Online Video Flameout: The Rapid Rise and Fall of Viddy

What's Viddy?

Viddy is an app that allows users to shoot, edit and share short videos (15 seconds or less) from their cellphones. One of the strengths of Viddy is the way the app makes editing and customizing footage (all done on a smartphone) simple. But perhaps most importantly, Viddy makes sharing these clips via social media (e.g., Facebook, Twitter, Tumblr and blogs) fun.

So why - just a year after launching and mere months after being valued at $200 million and becoming (briefly) the number one service in the iPhone App Store - is Viddy considered a prime example of everything that can go wrong in the circulation of original videos online?

According to a February 4th, 2013 Pando Daily report, Brett O’Brien - the co- founder and CEO of once red-hot online video platform Viddy - has been pushed out after "one of the biggest blunders in recent M&A memory."

And, as described in a February 6th, 2013 Ryan Tate post to Wired: "O’Brien’s biggest mistake may have been spurning an eager suitor: Twitter just launched a Viddy-like short video service after O’Brien is said to have turned down an offer from Twitter in the neighborhood of $100 million."

The chart above (also from Wired) reveals why Brett O'Brien's alleged stubborn refusal to sell his start-up to Twitter back in mid-2012 - when Viddy and its rival SocialCam were at their peak, using Facebook to become the "Instagrams of Video" - now seems like a mistake.

At the end of April 2012, Viddy was able to raise "$30 million in investments from the likes of Twitter co-founder Biz Stone, singer Shakira and Roc Nation."

But that heady moment - and the opportunity to sell Viddy for 9 figures - passed very quickly.

SocialCam's founders apparently timed their exit with a bit more aplomb - accepting a $60 million takeover offer from AutoDesk in July of 2012.

But the scuttlebutt in Silicon Valley is that Brett O'Brien turned that kind of money down for Viddy - banking on a bigger payday down the road...

In hindsight it seems clear that the moment to cash-in on Viddy's sudden success was mid-2012 - before Facebook "tweaked their algorithm" and apparently began limiting Viddy's access to their users. In other words, besides failing to take the money when it was offered, Brett O'Brien's other key mistake may have been relying too heavily on the social graph of a service that he did not control (i.e., Facebook). By way of contrast, Instagram's billion dollar value to Facebook may have been largely because Instagram had its own network with discrete social graphs.

In any event, the moment when Viddy was the sector leader has passed: In recent months Twitter (and other social services) have been able to develop their own video sharing apps.

The lesson for anyone banking on online circulation as a revenue source for filmmakers?

It's still the Wild Wild West online.

More fortunes will be made and lost before the winners in social sharing of online videos are crowned.

Will there ever be reliable revenue models for online video?

Sure... In the sense that there will soon be companies that aggregate content and really pay filmmakers (some of them are probably already in business).

But will filmmakers be able to easily monetize content - tapping into recognized deep streams of revenue?

Face it. The new digital tools have made it easier to create content and share it online, but it's still the movie business, where (in the immortal words of screenwriter William Goldman) "Nobody knows anything."

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