generate revenues from their online videos.
Brazil, Russia, India, and China will experience some of the highest growth rates among global internet users. By 2011, China will overtake the U.S. in number of regular online users to become the leading online population, with Asians making up about 42 percent of the world's population with regular Internet access. The rapid growth of internet users in BRIC nations will contribute to a global online population of 1.5 billion people by 2011. In its "Worldwide Online Population Forecast, 2006 to 2011" Research Report, JupiterResearch anticipates 22% of Earth's population will surf the internet regularly by 2011. Internet adoption has "matured," and its adoption pace has slowed, in more developed countries including the United States, Canada, Japan and much of Western Europe and as the online population of North America and other developed nations grows by about 3 percent, China should reach an online penetration rate of 17 percent by 2011 and India should hit 7 percent during the same time period. This growth is directly related to infrastructure development and increased consumer purchasing power.
Brazil "with its soaring economy," is predicted by JupiterResearch to experience a 9 percent compound annual growth rate, the fastest in Latin America, but China and India are likely to do the most to boost the world's online penetration in the near future. Western European nations including Russia are also expected to experience annual growth rates well above those experienced in North America. and the chart (right) highlights the internet's penetration rate among developed and developing nations.
|Country||Total Unique Visitors||% Total Online Population|
Modavox, acting as a Software as a Service ("SaaS") company, enables the delivery of Business Process Outsourcing services since it's technology platforms require on-going hosting, maintenance and development. Business process outsourcing or ("BPO") is a form of outsourcing that involves the contracting of the operations and responsibilities of specific processes to a third-party service provider. One of the most important advantages of BPO is the way in which it helps to increase a company’s flexibility. In regards to Modavox, its clients increase the flexibility of marketing online using videos without the need for additional staffing. This helps a company becoming more flexible by transforming fixed into variable costs. Another way in which BPO contributes to a company’s flexibility is that a company is able to focus on its core competencies, without being burdened by the demands of bureaucratic dictate. Key employees are released from performing non-core or administrative processes and can invest more time and energy in building the firm’s core businesses and may help a company create a competitive edge. The global BPO market is estimated to be worth $122 - $154 billion and is expected to grow by 35% by 2010, lead by BPO firms in India. Among the reasons why companies pursue BPO is the ability to migrate to new technology platforms. Other reasons include the ability to focus on core competencies, building world-class processes and gaining technical expertise.
Popularized by the best seller The 4-Hour Workweek, more people are realizing that they can get their work done by someone else as a small business or even as a solo entrepreneur. According to statistics published by the US Small Business Administration, 56% of US small businesses with 100 employees or less, have fewer than 5 employees. Driven by the economy and the need to watch expenses, more businesses will opt for contracting relationships and hold off hiring new employees as long as possible. And as discussed above, small businesses are pushing the envelope on what business processes can be outsourced.
The International Association of Outsourcing Professionals (IAOP) has released a report predicting the top five outsourcing trends for 2009. As the global economy continues to sink into a recession, companies worldwide will choose to stick closer to home when picking outsourcing partners. IAOP, the leading international organization for outsourcing professionals, also predicts firms will demand higher levels of savings, expertise, certification, and efficiency. The top 5 trends include:
Consumers have demonstrated a willingness to watch online video advertisements. While there are some consumers that refuse to pay for their media content with either their money or attention to ads, these consumers are a minority. In reality, most people understand that someone has to pay for media content and have shown a willingness to pay in the form of watching online video advertisements. Since internet video advertisements are more intrusive than in-banner ads, there is a potential for backlash if the video ad is perceived to be annoying or too long.
According to a research report by MarketingSherpa, putting video on websites has been a huge success. In fact, online video marketing has been touted as one of the most effective methods of interactive marketing and is expected to continue its momentum despite the current economic climate and recession. Whereas traditional TV advertising has relied on per-show and DMA targeting, internet video marketing can tailor advertising delivery on a per-user basis, according to the interests, viewing habits, demographics, time and / or location of every individual viewer. Internet video delivery also allows insertion parameters to be adjusted and optimized to maximize performance on the fly.
Some of the highest growth, and most highly valued advertising inventory being generated by online media is online video advertising, which frequently is packaged as part of so-called multi-platform deals by TV networks who sell TV and online video impressions as part of integrated buys. According to a recent survey of its online video publishers conducted by LiveRail in December 2008, average CPM values appear to be rising, with publishers reporting an average payment rate of $16.40 per thousand in-stream impressions. PermissionTV also conducted a survey of advertisers to gauge the tactics that U.S. marketers plan to focus on in 2009 that found evidence that 66.8% of marketers suggest that video would be their among their priorities for 2009 versus 22.8% for banner advertising.
Simply put, the monetization of internet videos is on the rise. Content providers including Vloggers, YouTube, and networks such as ABC, NBC and CBS are seeking to generate revenues by embedding internet video advertisements into existing videos. Q4 2008 has been a surprisingly successful period for online video advertising, despite the increasingly difficult economic climate. With ad spending overall showing clear pressures, online video has proven to be relatively resilient. 
For the nine months ended November 30, 2008 revenues were $2,565,156 compared to $2,531,779 for the nine months ending November 30, 2007. Revenues for the nine months ended November 30, 2008 included $532,794 from the Interactive Media Division and $1,473,415 from the Broadcast Media Division, and deferred revenue in the amount of $558,947 from the Interactive Media Division. This is comparable to $603,414 from the Interactive Media Division and $1,928,365 from the Broadcast Media Division for the nine months ended November 30, 2007. The Broadcast Media Division revenues in 2008 included $114,022 from World Talk Radio which was acquired on March 3, 2007 and $45,170 from Avalar which was acquired on May 15, 2008. Revenues from the Interactive Media Division in 2007 included an aggregate of $114,809 from hosting services and $417,985 from other services compared to $301,477 from monthly hosting services in 2007.