Rovio has been calling these efforts “one of the world’s biggest video networks,” and Brightcove’s Executive Chairman Jeremy Allaire, whose company is powering Rovio’s video streaming, told me Tuesday that he sees this as an inflection point for video franchises. But what do the famous birds and their disdain for pigs really mean for the future of television?

These birds are up to something

First of all, Rovio’s move into the world of original video programming is pretty ingenious. The company established an audience with its games, and now offers its ad-supported video series through the very same apps — no additional installs needed. “They clearly are in a really powerful position,” said Allaire.

Essentially, the company is using its games as very effective trojan horses, in turn demonstrating how iPads, Android tablets and mobile phones have become an important piece of of the puzzle when you’re in the entertainment business. It also shows how much they’re starting to change the game for the TV industry.

Netflix started its streaming efforts on PCs, but most of its streaming is nowadays happening on connected devices. Game consoles like Sony’s PS3 and Microsoft’s Xbox 360 are seeing the lion’s share of use, but devices like Apple TV are growing quickly as well. Netflix owes these devices its success. Without ways to get its content on the TV screen, the company would have never been in a position where it could spend $100 million on a show like House of Cards.

Rovio, on the other hand, is primarily a mobile company. Mobile devices are where people are playing Angry Birds, and it will be where they’re going to watch their weekly episodes of Angry Birds Toons. If the show turns out to be a success (and that’s still a big if) it could turn out to be the first big original programming success story for mobile devices.

And that could have an impact on the industry beyond birds and pigs, by signaling the industry that it doesn’t have to rely on traditional distribution mechanisms anymore. “You can establish a new programming franchise over the internet” thanks to mobile and connected devices, argued Allaire in our conversation.

When pigs fly

However, the flip side of this is that Angry Birds Toons also raises the bar for content companies to stand out and actually reach the consumer. It’s hard to compete with 263 million monthly active users. Heck, it’s hard to compete at all in a sea of millions of apps if all you have to offer is yet another show.

“In some sense, the business model hasn’t changed at all,” admitted Allaire. You still need to have highly compelling content, you still need to market that content effectively — and doing both  effectively is likely going to cost you a lot of money. And if you’re in mobile, you’re going to also need a really good app.

Birghtcove learned that lesson the hard way over the last couple of months when it failed to establish its app cloud offering, which was meant to provide publishers with an easy way to deploy HTML5-based apps with a native wrapper across a variety of platforms.

Turns out that publishers actually prefer to have true native apps that take advantage of each platform’s strengths and features, which is why Brightcove discontinued app cloud in February. “If you want a premium video experience, you got to put your best foot forward,” acknowledged Allaire when I quizzed him about its app cloud.

The bottom line is that Rovio may demonstrate new ways to enter the game — but that doesn’t mean that the rules have changed. To find large audiences, you still need to be big yourself or partner with a bigger platform.

That’s good news for Rovio and companies like Netflix and YouTube – but not necessarily for a startup looking to change the future of television.

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“Mark Zuckerberg was dead wrong, and it was shameful for him to throw HTML5 under the bus because Facebook had an outdated and poorly written hybrid app,” Brightcove CEO Jeremy Allaire wrote in an open letter to tech and media leaders that calls for an end to the “religious wars” on mobile platforms.

Allaire’s gripe is that companies like Facebook and Apple are abandoning support for hybrid apps which are built with much of the same code used to display a website in mobile browsers. With the hybrid approach, publishers can rely on universal HTML5 code to get their apps out quickly on multiple platforms and devices while also using some native code for features that count.

Facebook recently eschewed the hybrid approach, claiming it offers a sub-par user experience. Allaire suggests that this is a smokescreen, and that Facebook and Apple have undercut the viability of HTML5 in order to develop their own private eco-systems.

Some might accuse Allaire of sour grapes since a turn to proprietary platforms threatens Brightcove’s App Cloud service which relies heavily on HTML5. But that doesn’t make his point his less valid.

The larger issue here is about standardization. Recall that for much of the 19th century, there were no standards for everyday items like screws or lightbulb threading. Imagine if a carpenter needed a special, proprietary screwdriver for every job site? Allaire makes the same point for the app economy:

Since 1994, our industry has created millions of jobs in the web development industry.  Proprietary native platforms are limiting the available labor in the app economy, hurting our productivity. [...] Every institution on the planet wants to invest in reaching users through apps on consumer devices, but we have a deep deep labor shortage because of these religious wars.

Allaire concludes by calling for an “ecumenical” approach to end the current sectarian approach to development. His letter also points to a Brightcove blog post that sets out a longer version of his thoughts.

