Online Tech Outfits Vie for TV Business

Feb 5, 2007  •  Post A Comment

The land grab is accelerating among companies whose technology puts television on the Internet.

Brightcove, which has the most funding among the Internet TV companies, this week is poised to expand its claim on the business with deals to publish Web-video content for entertainment news site TMZ and Buena Vista Television.

Under those deals, Buena Vista Television will use Brightcove to distribute online promotional content for its TV programs such as “Live With Regis and Kelly” and “Who Wants to Be a Millionaire.” TMZ, which provided the inspiration for a syndicated TV show set to debut next fall, will use Brightcove to distribute video clips on its own site, Brightcove.com, and on other destinations such as The Huffington Post.

The agreements punctuate a period of furious dealmaking by Brightcove and other online TV players, such as Veoh and ROO. Brightcove’s competitors include Narrowstep, Maven Networks and Permission TV. Companies such as Veoh Networks and Revver, which have their feet firmly in the online clip-sharing business popularized by YouTube, also have their sights on video syndication.

All of them are trying to get a piece of the Web-video market, where demand for advertising spots next to clips offers opportunities for revenue growth. “In the next 12 months, they’ll look to bolster their position and share of market,” said Damian Riordan, director of media and entertainment for investment bank HT Capital Advisors. “You’re going to continue to see a degree of consolidation and/or investment in these new companies.”

The flurry of dealmaking in the last month among the players that hawk technologies that let Web sites run video may help some of them position themselves for a sale or initial public offering down the road, he said.

Without knowing how big a market Web video will become, studios, networks and Internet companies have been hedging their bets by partnering with and investing in Internet-TV companies. Those smaller players have lately been the focus of more attention than video-sharing sites, a sector that has quieted since YouTube claimed the crown as the leading destination to find clips online. Google bought YouTube in October for $1.65 billion.

Last week, ROO snared a deal to get a 10 percent investment from News Corp.

Brightcove’s Hollywood deal-making follows a round of $59.5 million in venture funding the company raised last month, bringing its total to $82.5 million. Also, startup Move Networks, which powers online video for Fox and The CW, plans to announce this week that it has amassed $11.3 million in venture funding.

“This part of the market is characterized by a bounty of demand for the enablers,” said Will Richmond, president of broadband video research firm Broadband Directions.

Brightcove expects to use the TMZ and Buena Vista deals as springboards to snare more mainstream content providers, said company CEO Jeremy Allaire.

“One of the key things we are making a bet on as this market matures is that media owners are going to seek distribution opportunities to support their rights,” he said.

Investors also are seeking to cash in.

“I am getting requests from lots of different private equity firms backing companies with all types of online video content to help advise them on what to do next,” said Vicki Cohen, executive VP of research at consulting firm Frank N. Magid Associates.

With the Internet-TV companies offering different technologies and pursuing different business models, analysts and experts are reluctant to call winners-yet.

“Brightcove is probably the leader in terms of the number of deals with content providers it has signed and from a financial perspective is leading the charge,” Mr. Richmond said. “ROO is probably the leader in terms of distribution.”

ROO also benefits from distribution deals with News Corp., Verizon, Financial Times, TheStreet.com and Excite.

“Our customers are looking to do 20 to 100 Web sites,” said ROO CEO Rob Petty. “Our customers are not single sites.”

As the market for Web video matures, different companies are following different strategies to exploit the niches.

“There is nothing surprising about Veoh announcing deals, Metacafe trying to get itself sold, about Brightcove raising a war chest,” Veoh CEO Dmitry Shapiro said. “These are all moves that happen in a very dynamic space with a lot of opportunity at stake.”

For Brightcove, 2007 is the year to build the business and execute strategies, Mr. Allaire said. “We are going to invest to be the No. 1 independent Internet TV distribution company.” “Companies are investing in their own businesses,” he said.