PBS MediaShift editor Mark Glaser says on his Twitter page that Google is in talks to buy Brightcove for $500-$700 million. If the deal were to take place it would be a smart move on Google's part and would finally give them a way to generate immediate revenue from video content, although it might not be as much revenue as some may think since a large chunk of Brightcove's revenue comes from reselling Limelight's delivery services, by my estimates, maybe as much as 25%. Also, charging a monthly fee for the Brightcove platform or for delivering content would be a completely new business model for Google, since to date, their platforms like YouTube have always been free.
If this deal went through, what does that mean Google thinks of their YouTube ecosystem? Why buy Brightcove if you already have a way to ingest, transcode, manage, store, track and deliver content? While Brightcove has a really nice roster of top name clients, is Google willing to spend half a billion dollars just to get a customer list? Maybe, but that seems like a lot to pay for just customers.
While I see the upside for Goggle and how Brightcove would enable them to get into the door with top name content owners outside of the media and entertainment vertical, I don't see the value to content owners in a Google/Brightcove combination. I already feel like Google is trying to control too much of the video market, yet still does not have a very clear strategy of who they are and what they want to become with YouTube. Acquiring Brightcove would mean content owners would now need to deal with Google and one of the reasons many of them are with Brightcove now is the fact they don't want to deal with the company behind YouTube or have their content on YouTube. A Google/Brightcove deal would not mean customers content would automatically show up on YouTube, but the kind of customers Brightcove has want to deal with a company that understands more than just video platforms.
Not to mention, how would this affect customers who stream content today via Brightcove? Google's network does not support streaming protocols and I don't see Google setting up their network to stream content in the Microsoft format. Today, most of Brightcove's customers use Limelight for delivery or use their own CDN in combination with Brightcove. Unless Google were to continue to use a third party CDN for video delivery, something they have not done in the past in any volume, I don't see how a deal like this works. I can tell you this though. If this deal does go through, look for a lot of Brightcove's competitors to pick up a large chunk of their business that would not stay at Google.
I could completely see Google doing a deal like this, but I'm not convinced it would be that great of an offering in the market for content owners or that it makes a lot of sense.
Updated post at 2:19pm ET to add the estimates on Brigthcove's revenue from reselling CDN services.