Update: In response to a reader request below, here is the full text of the letter:

Subject: Ending the Religious Wars over Mobile Platforms – an open industry letter

Date: November 15, 2012 3:47:48 AM PST

To: undisclosed-recipients:;

Hi-

All of us are blessed to be participants in this marvelous and dynamic internet tech and app economy.  But we’re also cursed with internal strife and religious wars over mobile platform technology that are hurting our economy.  Since 1994, our industry has created millions of jobs in the web development industry.  Proprietary native platforms are limiting the available labor in the app economy, hurting our productivity.

Mark Zuckerberg was dead wrong, and it was shameful for him to throw HTML5 under the bus because Facebook had an outdated and poorly written hybrid app.

Hybrid apps as a bi-partisan solution to the religious mobile platform wars are too important to our economy.  Every institution on the planet wants to invest in reaching users through apps on consumer devices, but we have a deep deep labor shortage because of these religious wars.

Steve Jobs, god bless his soul, was also wrong — well, perhaps, just deceptive — with his Thoughts on Flash and public flogging of Adobe.  Killing support for Flash on iOS was not a benevolent move to save consumers from slow and crash-prone software, nor a resounding vote for open, HTML5 based content apps.   No, it was merely a flanking maneuver to protect Apple’s proprietary native app development model.  While Apple has gone on to deeply enhance the iOS native APIs, they’ve barely moved the needle on support for HTML5 inside of native apps.

Again, hybrid apps are essential to getting the technical economy highly productive, and that’s essential to getting the global economy more productive.

Adobe smartly acquired PhoneGap — a hybrid app development platform — to answer this corporate and industry need, but since then the technology has gone stagnant, with little innovation.

The industry needs better hybrid app platforms, and that’s what we’re doing.

On my blog, I have a lot more to say about all of this, how we got here, and what the industry and Brightcove is doing about it.  Take a look, it’s a quick read.

http://blog.brightcove.com/en/2012/11/bipartisan-solutions-ending-religious-wars-over-mobile-platforms

The industry needs all of us to make this happen.

Thanks,
Jeremy Allaire
Founder and CEO, Brightcove

(Image by WilleeCole via Shutterstock)

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Second-quarter losses narrowed 38 percent to $4.3 million. Meanwhile, the Boston-based company also announced that it has acquired cloud-based video encoding firm Zencoder for $30 million.

Zencoder, which raised $2 million in April, touts more than 1,000 customers, including TwitVid, PBS, Posterous and CollegeHumor, and its open source Video.js player is widely used.

“The acquisition of Zencoder not only strengthens our Video Cloud online video platform in a key technology area, but it also signals our expansion into standalone cloud services that developers can use as building blocks for custom systems,” said Jeremy Allaire, chairman and CEO of Brightcove, in a statement.

Brightcove reported 4,697 customers to end Q2, a 43 percent year-over-year increase. During the quarter, the company added 365 customers to its “express” service and 78 customers to its “premium” offering. New businesses included Parametric Technology, Quintiles, Chrysler and Princeton Review.

Shares of Brightcove were up 2.45 percent to 15.04 on the Nasdaq.

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• You’ve surely read about Orbitz surfacing pricier hotel rooms for users doing travel search on a Mac by now. The Wall Street Journal expands on its earlier story to explain why exactly Mac users are so desirable for retailers like Orbitz.
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Image courtesy of Flickr user Savara

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The Cambridge, Mass.-based company also reported shrinking losses of $4.3 million, down 26 percent from the first quarter of 2011.

Despite incurring losses of $17.8 million last year, Brightcove has largely inspired investor confidence, with the company’s initial public offering raising $55 million.

However, since peaking on March 20 at $24.80 a share, Brightcove stock has slipped, closing Thursday at $19.00 a share.

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A staff of two dozen – or no operations at all?

“Do we have a China strategy? The answer is no.” Brightcove President & COO David Mendels

Ask Brightcove about China, and you’ll get a rather tight-lipped answer. “We don’t have significant operations in China,” I was told a few weeks ago by Brightcove President and COO David Mendels, who added: “We never made a decision to enter China as a market.” Mendels wasn’t very keen on talking about the subject at all, but to his credit, answered some of my questions anyway. His key point: There is no story about Brightcove in China. “Do we have a China strategy? The answer is no,” he told me.

