Why is Brightcove Struggling, Part 2

Summarizing the previous post, the OVP market in which Brightcove operates within is extremely competitive and small. In addition, the OVP market is fragmenting into smaller, more specialized platforms that offer a set of services catering to the needs of specific media verticals. The OVP approach to be all to everyone is fading away. What are Brightcove options for getting out of the slump? The answer is easy, Brightcove must take drastic measures to improve their situation.

 Recent Wins for 2014
  • TVN in Poland, a leading TV Broadcaster
  • Michael Hill, a Luxurious Retail Chain based in Australia
  • Le Figaro, based in France is using BC to power their mobile version of the news channel
  • Azubu, a premium eSports streaming network
  • Tribeca Film Festival,  a major film festival that takes place from April 16 – 27
 Quick Brightcove Facts
  • Q1 2014 Earnings: Annual revenue reached $31.1M
  • Expected revenue for 2014 is $126M to $130M
  • 6300 clients including many of the largest media companies
  • Publishes 919 million streams to 100k websites that reach 230M unique viewers
What is Brightcove

Let’s start off by breaking down Brightcove into its components. The Brightcove platform is comprised of the following pieces and functions: storage, compute, transcoding, video player, video delivery via CDN, and software that handles video upload, security, catalog management, reporting and analytics. Transcoding requires massive amounts of computing resources and storage, in order to store the various bitrates of the content. In addition, content delivery is another big expense for the Brightcove platform. If I had to guess, content delivery is one of the biggest expenses they deal with monthly. How much bandwidth is Brightcove pushing monthly? If I was to guess it would be in the ball park of 15PB – 25PB per month.

Brightcove’s Options

Overall, Brightcove seems to be growing satisfactorily. However, its stock price is down quite a bit, and they have a ways to go before they reach the $250M annual revenue milestone set by the CEO. There are two options available to Brightcove, get acquired or do the acquiring. The companies in the best position to do the acquiring are Google, IBM and Rackspace. Why Google? Google and Amazon are at war competing fiercely in the cloud compute, cloud storage and big data sectors. Google needs Brightcove to level the playing field. On top of that, a Google acquisition results in a net of 6,000 media customers, with some of the biggest names in the media industry. IBM and Rackspace need Brightcove for the same reason that Google does.

 Who Should Brightcove Acquire

If Brightcove wants to reach the $250M annual revenue milestone in 2-3 years, they will have to do some acquisitions. Growing the business organically over the next few years is not feasible, as it will take too long, and is too risky with Kaltura and Ooyala on Brightcoves heels. Brightcove needs to acquire the following three companies: MaxCDN or Cachefly, Signiant and MediaSilo.

Whether Brightcove agrees or not, it’s in the CDN business. A CDN in the Brightcove portfolio helps reduce their CDN cost. In addition, a CDN enables them to draw closer to the eyeballs, or the last mile, helping them to get to the proverbial end-to-end taunted by lots of companies. If Brightcove acquires a CDN, it needs to let it operates on its own as a separate division, and just use the CDN as part of its infrastructure and offering. I would recommended Fastly, but Fastly is too big and too expensive now. Fastly is a good fit for Apple.

Next, Brightcove should acquire Signiant. Why? Because Signiant transforms Brightcove from a Business-to-Consumer OVP Platform, to a multi-platform offering B2C and B2B media exchange. The B2B media exchange platform is the best solution for professional filmmakers, who must edit content before it becomes a final product. As of today, Brightcove only deals with finished product.

Finally, Brightcove must acquire MediaSilo, one of the leaders and innovators in the B2B Media Exchange space. MediaSilo adds many services to the Brightcove’s platform that are missing, but required by filmmakers. These services include editing in the cloud, metadata management, creating proxies (copies) of mezzanines files in the cloud, collaboration tools, and more.

With these three acquisitions, Brightcove is able to ingest content in the form of finished product for B2C delivery, or work in the B2B space where they can ingest dailies content from the time it leaves the camera, where it can be edited in the cloud, and exchanged between a private network of video editors who touch up the work-in-process videos.In the film industry, B2B media exchange enables editors to work on the same video files, regardless of distance, to do editing work such as coloring on the snapshots of film.

In conclusion, if Brightcove acquires these companies, they will become one of the few media platform that handles video end-to-end in the B2C and B2B industry. Now, that’s the kind of product that will help Brightcove reach $500M in a few short years. Why is Brightcove Struggling, Part 2