Deal Radar 2009: Critical Media

CNN’s ratings soared last Thursday evening as viewers tuned in to coverage of Michael Jackson’s death, demonstrating that traditional broadcast news still has a strong pull. But when it’s not a case of breaking news, broadcasters, advertisers and publishers are still trying to figure out what forms twenty-first century media and its distribution will take. Tonight’s Deal Radar company is one answer to that question. Founded in 2002, Critical Media provides real-time broadcast media capture, search, syndication and information services. Headquartered in New York City, the company was founded by Sean Morgan, one of the founders of Pinnacor (formerly known as Screaming Media). His experience with Pinnacor taught him that TV was a powerful medium for forming public opinion around products, people and competitors, yet the ability to track broadcasts in real-time was unavailable.

He started building Critical Mention—one of the three solutions the company offers—as a prototype solution that could digitize the world’s broadcast television. Today the platform, which ingests more than 15 hours of television content every minute across four continents, is subscribed to by a business community that includes brand managers, general counsel, investor relations, media relations and public relations professionals. The company estimates that the intelligence market stands at $20 billion, and they claim to have managed to drive into the heart of the business.

According to a June 2008 report by the Kelsey Group, revenue from the local online video advertising market will be $1.5 billion by 2012. In 2007, the company launched another solution, this time for online publishers called, ClipSyndicate to venture into this $1.5 billion market as well. ClipSyndicate is a portal for of licensed video news clips that are made available to publishers with player and ad server functionalities to create niche channels for their audiences with up-to-the-minute information on subjects they care about. The portal receives more than 2,000 news clips from more than 400 partners every day. They claim to have an archive of more than 750,000 video news segments from the last 2-plus years.

According to another report, this one published by Forrester Research in December 2008, the global online video advertising market will reach $7.2 billion by 2012. The company will be able to tap into this market with its recently launched solution, Syndicaster. The web-based broadcast-to-online solution allows broadcasters to upload, edit and post their video content. Broadcasters can access their live television signal from any web browser in real time and edit, title, tag and create clips. The company claims that publishers can publish, distribute and syndicate all of their video assets with one click. Further, Critical Media recently launched the OnLocation feature, which allows newspapers, broadcasters and bloggers to upload video caught on camera or smart phones directly into their Syndicaster account.

While the pricing model is the same for Critical Mention and Synidcaster, the Clip Syndicate follows a slightly different model. Both Critical Mention and Syndicaster have to be subscribed to annually. The Clip Syndicate, however, is free at the basic level and requires monthly subscription only if one wants to access the ‘premium’ services.

Though the company did not divulge the names of its customers, it did mention that each of its units has paying customers and generates revenue. However, it is Critical Mention that is the most mature division today and generates an operating profit. The company claims that ClipSyndicate and Syndicaster are well positioned and are expected to significantly ramp revenues in the next 18 months.

The company was initially funded by the founder as well as friends and family until the product was built out and had several dozen paying clients under contract; Critcal Media funded further expansion in headcount and equipment through a small angel round and with two subsequent VC rounds. Critical Media, which is currently operating at cash flow break-even, has raised nearly $6.5 million so far: a $250,000 angel round in 2003; a $2 million Series A led by Greenhill and Silicon Alley Venture Partners in 2004; and a $4.2 million Series B led by CIBC Capital Partners in 2005. The company partially funded the early operations and development of the Syndicaster and ClipSyndicate from Critical Mention’s operating surplus.

Suggested Reading:

*Web 3.0 & News Corp
*Deal Radar 2008: Brightcove
*Deal Radar 2009: SpotMixer

This segment is a part in the series : Deal Radar 2009