Brightcove's Hat Trick: Dollars, Distribution, and Diller

  |  November 22, 2005   |  Comments

The Internet TV player scored a distribution deal with AOL, along with a round of funding from some top portals.

Internet TV startup Brightcove picked up $16.2 million in funding from AOL, IAC/InterActiveCorp, and others; crafted a distribution deal with AOL; and added IAC's Barry Diller to its board.

The highly touted startup, founded by former Macromedia CTO Jeremy Allaire, gained a second round of funding from publishers AOL, IAC, and The Hearst Corp., and media-centric investment bank Allen & Co. Also joining the round were existing VC investors Accel Partners and General Catalyst Partners. Barry Diller, IAC's chairman and CEO, will join Brightcove's board of directors.

"The opportunities these investors bring to Brightcove, combined with the relationships we are already developing, put us in an incredible position to deliver our open Internet TV service and realize our mission to transform the media landscape by enabling video publishers to build broadband businesses that reach consumers directly through the Internet," said Allaire, Brightcove's chairman and CEO.

The company has developed a platform to allow commercial video publishers of all sizes to distribute their video content over the Internet using Flash. Smaller publishers can use a self-service interface, while larger ones can access more advanced tools used by traditional broadcasters. Publishers upload their video, categorize it with metadata tags, choose a design template, create graphic overlays with their brand or an affiliate's brand, and publish the Flash file.

The company revealed its advertising strategy earlier this month, detailing a plan by which publishers can monetize their content by either selling and serving their own ads, running ads from Brightcove's ad network, or selling their content for purchase or subscription. The Brightcove platform allows publishers to create customized video players to distribute on their own sites or on affiliate sites. Brightcove offers the production and syndication tools and handles the billing and collection for the publisher.

As a result of the content distribution agreement with AOL, the largest investor in the Series B round, video publishers using Brightcove will have the option to syndicate their video content directly to AOL.com, generating revenue from advertising and sales of their content throughout AOL's network. The companies will also market a co-branded version of the Brightcove service as the self-service platform for publishing video on AOL.com.

"We've automated a broad business distribution agreement on behalf of any producer who chooses to work with us," Allaire said. "We've created the first self-service distribution model in Internet TV. It takes a lot of the friction out of the TV syndication model."

The AOL agreement is a nonexclusive deal, so Brightcove will be able to continue exploring distribution agreements with other publishers and technology providers. The most likely candidates at this point are investors IAC and Hearst, with whom Brightcove is currently exploring "significant commercial opportunities," Allaire said.

This is AOL's second major video content announcement this month. The first was In2TV, an intramural deal with Warner Bros. to stream complete episodes of out-of-circulation shows from the '70s, '80s, and '90s. Besides creating more video inventory for AOL advertisers in the form of pre-roll and in-stream :15 and :30 clips, In2TV will create opportunities for show, channel, and promotional sponsorships, as well as banner ads on associated pages on AOL.com.

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ABOUT THE AUTHOR

Kevin Newcomb

Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.

Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.

With a combination of real-world marketing experience and years of business journalism, Kevin brings to ClickZ a unique ability to deliver news and training materials that help online marketers do their jobs better.

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