Deal radar 2008: Veoh

San Diego-based Veoh is an internet television service where users can find and watch major studio content, independent productions and other user generated videos. Founded in 2003 by Dmitry Shapiro, who is also the company’s Chief Innovation officer, Veoh began its full beta service in early 2006.

Veoh gives you two viewing options. First, the viewers can—like in Youtube— watch streaming video from across the web on Veoh.com. VeohTV is the second option that viewers have, where they have to download software that provides them with a ‘video browser’. The ‘video browser’ is a P2P interface to search, browse and view all the video on the internet.

Users can download video from any website and save it for viewing it later. One does not need an internet connection to watch saved content on the player. Veoh also lets viewers to subscribe to RSS feeds, channels, or publishers and have new content delivered to the player directly. Veoh also has a recommendation engine, which is based on user behavior, to help users find content that interests them. The vertical engine learns the user’s interests as he watches, rates and downloads content and presents the user with more video choices that match the user’s taste.

Veoh lets publishers upload content from their PC and makes the content available on its site, player, on the publishers’ site and even on devices like iPods and Sony PSP. Publishers can customize the content including organizing the content into episodic series and can even publish through RSS feeds. Till 28 April 2008, Veoh allowed publishers to put their content up for sale but discontinued it because it failed to gain traction. The publishers were given an option of converting the videos to free content; in the absence of any such request from the publishers, the videos were removed from Veoh.com.

Apart from user generated content, Veoh has also tried to expand its content network through a series of deals. The company announced a deal with DivX in early 2008, under which some of the popular videos from veoh.com can be accessed from DivX. Shortly after that the company announced its partnership with Viacom’s MTV networks to air content from MTV, VH1, Comedy Central, Nickelodeon and other MTV Networks. The company also went on to sign a deal with FEARnet, an on demand video platform for horror and thriller movies. With this deal, users will be able to access FEARnet on a dedicated channel with movies selected from Sony Pictures Television, Comcast and Lionsgate.

In January 2008, the company also appointed Michael Henry, a digital advertising veteran, as Senior Vice President Sales. He was with Dow Jones & company where he was the Vice President of the integrated corporate sales and marketing division. He has led multimedia deals with many of Dow Jones’ biggest clients. He is expected to lead Veoh’s sales team in developing advertising solutions to help brands reach Veoh’s diverse viewer base. Earlier, in July 2007, Veoh hired Steve Mitgang from Yahoo to be its CEO amidst copyright infringement lawsuits from major players. Disney’s former chief Michael Eisner is on the Board of the company.

So far 2008 has been eventful for Veoh. The company, with its latest round of funding, has raised its total funding to $69.8 million. It had previously raised $2.25 million in a Series A round from Shelter Capital Partners; $12.5 million in Series B from Spark Capital, The Tornate Company, Time Warner and Michael Eisner; $25 million in Series C from Firefly3 LLC, Goldman Sachs, Shelter Capital Partners, Spark Capital, Jonathan Dolgen. Recently it raised $30 million from Intel Capital, Adobe Systems, Gordon Crawford, Shelter Capital Partners, Spark Capital,
Goldman Sachs, The Tornate Company, Time Warner Investments, Tom Freston and Jonathan Dolgen.

Not all events have been good though. The company received a lot of flak for its decision to restrict international access. Veoh had announced that it would concentrate only on 33 markets (read countries) that have the most viewers, in a bid to prioritize its audience and advertisers.

In a recent interview to Dmitry Shapiro, Eisner highlighted the incorrect placement of ads in one of the shows produced by Eisner. That can at best be termed as teething problems.

The company in its first quarter milestones had reported that viewers spent twice as much time on Veoh than on Youtube and that viewership increased during traditional primetime TV viewing hours. The domain veoh.com, according to Quantcast, attracted nearly 19 million visitors with over 6 million from the US.

Whether or not the company can use the funds and Eisner and Mitgang’s experience to create a compelling internet video company remains to be seen. As with its competitors in the sector, Veoh is burning through cash at godspeed, so to provide returns to the shareholders, they better build a sizable company!

Can they? The jury is still out.

This segment is a part in the series : Deal radar 2008