MENU

Newsroom

Keep up with the latest press releases and insights from RhythmOne.

blinkx Takes On Video-Search

LONDON (Dow Jones)—Video search engine company Blinkx plans to cash in on the market’s hunger for digital media investment by floating on London’s Alternative Investments Market this month, but its public listing may be short-lived, analysts say.

Blinkx hopes to become the Google Inc. (GOOG) of the Internet video-search engine market and is looking to profit from video advertising spending, which research firm eMarketer estimates will top $2.9 billion in the U.S. alone by 2010. It’s expected to raise around GBP120 million in its float.

However, many analysts predict the dual Cambridge, U.K. and San Francisco-headquartered company would be an attractive takeover target for Internet giants Google and Microsoft Corp.‘s MSN (MSFT), which have struggled to find the same success in the video search market as they have with text-based Internet search engines.

“If you want to find some relevant video information on the Web then Blinkx is it. Microsoft and Google just don’t seem able to do it,” said London-based technology analyst Derek Brown, at broker Seymour Pierce.

“Someone like Google would pay a lot of money for a firm like Blinkx. It’s one of these businesses that won’t last for a long time on the public market,” Brown said.

A spokesman for Blinkx said that the company was looking to float and grow the business organically, stating that its recent announcement was not a dual-tracking process.

A Google spokesman declined to comment on whether the company would look to acquire Blinkx and added that it was working to improve its video-search technology.

“We’re constantly working to improve all of our search services to make it even easier for people to find the information they need - whether that’s a Web page, a book, or a video,” he said.

Following Google’s $1.65 billion acquisition of YouTube and News Corp.‘s (NWS) $580 million buy of Myspace.com parent Intermix Media, video content has become a key focus for investors.

According to VentureOne, a market tracker owned by Dow Jones & Co., publisher of this newswire, U.S. venture capital investment in video software and services firms increased 95% last year to $682 million.

Much of this interest results from the potential advertising revenues that can be generated from the Internet video market. Research firm eMarketer forecasts that U.S. online video advertising alone will grow to $2.9 billion by 2010 from $410 million in 2006.

With more and more consumers viewing video content from YouTube-style user-generated clips through to Internet television broadcasts via fast broadband connections, advertisers are looking for a way to target consumers with marketing messages.

Blinkx says it’s the world’s largest video search engine, having indexed more than 7 million hours of video content. The company is well positioned to help broadcasters monetize content on the Internet, is says. It has already struck deals with 130 media companies, including NBC, Viacom Inc.‘s (VIA) MTV, HBO and YouTube.

Chief Executive Suranga Chandratillake says that while many other startups are trying to develop such technology, Blinkx has the lead, having invested more than $150 million in research and development via enterprise search-engine giant Autonomy Corp. PLC (AU.LN).

Autonomy recently hived-off its consumer search business into Blinkx in return for a large chunk of the company when it floats. Blinkx also has 111 technology patents in its name.

Chandratillake says that while most of its competitors rely solely on searching meta-tags - information that helps search engines identify content - which are entered by content creators, Blinkx uses added speech recognition and visual video analysis to create an index of all the videos on the web.

“We have a vast collection of couch potato computers sitting there watching TV and video content at a far faster speed than humans ever can,” he said.

By using thousands of machines to “spider” or locate all textual, visual and verbal details in a video, Blinkx is able to provide advertisers with in-depth analysis to help them decide on what clips to advertise alongside.

For example, in the new Spiderman 3 film, Blinkx could link viewers to adverts by sponsor Burger King Holdings Inc. (BKC) or an ecommerce site selling designer clothes worn by super-hero actor Toby Maguire in the movie.

Seymour Pierce analyst Derek Brown says that Blinkx has chosen an opportune time to try and float on London’s AIM.

“There are some very big media companies out there wanting to monetize the huge video archives that they have,” he said. “There’s a chance here (with Blinkx) for content providers not to be beholden to Apple (AAPL) and Google.”

James McQuivey, principal analyst at Forrester Research, says that Blinkx, which was formed in 2004, has managed to get the edge in the video search market, and that even Google doesn’t have the same functionality.

“Google has been temporarily distracted by its acquisition of YouTube and how to monetize it,” he said.

Seymour Pierce’s Brown adds that Blinkx is more advanced than competitors, such as Time Warner’s (TWX) AOL Video Search unit, Pixsy, and Yahoo! Video (YHOO), and is actually used by other search engine firms including Lycos and InfoSpace.

Blinkx’ Chandratillake says the company will grow organically through its own portal and by providing its search-technology to other Web sites, in the same way Google does.

Nevertheless, some analysts see Blinkx as a prime acquisition target.

“I would be very surprised if a leader in the video-search space is able to stand alone in this market for very long,” said McQuivey.

“AOL last year bought Truveo for the same reason, and if video search continues to grow then I’d be surprised if Blinkx was still trading on its own in one to two years’ time,” he said.