In a busy summer of online
video investment, some startups are beginning to break away from the pack of
YouTube wannabes.
The latest to emerge in
high spirits is Metacafe, which leads all independent online video sites in
viewership and on Tuesday announced that it had snagged $30 million in a third
round of funding, for a total of $50 million raised.
That news follows Joost’s
$44 million funding round last May, and Veoh’s recent $25 million funding
announcement.
Not to say that any of
those sites are set to dethrone YouTube anytime soon as the world’s most
popular online video destination. But investors appear confident that even with
a fraction of the audience, these spots can offer attractive alternatives to
advertisers that might be too weary to get involved in YouTube’s more chaotic
scene.
Metacafe trailed biggies
YouTube, MySpace, Google Video, AOL Video, Yahoo Video, and MSN Video with 4.6
million unique U.S.
visitors in July, according to Nielsen/NetRatings. Startups Break.com, Veoh,
and Will Ferrell’s Funny or Die rounded out the Top 10.
“I think what you’re
starting to see happen is that four to five independent sites are breaking out,
while the 100 or so video sites funded in the last year are not making the
audience threshold, and that means increasing returns for the winners,” said
Richard de Silva, a partner at Highland Capital Partners. His firm joined DAG
Ventures and existing funders Accel Partners and Benchmark Capital in the
round. “That’s why we went for the No. 1 independent site. That’s a strong
position to start from.”
Mr. de Silva was also
attracted to Metacafe, he said, because its system is unique among video
sharing destinations in using a group of volunteers to vet every video before
it appears on the site and to toss away the garbage. Metacafe also offers
compensation to budding online video talent based on video popularity, an
effort to attract low-cost work that might still be higher quality and more
advertising-friendly than your typical video sharing fare.
“The scale of YouTube is
different, but Metacafe is a better media model,” said Mr. de Silva. “It’s a
place where advertisers can safely buy their advertising, and where consumers
can consume media in a more conventional way, by going to the home page to
discover what the community finds interesting. YouTube has a billion pages of
people sharing clips with one another.”
Metacafe representative
Michelle Cox said the company plans to spend the cash infusion on building out
its sales team to increase advertising revenue, setting up more branded
channels, and peppering the site with some established filmmaking talent. In
March, Metacafe started showing the video series “Café Confessions” from well-known
television producer Steven Bochco. Last month it launched a promotional deal
with Universal Pictures that allowed its users to mash up and re-edit content
from the Bourne Ultimatum movie.