Whether you're a first year MBA candidate, a successful hedge fund investor, a senior executive at a Fortune 500 company or a founding partner of a Sand Hill venture firm; the concept of "first mover advantage" is one of the more highly regarded competitive differentiators. The VC community, in particular, is fond of citing "first mover" when defending their portfolio companies [ironic when you consider how much "me too" investing occurs in the venture world, but that's a discussion for another time].
Yet it seems Brightcove, the hot startup du jour, is building a case against the "first mover" advantage. For the uninitiated, Brightcove was founded by Jeremy Allaire [who created Cold Fusion], and received $16.2 million in Series B funding from existing VCs [Accel and General Catalyst Partners] and media heavyweights AOL, InteractiveCorp, Heart and Allen & Company.
Brightcove has been on a roll the last few months, most recently appearing on the front page of the Wall Street Journal. The article does a decent job of profiling Allaire's journey to create Brightcove and details some of the notable "wins" the company has landed.
In the last few months Brightcove has:
- A multi-year partnership with New York Times [including About.com]
- A distribution agreement with National Lampoon
- A syndication deal with Reuters
- A major distribution agreement with AOL
When one looks at Brightcove's momentum, one has to wonder where "first mover advantage" comes into play. There are quite a few competitors [some well funded by tier 1 VCs] who have been in the IPTV market longer than Brightcove; so what's happened? Has Brightcove really built a better mousetrap?
Don Dodge offers his views:
Brightcove provides an environment for independent video producers to deliver their content directly to consumers, bypassing the traditional TV networks and channels. Video content owners are no longer beholden to the networks for distribution. Consumers can search and find the video content that interests them and build a relationship directly with the content producers. Brightcove is almost like eBay for video content, providing a market and infrastructure for producers and consumers.
The mega-popular Internet Stock Blog chimed in today by comparing Brightcove to Akamai [note: this article was written by the guys at Nyquist Capital, and can be found on their blog as well as the ISB].
We’re investors in Akamai (AKAM) and I consider it a key holding. They own large servers in many peering locations across the net. Media companies contract with Akamai to cache their data at these remote sites- for example, Apple (AAPL) runs iTunes on the Akamai infrastructure. This caching distributes network load, provides scaling for peak usage periods, and prevents QoS problems to ensure the media viewer has a quality experience (funny how QoS is going mainstream as an acronym isn’t it?). Akamai has a large software and hardware infrastructure investment to enable this distributed hosting.
It appears to us that Brightcove’s business model is just a subset of Akamai’s - they already act as a middleman between the media owner and the viewer. Brightcove has a really neat idea but does it have big barriers to entry?
As to Nyquist's contention that Brightcove is an Akamai competitor, I'm not sure I see that...ultimately Brightcove would be a customer of Akamai, at least initially. There's little sense in Brightcove undertaking the capital outlays needed to build out their own peering infrastructure. And while I'm a fan of Akamai's business [a true picks and shovels play on the growth of Internet content], make no mistake that Brightcove's business model is far more than a "subset of Akamai's." In fact, IF Brightcove delivers on its goals, it's going to be a far more important driver of IPTV adoption. Brightcove wants to create an uber scalable network which provides an easy-to-use platform for the creation and syndication of online content whether the creator is Joe Average sitting at home on his PC or a premier content brand like Time Warner or the New York Times. They also want to provide the infrastructure as a smart conduit for getting that content to people, and presumably layering DRM and billing infrastructure where applicable.
Whether Brightcove's recent buzz really signals their emergence from a crowded pack of similarly positioned competitors remains to be seen. But they certainly have the momentum and would be a great counterpoint to the truism of "first mover advantage."
Here are a number of Brightcove competitors [note: you won't see Akamai on this list] with brief blurbs on how they're positioned:
- Akimbo -- Backed by VC heavyweights Kleiner Perkins & DFJ, Akimbo has been light on major partnership announcements but remains someone to watch for several reasons. One, Akimbo is taking a hybrid device/service approach. Two, the company has a patent portfolio that, according to several industry contacts, is material and will play a roll in the IPTV market regardless of whether Akimbo itself emerges as a major player.
- DaveTV -- DaveTV is focused on building a network of content from individual content producers and creating co-branded offerings for network providers [telcos, CLECs, etc...]. The content producers get distribution and targeted advertising revenues. Another potential differentiator is DaveTV's willingness to offer access to its network in myriad ways: a portal, a set top box, a PC-connected device. DaveTV is currently seeking venture funding.
- Democracy -- The Participatory Culture Foundation just launched Democracy, a 100% free, open source IPTV application that offers tools for video publishing, syndication, downloading and viewing. Democracy is a non-profit that relies on donations and uses open source technologies such as RSS and BitTorrent to power the service.
- Kontiki -- Kontiki is AOL's "other" IPTV partner and the not-so-secret sauce behind AOL/Time Warner's Hi-Q IPTV venture. Kontiki uses P2P technology with an added layer of rights management, and preaches scalability [one of the deciding factors in AOL's decision according to several sources]. Kontiki has a number of notable investors including the Barksdale Group, Benchmark Capital and Adobe Ventures.
- Revver -- Revver is building a network of video content and inserts a RevTag ad into each uploaded video. Revver is embracing tagging and social networking components, and is in the early stages of its build out.
- Veoh Networks -- Veoh has been around for some time, and has embraced MySpace and the power of free speech as marketing tools. The company contends to have a massively scalable and high quality platform for full-length IPTV content. Veoh contends it has 10,000 users and has done one round of VC funding.
- YouTube -- YouTube, founded by the Paypal folks, has enjoyed massive scale and popularity since launching a year ago. YouTube is a completely free service that's set up like a social network where anyone can upload, tag and share video content [think Flickr for video]. Recently, NBC threatened YouTube with legal action and demanded YouTube remove 500 pieces of content [primarily skits from Saturday Night Live].
I'd be curious to hear your thoughts on the IPTV movement and where Brightcove sits along the spectrum of available platforms. Furthermore, do you agree with my assessment that Akamai [and other content peering vendors] are more collaborative that competitive to what Brightcove's doing?
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