Brightcove’s $1B Revenue Milestone

Brightcove, the leading online video platform (OVP), is on track to surpass a $100M in annual revenue in 2013, and record its first profit ever. Based on the share price as of 12/31/13, it’s market cap is $406M. They also have a decent balance sheet, with $21M in working capital (current assets – current liabilities), as of 9/30/13.

The Milestone
David Mendels, CEO of Brightcove, has another milestone in mind, $1B in annual revenue. For many smaller public tech companies, the $1B in annual revenue is the magic number and milestone to strive for. That leads to the question, is the $1B in annual revenue possible for Brightcove?

Competition
First, anything is possible in the tech world. But looking deeper into the OVP industry, it’s going to be extremely challenging. First of all, there is the competition at the OVP level: Kaltura, Ooyala, ThePlatform, open source CMS, Amazon, and a few others. Next, Brightcove must compete against the niche players, that offer encoding, video player, storage, & CDN services. Most niche players offer their products very inexpensively.

JW Player, Flow Player, and VLC Media Player offer their products for free or almost free. On the storage component, Brightcove must compete against Amazon S3, the low cost leader. For encoding, there is encoding.com, open source FFmpeg, and Amazon. For content delivery, even though it has partnered with Akamai, it must compete against CDNs that are going direct to Brightcove’s customers.

Where is Brightcove going to find this extra $900M in revenue over the next several years? One thing is for sure, it’s going to need to dip into its’ working capital, and acquire some companies, to further broaden its product offering. It might even need to take on a couple of risky projects, that lie outside it’s core OVP offering, that have the potential for big returns. It’s going to be interesting to see how they play ball in the coming year.