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With video projected to overtake text as the most-used web medium, tech startups are in heated battle to provide the software companies use to publish rich media online. But when it comes to capturing the biggest prizes, the fight appears to be over.
Now, startups are moving fast to reorder their priorities — away from major media publishers, toward innovative uses of video in the enterprise. Cambridge-based Brightcove Inc. has established itself as a leader with major video publishers, and this week was reported to have drawn an acquisition offer from Google Inc (Nasdaq: GOOG).
Brightcove competitor PermissionTV Inc. has made a sharp turn in its company strategy, turning away from wooing major content publishers to developing a video strategy for enterprise sales. The Waltham-based company changed its chief executive earlier this year, replacing former CEO Bob Luntz with former Lumigent Technologies CEO Clifford Pollan.
Pollan believes PermissionTV’s new approach will change the way companies do business, making video as common as email attachments or downloadable white papers. In concert with easy-to-use high-definition devices like the popular lightweight Flip camera, PermissionTV’s software will let companies use video content nimbly, qualifying sales leads online and communicating with prospects, he said.
“When there’s a paradigm shift, you’ve got to think differently to write the software correctly to enable that paradigm shift to have extraordinary value,” Pollan said. “Just showing videos over the web misses the point of the extraordinary value.”
When it comes to showing videos over the web, Cambridge-based Brightcove Inc. has developed into somewhat of an 800-pound gorilla. The company won marquee customers early, including AOL and the New York Times. On Wednesday, PBS’ MediaShift editor Mark Glaser reported via Twitter that Brightcove is in talks with Google for a $500 million to $700 million merger.
Brightcove vice president of marketing Jeff Whatcott said the company, now profitable with 170 employees and revenues between $10 million and $50 million, now sees more growth among smaller publishers, like the exact companies PermissionTV is going after. Soon, more than half the company’s revenue will come from non-ad-supported media, he said.
With the switch to a focus on smaller customers, Brightcove has had to focus more on scalable customer acquisition and retention, rather than catering to giants, Whatcott said. “It’s become more of a numbers game.”
Meanwhile, PermissionTV isn’t the only competitor to make sharp turns into new markets — or go out of business altogether. Utah-based Move Networks Inc. also replaced its CEO and changed strategy earlier this year, leaving behind the ad-hoc provisioning of Internet video to focus on a wholesale model that will package multi-channel video services.
In July, Yahoo announced it would shut the door on Maven Networks, the Massachusetts-based company that had been a leader in online video, which it had acquired for $150 million last year.
“At the start, all these companies were trying to get the business of big media companies,” said Forrester analyst Bobby Tulsiani. But that market has proven challenging, he said. “Now, they’ve expanded the base of companies that can use video.”
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