America Online Inc. and media companies IAC/InterActiveCorp and The Hearst Corp. are investing a total $16.2 million in Brightcove Networks Inc. in one of three moves the Cambridge-based startup is announcing Tuesday. Brightcove also said Barry Diller, IAC/InteractiveCorp's chairman and chief executive, will join its board.
The moves give Brightcove big media backing and Web portal clout among the startups and big cable providers seeking to make a huge array of video available for viewing anytime over computers or high-end TVs. The trend is driven by broadband technology, Web portals' video search capabilities and new video formats that allow for downloads rivaling DVDs in picture quality.
"I think this adds a lot of credibility to Brightcove," said Josh Bernoff, an analyst with Forrester Group. "They're not just another startup company now."
The announcements by Brightcove, whose rivals include San Mateo, Calif.-based Akimbo Systems Inc. and a startup called DaveTV, come just a week after AOL said it would join Warner Bros. to make dozens of old television shows available online and free-of-charge on a new broadband network called In2TV.
And Apple Computer Inc. and Walt Disney Co. recently said they will make reruns of "Lost" and other programs available as individual $1.99 downloads.
Privately held Brightcove, founded in early 2004, is for now merely pitching its business model to cable broadcasters and independent video producers in hopes of signing them up before the service is available to consumers early next year. The company did not offer any pricing or program specifics.
Brightcove's chairman and chief executive, Jeremy Allaire, said consumers will be able to download video from content providers' Web sites using Brightcove's technology. Providers will choose to offer individual shows or program subscriptions at cost or for free with advertising.
Sometime later next year, Brightcove expects to join AOL in a cobranded service via AOL's Web portal, offering a far broader audience than a content provider could expect from offering video only on its own Web site.
For example, a search for video or text on AOL's site could offer a link to a cable program or an academic lecture by a prominent professor, Allaire said.
Revenue will be shared among video providers, Brightcove and AOL. Allaire wouldn't discuss details of the revenue split.
While the service won't prevent amateur videographers from offering their creations for commercial viewing, Allaire said the service's initial focus is content from more traditional providers.
Brightcove does not have an exclusive agreement with AOL — the largest investor in Brightcove's newly announced round of financing — so the deal does not foreclose possible future deals with other Web portals, Allaire said. Yahoo Inc., Google Inc. and Microsoft Corp. all have recently moved to expand their online video capabilities.
"You have to wonder what happens after Brightcove possibly signs up with other portals," Bernoff said. "Google and Yahoo may be interested in these same sorts of partnerships down the line."