BrightCove and the Future of Internet Television

What are the strengths and weaknesses of Brightcove’s business model?

Strengths
One of the major strengths of Brightcove’s business model is its core focus on helping the video-rights owners build businesses around the delivery of content via broadband Internet. Their core focus helped construct a new model for media delivery where video publishers essentially controlled their own content. Brightcove’s focus marked a shift from the traditional media businesses where control resided with broadcast networks. Brightcove’s approach marked a significant positive change in the market. Brightcove developed the software technology platform to drive this radical shift. With its publishing platform, Brightcove presented a turnkey solution for creating and maintaining broadband video channels. Brightcove’s unique business model allowed video publishers to gain unprecedented control of the delivery and monetization of their content. Secondly, Brightcove’s model served the “long tail” of video content. The nonlinear nature of online programming created a new opportunity for video content owners to distribute vast libraries of content just like Netflix. Thirdly, the model put Brightcove at the center of a new, multisided television ecosystem. Brightcove was an all-in-all, in other words served many stakeholders. Just like the broadcast network, Brightcove distributed producers’ content both to consumers and affiliates, sold advertising, created a b2b marketplace just like eBay. Through Brightcove’s offerings, website affiliates were also gaining advantage. Fourthly, another strength of Brightcove’s business model is its usage-based fee plans. Although it followed this system, it aimed to shift more and more of its customers to revenue sharing arrangements based on advertising and pay media sales. The model enabled publishers to rent or sell ‘near DVD quality’ video downloads and let publishers keep 70% of the revenue from such transactions.

Weaknesses
Firstly, Brightcove’s goal is to become a multisided media distribution business serving not only content owners but also advertisers, distributors and consumers. The relaunch of the website is a major step toward fulfilling this ambition as this will help attract more content owners. However, other steps are necessary to develop the remaining sides of the multisided business. The development of this business will require lot more resources and most importantly cost and time. Brightcove should understand the existing competition in the market most importantly from giants like Google / You Tube. Brightcove may end up focusing on too many things, which could lead to confusion, customer frustration and at the end of the day it could be a stretch to reach the main goal. Secondly, Brightcove’s platform customers during the early stage fell into two categories of which one group were large media companies that expected “high-touch” service from Brightcove, while insisting that they retain full control over use and branding. Demands for customization work drained crucial engineering and business development resources and made it harder to manage the transition from providing back-end technology services to constructing a media distribution network. Thirdly, Brightcove’s goal is to make a strategic transformation from a platform business to a media distribution business. Google made a successful transition by leveraging its search technology licensing business. Apple and Microsoft had built prominent media businesses after first succeeding as technology platform providers. However, the issue is Brightcove lacks the “deep pockets” and the established user relationships that the other companies possess.