Video Egg is one of the many companies that has raised oodles of money: by last count, it had closed a Series D round raising money from WPP. I had looked into Video Egg’s platform last year and balked on them for the simple reason that they were not set up to accept 16×9 video content. I am sure they do now, but it was too late for me, as we were relaunching on August 19 2007 and we publish in 16×9 (instead of 4×3).
Anyway, instead of focusing on that - and a plethora of other things that content producers wanted - Video Egg took a few bizarre turns, doubling up on user-generated content (Video Egg powers a lot of social networking sites that run video content that most advertisers are not interested in) and then diving deep down into social media by billing itself as a Facebook ad network.
I gagged, but did not say anything. Others were not as kind.
Today Video Egg bragged about generating a whopping $1.5M over the past five months, as Mashable points out, that is a pittance relative to News Corp.’s Fox Interactive Media, who powered on MySpace’s awesome growth will do some $800M in revenue this year (disclaimer: WatchMojo.com is a content provider on MySpace TV).
What does this all suggest? Don’t jump of freaking bandwagons!
The Facebook bandwagon has been on turbo and it’s not surprising to see so many companies position themselves for it, but despite Video Egg’s best efforts, the effort only generated $1.5M. Had they focused more on the real deal (ie. video) they would have done better.
Surprising to see big-talking VCs take their eye off the ball and focus on the low hanging fruit that is social networks’ real estate… the real money is in video advertising on professionally produced video content for the Web. But don’t take it from me, check out the stats.
If indeed Video Egg’s Facebook-play is a mere sliver of their whole business (which I suspect it is) then they need to get over the flavor du jour strategy and drive that point home, otherwise, Video Egg’s competitors will eat their lunch.
Either way, Video Egg is backed by some of the smartest money out there, and the management team is pretty smart too, but am I the only one who is thinking of Bolt.com? Bolt.com was a media company leading a strong vertical, then it suffered from YouTube envy (ie. got greedy) and dived into user-generated content. Problem was Bolt.com got sued, sold to GoFish, that went nowhere (cause GoFish lost 90% of its value) and today Bolt.com is a mere flash in the pan.
Video Egg probably won’t fare so bad, and in fact, should do well… but they should recognize what the real opportunity is and drop the Facebook envy.
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WatchMojo NewsletterAfter launching to much fanfare, QTrax is forced into a humiliating retreat, but apparently, the company missed the memo and was ever more brazen in its explanation.
In a nutshell: over-the-counter stock company touts a major Napster-like launch on Sunday with record labels’ support, by Monday all record labels tell Qtrax to go pound sand.
Was this a mistake, a blunder, or fraud?
Here’s what I suspect: the company was in talk with labels for some time, not able to get the deal or terms it sought. So the geniuses at QTrax said “let’s launch this to much fanfare, generate interest, get 1M-10M signups and then leverage those members to get the deals we want.”
I could be wrong, but people can’t be this dumb, can they?
Expect to see a lot of consolidation in the broad video space.
- the fight for #3 in file sharing social networks will cause many (DailyMotion, Metacafe, Veoh, Revver, Break) to consolidate and merge to remain viable against YouTube, Yahoo!, MySpace and MSN.
- ad networks and advertising platforms will also see some shakedown (Yume, Scanscout, Brightroll, Tremor Media, etc.)
- today we saw content producer LX.tv get acquired by NBC. See our thoughts here.
Just now, metric company Vidmeter got acquired by Visible Metrics. It’s worth noting that Vidmetrix is a tool by Vidmeter, spawned from Holt Labs, whose founder Bri Holt previously sold SocialMeter.com to Adaptive Blue, Read Write Web columnist Alex Iskold’s Union Square Ventures’ funded company, USV is Fred Wilson’s fund, who incidentally was an angel investor in Wallstrip, Howard Lindzon’s video blog on the stock market, who sold to CBS and then proceeded to invest in Vidmeter’s competitor Tubemogul (on tomorrow’s Six Degrees of Separation, we’ll look at…).
All to say, Holt deserves some credit for identifying these niches and then creating products that catch the eye of would-be buyers, quickly.
We’ve used Vidmeter’s Vidmetrix. Also in the market are TubeMogul, as well as Hey Spread. Veoh too has a multi-upload tool function, but Vidmeter and Tubemogul also offer analytics, which makes them a more interesting acquisition target to more companies (think Nielsen, comScore, Google Analytics, Webside Story, etc.) I can also see a company like CBS acquire Tubemogul, don’t ask me why, just a gut (ie. Think Howard Lindzon is Kevin Bacon).
This is the year video goes mainstream and many companies that were thinking “Build” shift gears and decide to Buy. the dollars are shifting away from TV way too fast for cash-rich, time-restricted media and technology companies to sit around.
Disclaimer: WatchMojo.com has various working relationships with both Vidmeter and Tubemogul, and distributes content on Veoh. We’ve been rooting in equal parts for both Vidmeter and Tubemogul and fully anticipate them to have a successful exit too, soon.
Break.com - one of the many sites vying for #3 in the video file sharing social network space - just decided to veer into new territory by taking on Heavy.com, a broadband media company, by launching an ad network targeting men 18-34.
TechCrunch reports that CEO is expecting rates of $10-30 CPM. Break.com has a sales force of 15, expect all of the players in the space (Metacafe, DailyMotion, Veoh etc.) to ramp up sales teams as online video advertising crosses $1B in expenditures in 2008 - and potentially surpass search ads by 2018.
The challenge for many of these sites has been to handpick advertiser-friendly content on their sites, which is pretty slim in some cases (disclosure: WatchMojo.com is a content provider of such safe content on many of these sites - more on this here) so the concept of launching an ad network is not only in vogue (AOL’s Platform A, Yahoo!’s acquisition of Right Media and Blue Lithium, etc.) but a requirement to remain viable and not get drowned by the Google/YouTube and News Corp./MySpace tidal wave.
According to PaidContent.org, NBC acquires LX.tv:
Multi-platform entertainment programmer LX.TV has been acquired by NBC’s Local Media Division.
While no one is talking money, we hear the deal could be worth about $10 million, not a huge hit but a more than decent exit.
Part of LX.TV’s appeal to NBC Local Media is its out-of-home use—for instance, NYC taxis—at a time when NBC is expanding its out-of-home reach and advertising efforts.
This would be the second pure content acquisition I can think of. Last year CBS acquired Wallstrip for $4M (at the time it was reported that it was $5M). I mentioned that that was a very nice comparable for us because our library size and distribution network was larger than Wallstrip’s… though admittedly we were comparing apples and oranges given their tight focus on the finance vertical while we aim for a broader coverage across auto, business, travel, health etc.
I mentioned to my friend Howard Lindzon, founder of Wallstrip, that he sold too soon… but when the Tiffany Network comes a-knocking, can you really resist their offer? Mind you, this does vindicate me in suggesting that it was too early to sell.
Nothing against LX.tv, but this brings a big smile to my face because our library size is vastly larger than LX.tv etc. and not to brag, but our out of home reach is much larger than LX.tv’s, too.
I’m very happy for the LX team, they found a good home at NBC.
Looking ahead, this is a convergence on a number of trends, namely video and local advertising. Let’s just hope NBC does better with LX than they did with the iVillage integration, though in all fairness that was a bigger - and more complex - integration.
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