Brightcove Sets IPO Price; Video Distributor Valued At $290.1M As Challenges Remain

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February 6, 2012 – 4:55 pm

BrightcoveAfter planning for more than half a year, digital video distributor Brightcove has settled on a price range for its initial public offering at between $10 and $12 per share, as it hopes to raise around $55 million, the NYT's Dealbook reported, citing an SEC filing.

Even without all the hoopla around Facebook's historic IPO last week, this filing would value the 8-year-old Brightcove at a relatively modest $290.1 million. The company has already raised over $100 million in venture capital  as it has worked to expand from online video, the web's fastest growing segment in terms of advertising spending, to apps for smartphones, tablets, social networks and TVs.

Last May, Brightcove CEO Jeremy Allaire unveiled the Brightcove App Cloud, which lets developers write, publish and analyze apps, as part of a unified system intended to capitalize on the growth of social media and connected devices.

Over the last few months, Brightcove has struck deals with with connected TV makers like Panasonic, as it looks to compete with video ad networks like YuMe and digital entertainment tech providers like Rovi in building a wider ad platform from the web to TVs. It's also had its eye on international expansion, particularly Asia, but Brightcove faces a number of challenges as it looks to go public.

In the SEC filing, Brightcove says it mainly generates revenue by offering our products to customers on a subscription-based, software as a service, or SaaS, model. While the content business has been a tough one from the digital side, being able to power that content and track the ads that support it has tended to be pretty lucrative. So far, so good.

Also, Brightcove says that its revenue grew from $24.5 million from the end of 2008 to $63.6 million when 2011 was done. And it's customer base has jumped from just 549 three years ago to 3,872 as of last December.

But for a company that has worked to offer a range of products, most of the money is comes from its 6-year-old Video Cloud product. And almost all of that was from within the U.S., not overseas. As such, net loss has only slowly started to narrow from 2010's $17.8 million loss to $17.3 million at the end of 2011.

Considering the increasing importance and mainstreaming of cloud storage and digital video separately, Brightcove would seem have certain obvious advantages of being inb the right space at the right time. But there are a lot of other companies betting on powering video that is not bounded by a particular device (i.e., the PC vs. mobile vs. TV) and is instead managed across a variety of technologies and outlets.

Brightcove's head start in the cross-platform video delivery space is a major plus. But the revenues in that area are still relatively thin. But at a time when the economy is looking a little better, tech investors may find that they're willing to go along with Brightcove, even if it can't quite captivate the market like Facebook can. The good news is, it doesn't have to come close. But it does have to do better than it's done so far.

By David Kaplan

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February 6, 2012 – 4:55 pm

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