That may be true today, but Brightcove’s past dealings in China were a lot less black and white. The company had a significant R&D staff in the country starting in 2006, which I’ve been told by someone with knowledge of the operation consisted of up to two dozen people. It tried to hire additional staff as late as March 2010 – only to shut down its entire operation in Beijing and completely pull out of China by the end of that same year. Most of the Chinese staff was let go at that time, and only a few made the transition to Brightcove’s corporate headquarter in Cambridge. (Medels and a Brightcove spokesperson didn’t want to comment on the company’s R&D efforts in the country.)

So why did Brightcove leave China? The company apparently told its Chinese staff that it wasn’t able to grow the team fast enough – but that seems an unlikely reason, given that many other U.S. companies maintain successful R&D operations in the country. The decision may at least in part been motivated by Brightcove wanting to take things further and sign up Chinese clients – only to realize that China is a tough market for outsiders.

China’s unique challenges

Mendels talked a little bit about this during our conversation as well. “It’s an interesting place,” he said, without specifically referring to anything Brightcove has done in the country. And he cautioned: “It’s a tricky place to do business in.”

That’s especially true for anyone in the online video space. China has a complicated regulatory environment for online video companies, which forces them to get multiple licenses for things that don’t require any dealings with the government at all in most other countries. Want to stream videos from a website to a desktop? Then you need to become licensed as an online video platform. Want to deliver the same video over the same network to a set-top box? That makes you a TV network, which means you need a different license.

Adding to this are unique infrastructure challenges. China’s Internet population is growing rapidly, but most users access the network with comparably slow connections, which is why local players oftentimes optimize streams for 500 Kbps to 1 Mbps. Servicing Chinese clients requires to adapt to these challenges, which can take time. Brightcove may have felt that it didn’t have this time, especially as it was trying to ramp up its internatinal business elsewhere, and prepared for an IPO.

Brightcove’s team is still there

The irony of Brightcove leaving China is that its former staff is now proving the company wrong: Most of Brightcove’s employees have since been hired by Video-TX, a local video platform provider that openly references its Brightcove heritage on its website.

The company, which received a strategic investment from the Chinese CDN Chinacache soon after Brightcove left the country, has been offering Chinese customers what Brightcove could have offered – and was able to sign up a number of high-profile clients including the Shanghai Media Group, the large newspaper China Daily and state TV network CNTV. I’ve been told that there is no ill will against the former employer amongst the team, but there is an acute sense that this could have been done by Brightcove as well. Said one person involved in both efforts: “We didn’t set out to build our own company. We set out to build Brightcove China.”

This isn’t to say that Brightcove made a terrible mistake leaving China. Rather, Brightcove’s adventure in China goes to prove that the country can be a lot more nuanced than it is perceived in the U.S. Stories about U.S. companies doing business in China often fall into two categories: Either, they describe a gold-rush-like opportunity – or a repressive regime that companies should avoid entirely. Brightcove’s experience is much closer to the actual experience many have when doing business in China: It’s a complicated market that requires a long-term commitment – and not everyone has the stomach to stick around.

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Brightcove had revenue of $63.6 million in 2011, but incurred a net loss in 2011 $17.8 million over the same time period. It employed 312 people in 9 different countries by the end of 2011. Brightcove raised some $100 million since being founded in 2005. For more key facts, check our post: Brightcove’s IPO: What you need to know

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• Brightcove had 3,872 customers in over 50 countries by the end of 2011.
• The company’s 2011 revenue was $63.6 million, compared to $43.7 million in 2010. Its net loss in 2011 $17.8 million, compared to $17.3 million in 2010. It expects to continue to have losses in 2012.
• Brightcove employed 312 people in 9 different countries by the end of 2011.
• Brightcove generated 66 percent of its revenue in the U.S. in 2011.
• Brightcove’s customers served on average 743 million streams per month in 2011. More than half of those streams were delivered outside of the U.S..
• Most of the media is delivered through Akamai and Limelight, but the contract with Limelight is currently up for renewal.
• The New York Times is not only one of Brightcove’s biggest customers, but also a minority shareholder that owns less than 5 percent of the company’s stock.
• Brightcove doesn’t mention any of its direct competitors by name, but mentions YouTube three times in the filing.
• Brightcove will trade at NASDAQ under the stock symbol BCOV.
• The offering is led by Morgan Stanley and Stifel Nicolaus Weisel, and underwritten by RBC Capital Markets, Pacific Crest Securities and Raymond James.

What does the filing mean for the online video space in general? Our own Ryan Lawler summed it up best last August:

“Brightcove deserves kudos for making it this far while other online video companies have either been acquired at fire sale prices or bit the dust. But the modest revenues revealed by its IPO filing show just how hard it is to make money in online video, even while viewers are tuning in droves.”

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With its emphasis on design, Fab.com has become a go-to site for "product porn."

