Israel based video sharing MetaCafe has announced that it has received $15 million in funding from Benchmark Capital and Accel Partners. Founded in 2004, MetaCafe uses a filtering algorithm to prescreen videos before they appear on the site. A desktop client is used to upload and download the videos, only about two dozen of which are newly approved each day. The end results of that filtering are viewed by 20 million unique visitors each week. Instead of a YouTube style fat pipe of content, MetaCafe relies on just a tiny number of high-quality selected videos to drive a large amount of traffic. It’s like YouTube meets Fark.
Benchmark Capital has made investments in eBay, Zillow.com, Pagflakes and many other online services. Benchmark had given MetaCafe $5 mill in a previous round of funding. Accel Partners adds Metacafe to a portfolio that includes Brightcove, comScore, RealNetworks and Walmart.com.
The company will use its new funding to ramp up its infrastructure and open an office in San Francisco.
Two dozen? Don’t they need 2,000 at least per day to remain competitive?
These investors are smart people.
Why then are they all bidding for a piece of the online video sharing market?
Am I missing something or do all these video sharing companies have no business model… and are lossing money by the truck load every month?
Would anyone here invest $15mil into a vid-sharing service? If so, please share your reasoning and your predicted exist strategy. I could see being bought out by a large company with too much money in the bank… which would not be bad i.e. MySpace.
$20 million dollars to a website that serves up flash in the pan handful of viral videos.
i have a cool idea for a website that’s worth $20,000,000 DOLLARS: i’ll find all the homeless i can to feed and shelter them and train them in vocational training to get them working again.
the the business model will be 30% off their earned revenue and i promise the exit strategy to be a profitable ROI
Jo, that’s a great idea. Make a widget, add tags and you’ll soar to the top of the charts.
yes, the video bubble will burst very soon. Investor be warned.
Prepare for showdown.
I’m not convinced that the hosted/upload model is the future of online video sharing, especially from a revenue model perspective. Bandwidth is pricy and users are not willing to pay for hosting as it has become a commodity. Obviously, ads will be the main source of revenue, but margins will be squeezed over time as more competitors enter the space. It will be a race to minimize bandwidth costs and maximize ad revenues.
Hosted video sites are a dime a dozen and, in most cases, lack a compelling value proposition. Added functionality, control, and privacy will be essential to the end-user and must be addressed in the near future.
Just my two bits…
Aidan
Disclosure: I work for PiXPO, a MetaCafe competitor.
I am concerned about the algorithm which is used to screen videos. They must be making sure that once the day’s capacity is reached there are no more approvals for videos. Also, why would a user waste his/her bandwidth when he/she doesnt even know if the video will be approved or not.
There are entirely too many formats for video as well. Each player in the game has its own proprietary software to play content.
Some of the comments remind me of the “portal syndrome”.. let me explain. Back in 2000 there were about zillion portals. most of them are gone. however, some had some kind of “magic” – they became profitable and lasted till today. I call that magic – “traffic”. they knew what’s good for their users and maintained a solid growth. This CAN be translated to previews, one way or another.
Metacafe, somehow, has an Alexa rank of 150 + Rated #80 largest English site on the net (and i trust Alexa in this case – it’s not a website for webmasters).
How? Magic! They are doing something right, otherwise they wouldn’t surpass classic video portals such as iFilm, break.com, ebaumsworld, atomfilms and the list go on.
And remember that bandwidth prices ever decrease, video ads prices ever increase.
I think one of the reason that Metacafe is quite popular is beause unlike YouTube, it does allow “Not Safe for Work” videos.
I met MetaCafe’s founders and have used their service more then once. They are not a “me too”. their strength is with their powerful ranking system and with the great relationship they have created with their premier controbutors. These two are very hard to copy and their investors know that.
I think they are on the right path to become one of the top 3 players in the field. And for a sustainable period of time.
