Article Info

Brightcove vs. Akamai

Akamai needs to diversify their business model.

brightcovelogo.PngBrightcove has buzz. It’s run by Jeremey Allaire, who seems like a solid get-it-done entrepreneur. And today, they have managed to land themselves on the front page of the WSJ. They have been profiled by Don Dodge, as well.

Brightcove is a middleman, providing a mechanism for video content owners like NBC, Reuters, etc. to syndicate their content. Brightcove inserts advertisements into the video stream and distributes the revenue from advertisers to content owners and syndicating websites. It’s like Google AdSense for Video.

Akamai logoWe’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? A Brightcove competitor is quoted in the WSJ article:

Not everyone will be left standing after the market begins to settle. “I don’t think there’s room for five of us,” says Ian Blaine, chief executive of thePlatform for Media Inc., another start-up company that is acting as a middleman. “There’s room for two or three.”

He’s right – scale is important – you want to have lots of media customers and lots of viewers to provide advertisers with that one-stop shop. Last quarter, Akamai spent $23M in sales and marketing to media customers. They already do business with the folks who want to syndicate their media. Brightcove, according to the WSJ, has only two salespeople. Brightcove’s last funding round was just $16M. Which company do you think can scale media customers faster?

Akamai already has a large physical infrastructure that is profitable, something that is a huge barrier to entry. They are missing the advertising component. The media to be syndicated is already on or could be easily added to their server infrastructure. They could put the same licensing interface together as Brightcove and run it on their mature caching platform to ensure viewers have a quality experience. Then they sell it to their existing customer base. It’s not rocket science.

For that matter, Brightcove’s business model may be running on top of the Akamai infrastructure. Akamai won’t disclose customers, but it’s a safe guess.

Brightcove (or one of it’s four competitors) is either a great acquisition target for Akamai, allowing them to leverage their existing infrastructure in a new way, or a company they could snuff out with a flick of their finger.


Hat Tip to IP Democracy


Comments are disallowed for this post.

  1. Brightcove relies on others for hosting. It’s really a matchmaker, between the party with the rights to content, the party providing hosting, and the market of people who wish to further distribute or receive that content. Brightcove is trying to create a marketplace for such video feeds, like a video version of Google’s adsense, then an Akamai, which is trying to solve the problem of making sure content is as locally hosted and well distributed as possible. While it is possible for these features to be combined in one company, the decision for Akamai probably comes down to who does it want its future customer base to be? By doing what Brightcove does, Akamai probably will offend at least part of its customer base. By teaming up with Brightcove, Akamai could have the best of both worlds: a new set of customers who need hosting (from Brightcove) while also teaming up with any of Brightcove’s competitors.

    Posted by Ranjit Mathoda | February 21, 2006, 6:24 PM
  2. Which customers would be offended by Akamai changing it’s business model?

    Thanks for contributing.

    Posted by Andrew Schmitt | February 21, 2006, 10:27 PM
  3. Yeah, it seems like a sensible acquisition for Akamai — I too would like to hear what existing Akamai customers would be “offended”…

    I don’t get the sense though that Brightcove really has critical mass yet.

    Posted by Johnny Debacle | February 23, 2006, 8:33 AM
  4. It seems to me that Google, Yahoo, Microsoft, YouTube and BrightCove are all putting significant resources into monetization engines, and are the key players in the service of creating an ecosystem of advertisers that they can display on their own or other’s web pages. I thought Yahoo was a big customer of Akamai, but may be mistaken. If none of the forementioned companies are Akamai customers, it would make sense for Akamai to either develop its own monetization engine or buy a startup in this space.

    Posted by Ranjit Mathoda | August 15, 2006, 3:20 PM
  5. There are some other companies based in Europe who provides the same service as brightcove, or even more sophisticated service than the one of brightcove.

    Sometimes it’s not the service but also the location which gives Brightcove this advantage.

    Posted by Norah Chen | January 3, 2008, 5:30 AM
  6. Trackbacks / Pingbacks

  7. The Inevitable Competition of Akamai and Google | August 15, 2006, 3:01 PM
  8. Akamai Alpha No More at Nyquist Capital | October 30, 2006, 3:54 PM
  9. The Blogging Times » It’s All About The Commoditization, Baby! | November 13, 2006, 10:57 PM