Tubular, a small San Francisco start-up that provides analytics for
YouTube content creators, has raised $2.5 million in venture capital in
the latest sign of how far the business ecosystem has evolved around the
Google-owned video repository.
YouTube was once known as Wild West of
online video, but over the past two years Google has focused on raising
the quality of YouTube content through a series of direct investments
and the cultivation of third-party "networks".
The result is a
cluster of small studios, mostly based in Los Angeles, that acts like a
digital Hollywood, pumping out slick YouTube hits.
ultimate goal of hosting enough high-quality content to lure
big-spending advertisers to YouTube, Google doled out more than $100
million last year in grants to its networks and bedroom stars.
May Google led a group of investors who poured $35 million into
Machinima, a leading network, to stoke growth in the YouTube industry.
That market has now grown to the point that it can support its own start-ups, says Tubular's founder Rob Gabel.
more semi-professional and professional YouTube creators enter the
sector, with increasing competition among them, there is a growing need
for analytical services.
Tubular is one such service, allowing
customers to monitor and measure when videos get the most views and
comments, or the sources of referred traffic.
includes a dashboard that displays the real-time analytics, which are
generated by tapping into a stream of data provided by YouTube.
YouTube is a multibillion-dollar market, then that's billions of
dollars going out to content creators who can then invest that again,"
said Gabel, a former Machinima employee.
"On every platform, from Google to Facebook to Twitter, people have turned to third parties' helpful tools."
a high level, the pie is large and continuing to grow rapidly. Former
Citi analyst Mark Mahaney estimates that YouTube will bring Google a
total of $3.6 billion in 2012.
Rich Heitzmann, a co-founder of
FirstMark Capital, which led Tubular's latest funding round, said that
Google is far from wringing out all of the potential revenue from
"We think the ecosystem is at least the size of
Facebook's, considering it has a billion users and if you consider the
time spent on YouTube," Heitzmann said.
"The advertising opportunities are there, and yet the ecosystem hasn't evolved technologically."
investors in Tubular's first tranche of equity financing included High
Line Venture Partners, SV Angel, Lerer Ventures and Bedrocket Media
Still, Gabel is betting that he can create a long-term,
sustainable business on YouTube's platform at a time when some Silicon
Valley companies are wary of building on the backs of larger companies.
for instance, courted controversy this year when it made a business
decision to shut off its firehose of data for a number of popular
third-party developers to drive more visitors to its own site.
DeBevoise, the CEO of Machinima who is also a Tubular investor, said
that YouTube has reason to foster its independent developers rather than
"It's a thriving and fast-moving ecosystem now," he said. "But a lot of players are needed to make it all work."
Though Gabel acknowledges that the YouTube industry's rapid expansion is no guarantee of success, he has high hopes.
"Everything is a bit of gamble," he said, "but I feel good gambling on YouTube and online video."
© Thomson Reuters 2012