Can Brightcove define a third way ?



The announcement that Brightcove raised a further $59M at $220M post is a clear commitment of its formidable founder, Jeremy Allaire, to take this company to be a large global success. But what might success look like ?

First of all a few comments about Brightcove..

The company has always been focused on enabling the vision of letting 10,000 channels bloom, and so focused on channel creation tools, a fantastic content syndication capability, and of course ad serving into this network.  Beet.tv has a great video of Jeremy Allaire which did beg the question of whether they were trying to do too much, as echoed by Bambi.

And the product itself is really nice. Their player is just fantastic. All the functions embedded in theplayer itself, highly bandwidth efficient, great. And the quality is incredible.

For maximum buzz this funding announcement was followed by the annoucement of a video partnership with Obama. He is almost as good looking as the guy in 24, but too young. One election away in my view. But that is not the topic of the day. He does use the word “conversation a few times and speaks at you, so Jeff Pulver has decided he understands social media.  If I turn out to be a lousy venture capitalist (no comment required :-)), I will go help with the next Belgian election, can’t be that hard to do.

Whilst this not exactly breaking news, the Brightcove funding triggered a few questions or thoughts in my mind:

  • On the web, simple is best. Whilst I will be the first to recognise that YouTube is not exactly competitive to Brightcove, how do you think GC and Accel felt when YouTube steamed past them and got sold. It is a constant theme of tech and the internet that the simplest, least engineered offerings that “just work” and answer a real consumer yearning always outperform the smartest in the class. Most people I know complained fom the start that you could not find anything on YouTube, that this search paradigm was wrong for video and so on, yet look where it got them.
  • Audience, audience, audience: does the Brightcove 10,000 channels approach beat a simple deep reach brand like YouTube ?  And do YouTube’s 100,000 non pro Directors create the kind of traffic you can monetise fast, creating the cash machine you need to fill out your backend offering over time ?  Looking through the Brightcove set of channels, I am really not sure these guys are generating the kind of critical mass they need to create serious monetisation.  It was interesting to see Brightcove coming out with its own UGC offering.  the traffic is not anywhere yet, actually their biggest traffic spike seems to have come after some TC juice.
  • Ad format supply availability: VC is mostly about timing (being right in the long run is not very useful) and my key question around Brightcove is whether the reality of in-video streaming is sufficiently close that they can monetise all this stream inventory before their IRR’s head south.  In the meantime, over at YouTube, they do probably do about $3 CPM on probably about 1bn monetised page views every month, so that’s I would guess about $3M a month at the very least.  That means your partners keep a smile on their face thanks to the nice revenue share.  It may be that Brightcove negotiates a cut of the classic advertising, but a lot of their channel affiliates did not seem to be delivering any.
  • Does programming matter at all ? Call me nu skool, but I really think users are the best programmers.  That’s fundamentally the reason why I went in with a team of video nuts called DaillyMotion.

Having said all that, the $220M post-money valuation means exit target value must be at least $750M.  With YouTube behind us of course, it is easy to dismiss such numbers.  But that is still a big play.  That means the current course of action must be showing promise.  If Brightcove pulls it off it could really be the network of the future, the google of open video distribution, whilst the UGC video sites slowly lose their momentum.  Now I bet that’s got Jim Breyer excited…

technorati tags:, , ,

This entry was posted in Startups. Bookmark the permalink.

2 Responses to Can Brightcove define a third way ?

  1. TVnomics says:

    In front of an unlimited amount of videos, “programming” (selection + presentation) is key and will generate value.

    It will be the next step of video sharing platforms (if there is a next step).

    Micro-networks such as http://retrofoot.iougs.com/ (and many are poppping up) will emerge.

  2. Fred Destin says:

    Jerome, I fully agree with you on programming mattering a lot. But my underlying point was that this would not come from channels, rather from users. If channels as a concept involves little programming in the classic sense, I am with you.