Brightcove?s Zencoder Purchase Could Be The First Step In Its Transition To A Freemium Model

Brightcove announced its first acquisition as a public company today, with plans to acquire cloud encoding startup Zencoder for $30 million. And while the purchase will add a small amount of incremental revenue, the bigger strategic bet for Brightcove could be around making its video offerings more flexible and extensible, and hooking developers with a freemium business model. First of all, Brightcove's Zencoder purchase marks a huge opportunity to capture part of a fast-growing segment of the online video market. According to Brightcove CEO Jeremy Allaire, Frost and Sullivan estimates the market is worth $264 million today, and will grow to $630 million by 2017. For this year and next, the actual impact will be pretty small: Brightcove estimated that Zencoder would add $1 million in revenue in the second half of 2012.

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