Web portal AOL is scrapping its proprietary video player and associated content ingest, analytics and other back-office software and moving to a third-party platform from Web video specialist Brightcove.
Brightcove will provide online video content management, publishing and video playback throughout the AOL Network, beginning in the first quarter of 2009, including all AOL Programming and AOL Video partners. The Brightcove software will also be integrated with AOL’s global advertising platform, Platform-A. AOL is one of the top five video portals on the Web, delivering some 205 million streams worldwide each month to some 32.2 million unique viewers, according to Comscore data from August.
AOL’s deal with Brightcove makes it the first big Web portal to outsource its Web video player and other workflow functions to Brightcove, a Cambridge, Mass.-based firm founded in 2005 by former Macromedia executive Jeremy Allaire. It also makes AOL one of the first “enterprise class” customers for Brightcove 3, the company’s new software platform, which is designed to provide a higher-quality streaming experience through dynamic bitrate adjustment and also features new software APIs (application programming interfaces) that make it easier to integrate video with other content.
According to AOL Senior VP Fred McIntyre, the Time Warner subsidiary has been thinking about going to a third-party Web video platform for several years, as more and more money—between $500 million and $1 billion in the past two years, he estimates-- has been invested in Web video specialists like Brightcove that continually keep improving their players and content management tools.
AOL has been building and operating its own video player platforms since 2002, and each one has a life cycle of about 18 months. McIntyre and other AOL execs thought the company might be better off leaving player development to the specialists and focusing on its core competencies, such as video search, content creation and advertising.
"As the business has matured and as the value chain has become more and more clear, we’ve gotten a deeper understanding of what our strengths and weaknesses are,” says McIntyre.
Developing its own player and ingest tools had stopped being a competitive differentiator and instead had become a cost center that needed to be managed, he says. So AOL decided to make the move to a third-party provide in the fourth quarter of last year. AOL was already familiar with Brightcove, as it was an early investor in the company, leading a $16.2 million funding round in Nov. 2005. But McIntyre says that AOL evaluated a multitude of Web video platforms, including the offerings from Comcast subsidiary thePlatform, before selecting Brightcove.
McIntyre says that going with Brightcove is more cost-effective than continuing to support its video player with in-house development. But he won’t say if the outsourcing move has resulted in a headcount reduction.
“We’re increasing our amount of focus and investment on video search and ad-serving technologies, and we have the ability to move people around from one job to another,” he says.
For its part, Brightcove is obviously hoping that the AOL deal will lead to further outsourcing deals with large portals.
“I think it signals a real shift in the market, where even the largest publishers can take advantage of an online video platform and take advantage of our core capabilities,” says Adam Berrey, Brightcove Senior VP of marketing and strategy. “It frees them to focus on their fundamental core competencies, which is creating and acquiring great content and selling advertising.”
Berrey won’t say whether Brightcove is close to other big deals for its Brightcove 3 enterprise platform. But he suggests that portals run by cable and telco operators are one significant target.
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