Bracing for Storm, Veoh Lays Off 18 Percent

11/6/08Follow @bvbigelow

Updated Nov. 6, 2:45 PST; See below for details about Veoh

San Diego’s Veoh, one of the top Web-based providers of video and TV programming, has laid off 20 people, or 18 percent of its 110-employee payroll.

The cutbacks, reported by PaidContent, TechCrunch, and others, apparently are intended to help the startup survive hard times expected in the months ahead.

Veoh aims to deliver full-screen, high-quality video over the Web, bypassing traditional broadcasting systems and regulatory restrictions. Investor Todd Dagres of Boston’s Spark Capital talked about his interest in Veoh in September with Xconomy’s Bob Buderi.

Veoh has about 60 employees at its San Diego headquarters, mostly in engineering and product development, spokeswoman Gaude Paez told me this afternoon. Another 25 work in business development and marketing in Los Angeles, mostly to interact with Hollywood studios, TV networks and other video developers. A handful of others work in New York and Chicago.

Veoh generates revenue by selling advertising throughout the videos it offers, and through conventional online advertisings, including banner and display ads. Paez says Veoh’s video content is free to its estimated 25 to 28 million users around the world.

“It’s very hard to predict how soft the advertising market may get,” the spokeswoman said. “It just makes more sense to make the tough decisions now rather than later.”

Last month, PaidContent reported that Veoh laid off employees and shut down its Russian office in St. Petersburg. Veoh described the cutback in Russia as a strategic decision rather than a financial one, saying it wanted to move its development staff to San Diego.

Veoh CEO Steve Mitang told TechCrunch this move is financial and reflects the new economic reality. The company insists it is still strong, financially. Veoh has raised $70 million from investors that include Goldman Sachs, Spark Capital, and Time Warner Investments, including $30 million last June from Intel Capital, Adobe Systems, and several prominent private investors.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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