According to this S-1 filed this week, video softward and cloud services provider Brightcove is preparing for an IPO in the first half of 2012. The offering would raise something like $50M, which Ryan Lawler describes over on GigaOm as modest compared to the once lofty expectations we all had for video in general not so long ago.
The filing also gives us a window into the company's finances. In the first six months of 2011, they brought in $28.4M in revenues (up 40% from the first six months of 2010), losing $9.7M along the way. Actually, the numbers and expected valuation don't surprise me at all. Companies that sell the platform, whether in the form of software licenses or cloud services never make the bundles that consumer-focused businesses do - but they do scale well over time.
I chalk it up to the same phenomenon as with BroadSoft, where the numbers in the S-1 filing didn't seem to reflect the influence the company had in the VoIP sector - my expectations were simply out of whack. Likewise, Brightcove powers quite a bit of video on the net, but that doesn't mean they are yet a revenue powerhouse. But also like BroadSoft, Brightcove seems well positioned for the cloud revolution and this may be a good time to lift the curtains with an IPO.
But the idea that video itself has not turned into a huge moneymaker on the internet yet (Joost, YouTube, etc) is a reflection of a simple truth. Video is bit-heavy, but gets paid for on similar scales to voice. That means it is just very difficult to scale your way to a profit (ask YouTube and Joost) the way VoIP has done.
Brightcove is an easier bet to make though, since as a wholesale platform its scaling potential is not as directly dependent on finding more money in consumer wallets.
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