Brightcove, Surviving the Recession, Seeks New Fortune in Cloud Content
Whatever happened to Brightcove? You know, the Jeremy Allaire company known for developing a Web video-hosting platform and raising lots of money in the mid-to-late 2000s?
Well, for starters, it went public in February with a $55 million IPO. That didn’t begin to match the $103 million it had raised from prominent venture investors, including Accel Partners and General Catalyst, but it did help the company get to a healthy $300 million-plus market capitalization.
Brightcove (NASDAQ: BCOV) recently crossed the Charles River, setting up new headquarters in Boston after many years in Cambridge. The move is symbolic of something bigger. The company has also crossed over from being solely focused on Internet video to working with mobile devices and different types of digital content and services, such as apps for brand marketing. Its recent moves suggest it is trying to find new ways to make money by distributing content in the cloud more broadly.
In May, the company announced its first-quarter stats, which included quarterly revenues of $19.9 million (up from $13.1 million during the same period in 2011) and new customers such as Toyota and Starwood Hotels & Resorts (the company has some 4,400 customers in total). Brightcove is not currently profitable, but it flirted with profitability in recent years—2009 in particular—before investing more heavily in international growth and product development.
At the highest level, Brightcove’s vision is “to publish and distribute the world’s digital media,” says Jeff Whatcott, the firm’s chief marketing officer. “We believe in the power of the cloud, and we believe that content belongs in the cloud.”
That might sound a little nebulous, but let’s back up to understand the context. Brightcove started in 2004, led by Allaire, a tech entrepreneur and investor best known for helping create the Flash video format at Macromedia (now part of Adobe). Whatcott, another Macromedia alum, joined the firm in late 2008 after a restructuring that he says got Brightcove “properly set up for success.” As Whatcott explains, “The whole world was battening down the hatches. We pared back on some initiatives we had experimented with, focused in on the core, and made staffing changes right before I came in.”
It was a tough time for a lot of Web companies. “We continued to grow and succeed through that time frame, with more of a defensive posture, which I think was prudent at the time,” Whatcott says. “During the financial crisis, we did have some customers that went out of business. But to offset that, the general trend of video, which was our only business at that time, continued to be strong through the crisis.” Indeed, some big newspapers and media companies like the New York Times and Washington Post (noted Brightcove partners) upped their investment in video content, which seemed to help Brightcove’s prospects.
Now things are getting more complicated for the business—but that also means there could be more opportunities. Late last year, Brightcove rolled out its second major product line, called App Cloud. This is a cloud-based software platform for customers to develop, deploy, and manage apps for smartphones and tablets. These are not necessarily video-based apps; the software is designed broadly for digital media and content apps. So Brightcove now has some overlap with Urban Airship and Appcelerator—a couple of West Coast startups we have followed in the past—as well as a slew of mobile app development platforms. One question is whether any of these approaches can really make much money.
Whatcott emphasizes that managing digital media in the cloud makes it “easier to distribute, monetize, analyze and measure, share, and protect, and easier to personalize content into the right hands.” Brightcove’s DNA is in video tech (and it made the leap from Flash to other formats), but its expertise should also apply to other types of content. “We want to provide cloud content services,” Whatcott says, and do it “very cost effectively.”
So where’s the money in all this? Brand marketing, perhaps. A luxury clothing brand, for example, could use Brightcove’s app platform to build relationships with its existing customers, through things like sending push notifications (if there’s a special event or sale going on), running a location-based ad campaign, or enabling in-store purchases via mobile phones. Or, a TV show could push out an app for fans that has exclusive content or features, say.
That brings up an ongoing debate over the role of the Web versus apps for digital content. Whatcott has some thoughts on that too. “To a large degree it is a moot debate,” he says. “It’s not either/or, it’s both.” A brand or TV show is not going to use a downloadable app to reach new customers or fans, he says. It will use its website—perhaps a mobile-optimized website—to draw in new people. “That’s what the Web was built for, serendipitous discovery,” he says. “The Web will always be supreme there. But once you’ve made your first purchase with a brand, I think that’s an appropriate time for the brand to say, ‘We have an app.’”
Where Brightcove is looking to grow, then, is in helping companies manage various kinds of content for a variety of purposes. “Lots of different content can be managed in the cloud. There are lots of different ways to create content experiences. People tend to think about Brightcove as the video company, but we’ve evolved way beyond that,” says Whatcott. “A new category of software is being established—cloud content services. That’s the opportunity we see ourselves attacking.”
As for the company’s immediate future, he says, “customers are growing and revenue is growing.”