Brightcove Case
Q.1 Was it wise for Brightcove to launch as a four-sided platform? If yes, why? If not, which side should they have launched with?
Brightcove’s launching of a four-sided platform was not a wise or prudent idea. The company did not take into consideration the interest of the content-providers, particularly the large publishers and the resource needs for such a venture. After two years, Brightcove’s management realized that its goal of becoming a four-sided platform linking video content providers, Web affiliates, advertisers, and end-users was not feasible (Hagiu, 2013). The primary issue was that large content publishers such as MTV Networks, The Wall Street Journal, and Discovery Communications perceived Brightcove as a rival against their efforts to attract advertisers and consumers to their websites. Moreover, the company established that its resource capacity could not match the resource requirements for four different forms of consumers (Hagiu, 2013). As such, the firm could have just focused on one side, which is the supply of tools for video publishing to content providers.
Q.2 How would you design network effects on a platform like Brightcove?
Multi-sided platforms (MSPs) such as the one embraced by Brightcove can encompass various features and functionalities that limit search costs, transaction costs, or product development costs. As such, making MSP design decision becomes difficult when features that put the interests of various MSP sides at odds with one another or with those of MSP emerge. According to Hagiu (2013), such features establish strategic trade-offs for the MSP as they produce positive value for the MSP or certain participant groups, but the negative value to groups of participants, as was witnessed between Brightcove and large content publishers. Therefore, when designing network effects in a platform such as Brightcove, the appropriate principle is to constantly address trade-offs to meet the interest of the participant group that is most significant to the long-term success of the MSP.
Q.3 Did Brightcove make any great strategic moves? If yes, what were they? Did they make any strategic mistakes? If yes, what could have they done better?
Yes, Brightcove made a strategic move. After the firm’s management experienced the conflict of interest with large content publishers and established that its resource capacity could not meet the resource requirements for establishing a four-sided platform, the management sought to focus on a one-sided platform. In its new strategic move, the company decided to settle on a one-sided platform, which involved supplying content providers with video publishing tools. This move was strategic as it eradicated any potential conflict of interest between the company and content publishers and ensured that the firm’s resources could meet the needs of the new business venture. The success of this move was evident in 2013 when Brightcove had a market cap exceeding $400 million (Hagiu, 2013). It can also be noted that Brightcove made strategic mistakes by not focusing on meeting the interest of participant groups that generated large revenue streams to the company. The organization ought to have considered the interests of this participant group in designing its platform.
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