Vuze Confirms Layoffs

A tipster reached out to us this week to tell us about layoffs at the Redwood City, Calif.-based P2P video startup Vuze, stating that the company had dismissed more than half of its workforce. Vuze subsequently confirmed two rounds of previously unreported layoffs to us, but clarified that the dismissals were not recent: 12 people were let go in April and another 12 in August. “We anticipated that the economic environment was going to deteriorate, so we decided to act proactively,” said Vuze’s V-P of marketing, John Fernandez.

Vuze has been building an ad-supported download platform for HD videos based on its BitTorrent client, which used to be known as Azureus. The company recently put the client through a major revamp, and Fernandez told me that things are looking up in terms of revenue and video views. Vuze did lose some key content partners in recent months, something CEO Gilles BianRosa recently attributed to the move away from download sales.

To date, Vuze has raised a total of $32 million in three rounds of funding from BV Capital, Greycroft Partners and others. After the job cuts, the company moved its 31 employees out of its prime office location in downtown Palo Alto, Calif., to a presumably less expensive space a few minutes away, in Redwood City. It also discontinued its work with a PR agency and instead now handles all press relations in house, another sign of cost-cutting.

Vuze’s video platform had originally started with a combination of free, ad-supported and paid downloads, with content both from niche producers as well as major TV networks. However, selling content to file sharers hasn’t been working all that well. Competitor BitTorrent Inc., which is also running a download platform for TV content, was forced to lay off part of its workforce earlier this year and has been deemphasizing its download offering in recent months. Vuze’s own web stats show that even hit shows like Weeds only generate a few hundred downloads per for-pay episode.

That’s why Vuze has been moving away from sales and towards ad-supported downloads – a move that not everyone seems to agree on. Content partner Showtime hasn’t published any new complete episodes on Vuze since April, and shows from former partners Starz and the BBC have completely disappeared from the site.

However, it looks like Vuze has been making some progress on the advertising front. Fernandez told me that Vuze’s revenue has increased five-fold since April, and that Vuze now expects to break even in 2009. He also stated that the company has seen a 30 percent increase in video views since it published version 4.0 of its client earlier this month.

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