Web video engine Brightcove has just completed a $12 million round of funding from investors who see Web clips as tomorrow's money-maker. Now iPO rumors are swirling. One question remains though: Can Web videos turn a profit?
The new $12 million means that since 2004 Brightcove has raised $99 million in funding—an impressive figure, given the somewhat "lightweight" feel of the Net video business. And what's Brightcove done with its $0.1 billion dollars? Amassed an impressive client base, mainly—including the online versions of prestigious publications like the New York Times and Time magazine. The company, riding high on these successes and this new multi-million dollar pile of investment cash, is now expected to go public as soon as 2011.
But what's Brightcove actually going to do with this new money? Nobody knows exactly, of course, but we've got to hope that it uses it to innovate the services it offers. And the reason for this is that the question of profitability in Web video serving has been a tricky one until just recently. Hulu released some financial data recently, reporting that it had generated over $100 million in revenues, which after deducting all the business costs resulted in a genuine profit...but the media community wasn't hugely convinced of this fact, given the profit's small size. And while guesses about YouTube's revenues have reached lofty figures like $1 billion in 2011, other commenters are noting that although it's the world's biggest Web video system, and has been around for five years, it's only likely to tip into making a profit this year—2010—despite trillions of user video-views, and those hundreds of millions of dollars of revenue. Scalability, as always, is the central problem of serving video through pipes.
It does looks like Web video serving is on a tipping point in terms of profitability though, making Brightcove's timing seem excellent. And one innovative trick it may be using to leverage an advantage at this critical moment is its switch over to non-Flash HTML5 tech—something Google's only experimented with so far. This makes the videos it serves compatible with Apple's iPad, as well as future generations of browsers, ditches the proprietary (and allegedly mobile computer battery-sapping) Adobe tech, and positions Brightcove to surf down the huge wave of mobile web surfing that will result from the iPad's presumed success. It had better surf quickly though: Just the other day Google bought Episodic (a small company that promised to "monetize" Web video) to shore up YouTube's future cash-earning powers.
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