Brightcove Case

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

Brightcove’s business model has several strengths. They utilize a multisided business model with focus on content providers, advertisers, and affiliated programmers.
Leveraging a network strategy, the revenue flows stem from affiliates, advertisers, publishers, and consumers. Realizing the importance of network effects- that the services they offer would become more valuable as more and more users entered the network, Brightcove first pursued large publishers. They used an invitation-only introduction to premium customers that were large, established media companies got the ball rolling. This led to two primary customers in their early stages: “long-tail” customers- small niche-based content owners seeking a cheap, all-inclusive internet TV solution and “high-touch” customers- large media companies that wanted fuller control over use and branding.

This business model also has several weaknesses. The complexity of their multisided model leads to uncertainty of how to invest capital funding. Pursue all four options (build out key elements of software platform, invest in efforts to drive traffic to the network, expand internationally, or make acquisitions that would fill gaps in either the platform line of business or that of the network) and spread that capital investment evenly, or, “double down” more promising options? There are also problems with the “premium customers” who were courted early on. These “high-touch” customers had a high demand for customization which was a drain to engineering and business development resources, leading to delays in planned company advances. Another weakness was the Catch-22 of the revenue model. Brightcove needed to bring in both consumers and advertisers. They currently do not have a large audience so therefore, no audience, no advertisers. Similarly, until they attract a large number of advertisers, they will not attract enough high quality content publishers and therefore will have no new consumers. Brightcove also faces competition from many sources. Some are competing in specific segments of Brightcove’s business, like- technology suppliers, aggregators such as Comcast, social networking sites, and broadband media distributors. There is also competition from giants like YouTube and Google, which leverage huge financial resources as well as established user base. YouTube one year after launch: 100 million views per day, 20million unique visitors each month, 60% of all online video watched online and 65,000 uploads a day.