It’s that time of year again — time to log on to our favorite e-commerce sites, that is. They are sure to have another banner year. But it’s been an interesting last few years for a new breed of commerce sites that are gaining millions of users and boatloads of cash. These sites are distinctly different from their predecessors in that they have social, gaming and entertainment elements deeply woven into the user experience. They’re able to do so by leveraging the technologies and social graphs that were but a glimmer in the eye of the first commerce sites.

The first wave of e-commerce was built around the functional. Amazon, CDNow and others succeeded in putting the basic shopping experience online. It was hard enough for sites to translate our mouse clicks into packages that we’d receive, with all of the attendant systems, workflow and business processes that needed to be put into place. It was hard and expensive to get basic e-commerce order and fulfillment, and their attendant business processes, in place. At Live365, we spent more than a year and burnt more than a $1 million in 1999 building an online store to sell CDs. One could have the same front-end functionality today for $99 a month using Shopify. Ouch.

That’s not to say that the first generation e-commerce companies didn’t innovate. CafePress, eBay, Hotwire, Lastminute.com and Priceline, among others, innovated on the business model front, but their sites tended towards the utilitarian, rightly eschewing anything that might distract the user and impact conversion rate.

“Here we are now, entertain us!” — Kurt Cobain

Enter the second wave of e-commerce

Not so the new breed of e-commerce sites. They obviously optimize for conversion. But their core value proposition is based on entertainment, gaming or social. To channel Maslov, now that we’re able to easily buy the stuff we want and need online, we look to fulfill our “higher” needs via commerce: To express ourselves, to identify and connect with one another, to be entertained.

Companies are popping up and getting funded in several categories:

Flash sales: Vente Privee, Rue la la, Gilt, JetSetter and their kin were probably the first to go for high production values in the presentation of their product. This high-gloss veneer combined with the urgency and serendipity of a flash sale clearly struck a nerve. Fab.com is clearly on to something in this arena. As my friend put it, “It’s where people go for a little product porn during their lunch break.”

Crowd-sourced, user-created, demand-led: CafePress and Zazzle are the pioneers in this category. Threadless and its clone, Spreadshirt, have brilliantly built design-oriented communities with a game component. Made.com is taking a different approach by ensuring demand for their products before they get manufactured.

The new window shopping: Open Sky is a platform for celebrities and experts to curate things for us to buy. Others, notably Pinterest, Polyvore and Svpply, are taking the notion of curating to the logical next step by allowing us to roll our own lists of things we love, while FantasyShopper here in the UK, is introducing a game-like element to this.

Story-based commerce: As high-end brands have gone more and more mainstream, we increasingly desire other ways to express ourselves. Products with stories behind them are one way of doing this and Etsy, the platform for artisans, stands tall in this area.

S-commerce: Subscriptions, that is. ShoeDazzle, Birchbox and Trunk Club are high-profile examples of sites taking a subscription approach that gives their subscribers both cost savings and a “story” from the serendipity of what you get in your monthly shipment.

Big brands: Not to be outdone, the luxury brands are increasingly investing in entertaining their consumers online. Victoria Secret, with the annual runway show, is probably the pioneer in this area. But nearly all brands are investing heavily in rich media content including Ralph Lauren, Burberry and Hugo Boss.

This is by no means a comprehensive list of the models and activity in the space (unlike Elizabeth Knopf’s exhaustive analysis on Quora on why e-commerce is such a hot area in VC) but it hopefully gives a glimpse as to the “new new commerce.” It may well become the norm in the years to come as these new sites grow into their own, and as the incumbents respond in kind. We will simply expect our online shopping experience to be social, to be fun or to have beautifully presented products. As we’ve seen in music, there will be different curators in fashion, travel and other categories, from whom we will decide what to buy. Pinteresters, Polyvores and Svpplyers whose influence may well rival that of magazine editors and retailer buyers.

But in fact, the new new commerce isn’t so new: Artistotle is said to have noted that “Man is, by nature a social animal.” He was on to something. In fact, the fear of people and public places, agoraphobia, is literally “fear of the market.” Whether it’s the storytellers spinning yarns in the main market square in Marrakech or the flower sellers on Columbia Road hawking their wares in their Cockney accents or the auctioneer at the county fair, we have socialized and been entertained while shopping for centuries. And as long as we remain a social animal, it’s only natural that we will look for the same fix online

Rags Gupta, based in London, is currently on sabbatical from the online video company Brightcove, where he has been vice president, international. Prior to that, he was an executive at Live365 from 1999 to 2004 and is currently an investor/advisor at 8tracks. Follow him on Twitter: @ragsgupta. 

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