2015 was a very exciting year for the sector, with the year witnessing not only the most amount of dollars invested but also the highest number of acquisitions yet.
According to our Tracxn Report on Online Video, funding into the space increased by ~29% in 2015, with the sector seeing a total $1.5B invested, contributing significantly to the overall funding of $6.3B invested since 2010. The funding for the year was mostly driven by MiaoPai receiving $200M raise in a single round, which is the sector’s largest deal in the last 5 years. The year also witnessed other high ticket sizes in the form of Azubu receiving $60M and Tastemade raising $40M.
These high volume deals have indeed contributed significantly, considering that the number of rounds has been decreasing, indicating that the sector is now in a phase where large companies such as the above-mentioned ones, are now grabbing a majority of the investments.
2013 witnessed the highest number of deals, with startups such as Videology and Ooyala raising $60M and $43M respectively during the period.
As the above graph indicates, a large portion of 2013’s deals was dominated by early stage rounds, with startups in the Video marketing and syndication, Live streaming apps, and Interactive Videos space seeing a majority of the funding. This was because there was a sudden increase in the number of startups founded after 2011. The year also saw good contribution from late stage deals, which has continued in the years 2014-2015, where Social Video sharing, Supply Side Platforms for Video advertising, and companies providing technology for video distribution have received a majority of the funding. Average round size of the funding gradually increased from 2013.
Acquisitions Increase over the Last 3 Years
A telling sign of the market seeing consolidation is the fact that M&A activity has been increasing steadily over the last 3 years, with the maximum number of acquisitions happening in the Video Distribution – Technology sector. The number of acquisitions peaked in 2015, with Alibaba’s acquisition of Youku Tudou for $4.4B being one of the biggest acquisitions of the year.
2016 has continues the trend, seeing a total of 5 acquisitions already, with the most important being IBM acquisition of Ustream.
2014 Witnessed the Highest Number of New Startups
The number of companies being founded in the Online Video space has been seeing relatively high volumes ever since 2011, post which over 60% of the total companies have been formed. Out of these, 60 percent of the companies in Social Videos space were formed in last three years.
2014, in particular, saw the maximum number of companies in the space, riding on the high number of deals, specifically early stage deals, the sector had seen during the last year.
Video Advertising Stands Out as the Most Funded Business Model
With a funding of over $8B in the last 10 years, the advertising Business Model stands out as the most funded segment within the Online Video space, accounting for 25% of the total funding. 2013 saw the most number of funding rounds (41) with majority of rounds (18) happening in companies creating Interactive Videos for advertising. Late stage deals have consistently gone up since 2013 with increasing ticket size.
Notable funding rounds have also been observed in the On-demand Video distribution sector, with companies raising a large amount of funding in 2014 and 2015.
Signs are really bright for the companies operating in Live Streaming space, considering its reliance on the upward trend of mobile smartphone penetration which is expected to reach 70% of the world’s total population by 2020. Around 65% of the companies operating in this space were formed in last three years. 2015 saw a total of 23 rounds of investments in this sector, out of which 17 were early stage deals. In 2016, Live streaming will be less about direct competition and more about who can convince the huge mainstream population who’ve never tried it to jump in front of the camera.
500 Startups, Sequoia, and General Catalyst Partners are the Most Active Investors
Early Stage VC firm 500 Startups was the most active investor in the space with Vungle, Wideo, Viki, Zencoder, Virool, Vidcaster, and Zeemi.tv as part of its portfolio. Sequoia Capital and General Catalyst Partners follow with 4 companies a piece. Sequoia investments include YouTube, Joost, Imba TV, Interlude, while General Catalyst Partners has invested in Brightroll, Elemental Technologies, KIN Community and Visible Measures
Note: The Tracxn Report on Online Video covers companies that provide software and platforms for the companies in Online Video sector. It includes online tools used by the video creators and companies which provide platforms for the publishing and management of video content. This report covers companies providing On-demand and OTT videos, encoding/transcoding and bitrate streaming solutions for video distribution. The report also encompasses companies providing platforms for social sharing of videos, live streaming of videos and multi-channel networks. We have also covered companies providing solutions and technology for Video advertisement, Video marketing and monetization and video analytics.
Check out the Online Video Report here: