So much for the YouTube competitors. The owners of Veoh, a video portal that claims to have millions of users worldwide, has said it has enlisted the help of Equity Partners CRB to explore strategic options for the company, including a sale. “The company intends to focus solely on commercialization of its proprietary social video offerings,” owners Qlipso said in a statement (embedded below). The move is a sign that even with large audiences (but perhaps not large enough) video portals are facing some challenges monetizing under their existing, ad-based business models. And it may be a further sign that Veoh specifically has faced challenges in growth following lawsuits from big media, a bankruptcy in 2010, and its sale to Qlipso shortly after.
Veoh, which focuses on premium rather than user-generated content, says it currently has 3 million pieces of content in its catalog, along with revenue-sharing partnerships with TV, cable, music and other brands worldwide. The company had raised some $80 million from investors that include Intel Capital and Michael Eisner.
But although there is content on the site now, it is not clear whether the sale will include it or just the platform to deliver it for someone else. Matt LoCascio, a Managing Director at EP, described the sale in a statement as “a very unique opportunity to capture massive traffic and a sophisticated technology backbone that can be used for a variety of video, social, and gaming applications.” When reached on the phone for comment, he told TechCrunch: “We’re still working out whether there will be content in the deal.”
He also noted that the sale process only started about two days ago.
Israel-based Qlipso bought embattled Veoh back in 2010 for a price that TechCrunch understands was in the region of only $10 million — a big discount on the $80 million originally pumped into it by investors. At the time, the CEO of Qlipso, Jon Goldman, described the sale as an “exotic venture strategy.”
Qlipso itself is a social media company. It also operates Mixin.com, another social video site that lets users overlay memes and messages over videos and then post them on other sites. The Mixin domain itself came out of the remains of a social calendaring app that hit the deadpool in February 2011.
Although Veoh was focused on premium content in its business model, the company also faced lawsuits from content owners for how it handled it, specifically related to content uploaded by regular users.
Founded in 2006, when these suits were still very much a common occurrence (YouTube also faced legal actions) Universal Music Group filed a copyright suit against Veoh in 2007. In that case, the court ruled in Veoh’s favor, in a decision that some saw had wider implications for other video sites like YouTube. But although the company came out on top in that particular Hollywood vs Silicon Valley battle, the site perhaps never quite developed into a big enough play anyway. According to comScore’s most recent rankings for online video sites, the largest player of all, Google/YouTube, had 157 million uniques. Veoh did not make the top 10.
Dmitry Shapiro, the founder of Veoh, is now a product manager at Google+.
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FOR IMMEDIATE RELEASE
VIDEO PORTAL SITE RETAINS M&A FIRM, EQUITY PARTNERS CRB
SEPTEMBER 11, 2012 – LOS ANGELES, CALIFORNIA — The owners of Veoh, one of the world’s largest video portals (www.veoh.com) has retained Equity Partners CRB (www.equitypartnersCRB.com) to explore strategic options, including a sale of the asset.
Veoh has millions of users from around the world, including large communities in Asia, America and Europe, and a quickly growing community in India, as well as over a million mobile users.
Hundreds of Veoh servers, located in southern California, accommodate a global audience hungry for video, along with storage capabilities for user generated content and media partner content, robust technology for ad serving and partner management, as well as over 3 million pieces of content on the system. Veoh enjoys revenue partnerships with TV, cable, music and online video brands all over the world. Operating costs have been trimmed to create one of the most efficient video operations active today.
Veoh was originally purchased as a source of traffic for a new social video technology start up in 2009 from a founding team which had invested nearly $80 million in building a world class video portal and included marquee investors like Michael Eisner and Intel Capital. Now that Veoh has served this purpose well, the company intends to focus solely on commercialization of its proprietary social video offerings.
The sales process is being represented by Equity Partners. Matt LoCascio, a Managing Director at EP, says that “is a very unique opportunity to capture massive traffic and a sophisticated technology backbone that can be used for a variety of video, social, and gaming applications.”
Equity Partners CRB, headquartered in Easton, Maryland, provides investment banking services exclusively for middle market companies in financial distress and/or with special purpose assets and has completed in excess of 400 transactions throughout the United States since 1988.