Who would buy a struggling video website, bogged down by lawsuits, when YouTube, Hulu and the BBC iPlayer seem to have the market sewn up?
Qlipso would, apparently, for the Israeli site has bought Veoh‘s assets after the latter filed for bankruptcy in February. One person with knowledge of the deal put the price at less than $20m – well south of the $70m investors including Goldman Sachs, Spark Capital and Intel Capital had pumped into Veoh.
You could be forgiven for not knowing Qlipso. It started life as a massively multiplayer online game (although massive may be an overstatement). But when Jon Goldman, a veteran of online games, joined as chief executive, he saw a greater opportunity in using the same technology to enable groups of people to chat using text, voice or video, while they gather around a virtual TV screen.
Qlipso “creates the opportunity of the TV room, sports bar or comedy club which has been missing on the web”, he says. He likens the experience to watching Netflix or Sky Sports on Xbox Live, but through a web browser – think high-five-ing avatars when a goal is scored or a cartoon robot is blown up. “The world doesn’t need another destination site, so let’s take that social capability to content where people already are.”
Mr Goldman hopes that Veoh will provide an audience for this multiplayer viewing experience and will gradually integrate Qlipso into the site, which he says has around 20m regular users.
The pitch of social TV and chatting with friends sounds similar to Joost, another video site which crashed and burned. Qlipso has acquired all the content already on Veoh (though not the lawsuit with Universal Music) but the danger is that – like Joost – it fails to sign enough new deals with content owners.
Mr Goldman says that he is working to secure more sci-fi and manga content along the lines that Veoh’s 18-35 male audience in the US, Japan and South Korea already enjoys. He argues that Veoh is different to the other video also-rans thanks to good advertisers such as P&G, strong technology and loyal users. It merely suffered “bad luck” with the economy, falling ad rates and lawsuits, he says.
“More importantly, we are setting a path that is not about being under the umbrella of YouTube and Hulu,” he says. “We want to be market leaders in social consumption. The experience is going to be substantially different to Metacafe, DailyMotion, YouTube or even Hulu.”
He hopes the social approach will give a multiplier effect to attracting users, and keep hold of its viewers for longer.
As a result Qlipso’s investors, Jerusalem Venture Partners, will be banking on valuation more akin to a social gaming site – think Playfish or Zynga – than just another a video site.
It’s a long shot that people will replace their real-world sofas to watch non-exclusive, non-premium content in front of a PC screen. But the deal highlights the big bets some investors are still prepared to make in online video – even if they have, at least, learned not to take the new incumbents on directly.