I believe online video sharing sites will make high revenues in the future by placing videoads inside the hosted videos. As some mentioned before, the bandwidth is not cheap and rises as the popularity of the site does. Therefore, only strong servies with the right VC backup will survive the game. When it will happen, they will move to the ads model. MetaCafe is positioned very well in the market and are planning on staying there when that model will be assimilated. MetaCafe is an Israeli company and more information about Israeli Web2.0 companies can be found at thecoils.com
$15 million..geez…but at least metacafe filters before anyone can view it.
I could not watch the video on my Mac. It said that I have to install the Windows Media Player. Ug. Another ““.
Microsoft’s support for the Mac is uncertain. [source]
That said the video quality at 350kbps looks much better than the Flash video on YouTube in my view. [but I had to switch to windows to see it]
Another question … does anyone know how much these folks are paying for bandwidth? Any guesses? How about 25 cents per Gig transfered? This will add up quickly.
… I could not watch the video on my Mac. It said that I have to install the Windows Media Player. Ug. Another “codec silo” … http://podslug.com/blog/?p=32
If you buy a lot of bw it can be less then a penny a gig…
And large sites could get good advertising deals so they can become profitable
Well done to them! Yeah torrent buying bandwidth in bulk can save a load of cash in the long run, thats what I do.
With all these bandwidth hungry applications, I hope that Internet will remain free forever…. The father who invented the Internet did not mean to earn money out from it, but rather to innovate and educate the world about the technology and information.
Torrent said that he can buy bandwidth for a penny a gig … please please tell me where! How much do I have to buy in bulk to get this deal?
This is stupid, how much of the material on MetaCafe is published with approvement of the rightfull copyright holder? Zero?
You can’t just publish things and say that you are, ” committed to protecting the rights of copyright”, and that you will remove content if the copyright holder contacts you, when it’s obvious that the majority of the trafic comes from stolen material. When they start making money the media companies will come down on them, hard.
YouTube and GoogleVideo do have some material created by their users, but almost every video on metacafe’s first page is clips from tv-shows. The only diffrence between metacafe and abum, kontraband, blennus etc is that they have less banners, oh yeah, and $15 million from some clueless investors
fyi:
youtube is #20 according to alexa, and this is #180. In my opinion, they don’t have a chance, the industry is saturated.
it doesn’t play on my mac or my linux box.
15 mill for this? i think you can hire 10 developers and crank out a better site in 2 months for 1 mill.
VCs = sheep.
Wel fireIsiah, looks like we might have a project on our hands…
Who is up for building a video website?
jk. the market is saturated.. and with google in the mix, there will be no other introductory players..
Jason, I know this isn’t quite the topic, but your “with Google in the mix” comment couldn’t go unanswered…
I for one don’t buy the “Google is in X market, so it’s stupid to get into that market” song…
The truth is, except for search, Google is no leader in any of the other areas they’ve got into. In fact, if you look at “Blog search” – let’s be clear, Google is all about search after all – Technorati is still clearly the leader. Not only but when Google launched their Blog search, many people were quick to predict the end of Technorati. It’s been a while and so far, so good…
Heck, I look at Yahoo – a company that does almost EVERYTHING that can be done on the net – and that isn’t stopping other companies from delivering great services while competing with Yahoo.
To me, the problem of launching a service is not whether a giant might get into that, but how many other leveled players you’re going to be up against. For online video, it surely is a saturated market, but not because Google, Yahoo and MySpace do it, but because there are other 300 companies more your size doing it as well.
The Video Entertainment industry in my opinion is still growing rapidly. It’s definately becoming much harder to be sucessful as 100’s come out everyday but those that get there will stay there. I’ve been working at my video site for 14 months now and have managed to make a pretty good name for myself.
Bandwidth costs are expensive. Most sites like yourdailymedia.com run on a lower quality bandwidth compared to sites like metacafe, break etc. The massive media sites use content delivery networks, it’s a series of disconnected points of presence that cache content onto servers close to the end user.
So if someone is in Florida, they would receive the video from our Florida location or if they were in Amsterdam it would come from our Amsterdam location. The bandwidth costs are extremely high!
just film a cat taking a piss or sleeping and youre in metacafe!