Brightcove announced this morning that it is acquiring Unicorn Media for approximately $49 million, a savvy move to expand into cloud-based video ad insertion, which is particularly beneficial for mobile devices.

Unicorn has differentiated itself by enabling content providers to dynamically insert ads in the cloud, rather than in the video player. By "stitching" ads in the cloud, Unicorn obviates some of the major issues in video ad insertion today, including delays and buffering caused by the video player switching between content and ad playback. These diminish the user experience, in turn causing abandonment which hurts overall consumption and monetization.

Unicorn's CTO AJ McGowan (who will become Brightcove's new CTO following the acquisition) recently explained to me that the key point of traction for company has been video monetization on mobile devices. Because of the massive fragmentation of mobile devices and inability to handle video players / software downloads, seamless video monetization has been extremely difficult.

Obviously as more video consumption has migrated to mobile devices, this has become a key pain point for content providers. By moving the ad logic into the cloud and inserting the ads there, the ads simply play back as part of the video stream. Importantly, all incumbent decisioning and ad sources are retained.

AJ said that solving the mobile monetization problems often leads to broader opportunities for Unicorn's cloud-based insertion approach in connected devices and even on the desktop. In these environments (as Brightcove CEO David Mendels mentioned on a call this morning), growing challenges include ad-blocking, complexities of live-streaming, and variability in Internet connectivity, all of which cause user experience issues when the video player is handling the ads. Since Brightcove is a leading online video platform, no doubt it has heard about these issues repeatedly from its own customers.  

David said that Unicorn currently has 50 customers, including 5 of the top 10 media companies in the U.S. such as ESPN, NBC and The Weather Channel. Unicorn's compelling ad insertion product now gives Brightcove a fresh angle to approach these customers with revenue enhancement opportunity.

In fact, David highlighted the opportunities that Brightcove will have using a hybrid cloud/player approach for ad and content delivery. More broadly, the Unicorn approach appears poised to have a big impact at Brightcove given the prominent roles several Unicorn executives will be taking. In addition to AJ becoming CTO, Anil Jain, Unicorn's SVP of Business and Corporate Development, will become SVP/GM of a new Media Group at Brightcove and chief product officer Jon Corley will become SVP of Product and Operations at Brightcove. As well, Unicorn's CRO Chuck Parker will become VP, Media Sales and CSO David Morel will become VP of Customer Success in the new Media Group.

Overall, it seems like a win for all. Brightcove now has a strong new position in monetization, with a focus on the white-hot mobile space, which is very complimentary to its existing management and encoding solutions. It also gets Unicorn's portfolio of 14 patents with another 20 pending. Unicorn's technology will get much broader sales support as part of the focused Brightcove Media Group. And video content providers will get more innovation in cloud-based ad delivery, which will help their monetization and growth. This in turn drives more choice for viewers. All good stuff.