Move's Big Shakeup: Is the CEO on His Way Out?

Written by Ryan Lawler

Tuesday, March 24. 2009 at 11:20 AM EDT 3 comments

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After two rounds of layoffs and a major reduction of its senior management team, sources say that Move Networks Inc. could be in search of a new CEO.

Speculation among Move-watchers started last week, when CEO John Edwards failed to make an appearance at a digital media event for which Move Networks was the lead sponsor. Speaking in his place was Move board member and Steamboat Ventures managing director Dan Beldy.

During the course of trying to figure out why the CEO hadn't appeared -- and just as importantly, why a VC had taken his place -- Contentinople has heard through multiple sources that the company is facing major upheaval in the wake of not one, but two very deep rounds of personnel cuts.

While Move confirmed that it had reduced headcount by 30 percent in February, what the company did not mention was that those cuts were actually the second round of personnel reductions in recent months. According to sources, the company had reduced headcount by about 30 percent in an earlier round of cuts held in December.

Included in those cuts were many of the company's top executives. Sources have confirmed that chief strategy officer Tom Morgan, senior vice president of sales Robert Bryson, and senior vice president of operations Doug Parrish have all been let go. (According to sources, Parrish -- who had experience as CTO at Disney -- was the company's COO before being "demoted" during the first round of cuts.)

So what's left of the Move management team? Of those that had been listed on the Move Networks leadership page, only CEO John Edwards, CTO Greg Smith, CFO Jamie Harper, and vice president of marketing David Rice remain. (Move has since updated its management page to reflect just its board of directors.)

Multiple sources close to the company expect that Move CEO John Edwards is on his way out. Edwards was rumored to have lost the CEO position during the February layoffs, but the company announced that he would gain a place on the board as executive chairman instead. Now many industry watchers think he is just keeping the CEO seat warm until the board can find a replacement.

Move's personnel shakeup has come quickly for a company that just a few months ago was seen as a fast-growing leader of the digital media industry. At its peak, Move had approximately 180 employees. Reduce that by 30 percent twice, and you're at about 90 employees -- although sources say the company's true headcount is probably closer to around 80 employees today. 

Move's cuts could affect its sales and business development relationships, particularly through partner relationships. One partner in the CDN industry, which asked not to be named, complained that the staff turnover and resulting confusion has made it difficult to win new business together.

Move's two rounds of layoffs also underscore what some are calling a lack of focus at the company. Sources say that Move last year aggressively turned up headcount to find engineering answers to some of its biggest problems, but failed to execute on those plans.

One such project involved hiring a team of engineers to enable interactive advertising natively through the Move player. Because most online video advertising is created in Adobe Flash, Move was unable to dynamically deliver ads. Publishers that used the Move player were forced to either encode advertising directly into video streams, or to open up a separate Flash player on top of the Move video to dynamically insert ads. But no advertising solution ever came to fruition, and ultimately the employees that were part of the advertising group were cut.

Move's cuts are coming just as competitors are dialing up ever-more-competitive video offerings, including new technology updates from big players such as Microsoft Corp. (Nasdaq: MSFT) and Adobe Systems Inc. (Nasdaq: ADBE)

Granted, Move still has a significant market acceptance. Users and industry observers still marvel at the technology and the quality of the stream its player produces.

But Move's special technique -- the adaptive streaming technology that shifts the bit rate delivered to the end user based on the amount of last-mile bandwidth available -- is slowly being adopted by its competitors. Both Microsoft's Silverlight and Adobe's Flash technologies are bringing to market similar capabilities.

So what's next? Some people in the industry believe that the company's VCs may be prepping it for a sale. Rather than replace the bulk of Move Networks's management team, it may be easier to simply find a buyer to take the company -- and its technology -- off their hands.

But for that to happen, Move's investors will need to find somebody to pay a significant amount of cash to make any money. Move has raised more than $67 million through three rounds of funding, and valuations aren't what they were, even just a few months ago.

The biggest factor in Move's future may be Microsoft, which is a strategic investor in Move Networks. Microsoft was long thought of as top suitor to buy the company outright. But now that Microsoft's Silverlight has a "smooth streaming" technology of its own, a purchase of Move Networks might not make as much sense.

Representatives from Move Networks did not respond to requests to comment for this article.