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Brightcove expands Web video service

By D.C. Denison
Globe Staff / November 16, 2009

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Five years ago, when Jeremy Allaire founded Brightcove Inc., an online video company in Cambridge, he predicted video would someday be as common as text on the Web.

Today, Brightcove is expected to launch a low-priced video service that would build on the belief Allaire’s prediction is getting closer to reality.

The company, which until now has provided its video tools and hosting services mostly to large media companies, including Fox Entertainment Group and A&E Television Networks, will introduce an entry-level edition called Brightcove Express.

It’s made for the millions of smaller company websites that Brightcove believes will soon be adding video, and is accompanied by new software that will make it easier to use video with mobile devices like the Apple iPhone and services like Facebook and Twitter.

“Brightcove has found a niche with mid-size companies and up,’’ said a Forrester Research analyst, Bobby Tulsiani, who recently wrote a report on Internet video platforms. “The signs are that now they will be trying to go from a base of Fortune 500 clients to Fortune 1000 clients and smaller.’’

The use of video on the Internet has exploded since Brightcove was founded. Recent figures from the comScore Video Metrix service show that 161 million US Internet users watched online video during August - the largest such audience ever measured.

Online video use set another record in August, with more than 25 billion videos viewed during the month.

Consumer sites like YouTube.com, which feature user-generated content, account for the lion’s share of the videos viewed on the Internet. But Allaire, Brightcove’s chief executive, said videos on business sites are gaining popularity, too.

“In the last 12 to 18 months, we’ve seen a dramatic rise in the number of company sites that are adding video,’’ he said. “These are not media companies, but corporations and organizations of all kinds: consumer goods companies, universities, government agencies. Nonmedia companies are our fastest-growing segment.’’

Reebok International Ltd is a typical nonmedia customer. The sports brand uses Brightcove-hosted videos on its websites to demonstrate and promote products.

(Boston.com, the Globe’s website, and its owner, The New York Times Co., are also Brightcove customers.)

The new entry-level Brightcove Express will be $99 a month; customers will be able to activate it with a credit card. This is a considerable price drop from Brightcove’s current rates, which start at more than $500 a month, and, depending on traffic and customization, can rise to tens of thousands of dollars annually.

Allaire said the cheaper version is an attempt to win over the many smaller companies that are considering video, but had been unable to afford Brightcove’s offerings.

“There are 20 million professional websites in the world,’’ he said. “The next big thing is the adoption of video by everyone. We want to have an on-ramp for those companies.’’

Clients have the option of using free consumer video sites like Google’s YouTube service, but Tulsiani, the Forrester analyst, said many companies prefer to work with video services that specialize in business.

“It’s the same reason why companies don’t use free services like Blogger to create their websites,’’ he said. “They want total control over the branding and the experience.’’

But, Tulsiani added, the low end of the market for video service is “a very crowded space,’’ with many start-ups targeting the same customer base that Brightcove is now pursuing.

Brightcove has raised roughly $90 million from investors since it was founded in 2004. Although it laid off 15 percent of its staff in late 2008, going from a head count of 172 to 147, it has been growing.

The company, with headquarters in Kendall Square in Cambridge, now has 180 employees and expects to top 200 by the end of the year.

Brightcove has satellite offices in New York, Seattle, London, Hamburg, Beijing, and Tokyo.

Allaire said the company “reached profitability in the first half of this year.’’

Tulsiani said that as an early, well-financed entrant into online video, Brightcove is well positioned to take advantage of the “explosion of video content,’’ which he predicts will double in volume by 2013.

The biggest challenge for Brightcove and its competitors, he said, is “whether these company websites will be able to monetize their video content.

“The continued growth of the market will be determined by whether these companies can justify the cost of creating and serving videos on their sites.’’

D.C. Denison can be reached at denison@globe.com.