IP Democracy: Acinion is Now Blackwave, Raises $16 Mil. in Series B

Video storage and delivery infrastructure provider Acinion is coming out from under wraps with a new name, Blackwave, fresh from a $16 million cash infusion. The series B funding round was led by Sigma Partners and was joined by both of Blackwave's Series A financing investors -- Globespan Capital Partners and IDG Ventures Boston.

This new round of funding follows the start-up's $5 million first-round funding announced last December and will fuel a big push by the company when it starts shipping its product on a commercial basis in Q1 08. What, exactly, does Blackwave produce?

Blackwave does storage, streaming and all the intelligent software needed to power video publishing and it promises to cut costs over existing video distribution set-ups by a factor of ten. Although content providers used to face steep bandwidth costs and low hardware costs when putting their videos online, it's now the opposite.

Bandwidth costs are low but still not "low enough for everybody to go online" CEO Robert Rizika told me in a briefing last week. The big expense is now the hardware component of the equation and "Blackwave cuts the infrastructure cost by a factor of ten," Rizika contends.

Full-length video content requires a lot of servers and hardware, which in turn require a lot of rackspace, which in turn adds even more to the cost of delivering video. Blackwave's system produces 20 gigabit per second performance capable of serving an iTune video to 20,000 simultaneous users where existing configurations can only 2 gigabits per second capable of serving 2,000 simultaneous users. "We're fundamentally getting rid of 9/10s of your infrastructure cost," Rizika said.

Not only does Blackwave speed delivery and cut costs, it also improves video quality, the company contends. "We have software that as it sees new requests come in, it adds more performance to the hardware to manage the experience," Rizika claims.

Blackwave is currently in use by a couple of alpha and beta testers, including one "very large TV media company [my money says that's NBC], one very large social networking site and one very large UGC customer." Blackwave offers three different kinds of products aimed at three overlapping kinds of businesses.

Its most expensive product is aimed at big content delivery networks (CDN) such as Akamai (Jonathan Seelig, Akamai co-founder, is a board member). Blackwave also sells a system for large media companies that have decided to bring content delivery in-house, as well as a system for large media companies that need digital storage but use CDNs for delivery.

Although one upshot of Blackwave's system could be lower costs, Rizika thinks the real benefit might be to make it more economically feasible for content providers to bring more content libraries online. "If you think of Internet video today, just about one to two percent of video that could be online is online."

With a cost structure that is one-tenth of existing costs, top content providers can afford to bring online video content that otherwise might have lost money, such as old TV series, niche films and other material that is currently gathering dust. Small players that can't afford to invest in online video infrastructure might be able to do so for the first time using Blackwave's technology, Rizika thinks.

What isn't clear to me is whether a lot of video providers are ready to scrap their legacy set-ups, which include storage systems from companies such as NetApp (or increasingly "white box storage"), streaming servers from companies such as Dell and HP and caching and load balancers from companies such as Cisco. Even if Blackwave's system reduces the cost structure by 9/10s, most online video providers have made substantial investments in their existing infrastructure and might not be willing to junk the legacy gear in favor of Blackwave.

Rizika contends, however, that these legacy systems have very short life-cycles to begin with and are typically obsolete within six months. "What we've done with our system is build all those pieces in and optimized them for rich media delivery," making it a no-brainer for video providers to swap out the multiple pieces of hardware for Blackwave's system.

Posted by Cynthia Brumfield on December 3, 2007 10:47 AM to IP Democracy