• by Mark Walsh  @markfwal, May 23, 2008

Web video provider Brightcove is entering the Japanese market by creating a local subsidiary with a group of big Japanese media players.

The new unit, Brightcove KK, is backed with $4.9 million from Brightcove and four local partners: Dentsu, Japan's largest ad company; content delivery network J-Stream; media conglomerate transcosmos; and interactive ad company Cyber Communications, Inc. (CCI).

With high-speed Internet connections in more than half of Japanese homes, Brightcove plans to capitalize on a fast-growing audience for online video. Only recently, however, have Japanese media companies and brands begun to view video as a viable option because of falling broadband costs and more flexible rights management rules, according to Brightcove Chairman and CEO Jeremy Allaire.

"Media companies (in Japan) have dabbled in it, and now they're looking at it as a real business," he said. "Brand marketing companies and TV and display advertisers would very much like to shift dollars into the Web."

Launched in 2005, Cambridge, Mass.-based Brightcove powers online video for scores of prominent U.S. media brands, and marketers including the Discovery Channel, HBO, About.com, General Motors and Time Inc. Now it wants to do the same for their Japanese counterparts.

Allaire added that the partnership formed with top Japanese media and distribution companies will help smooth Brightcove's move into the market. In particular, Dentsu, J-Stream, and CCI, will act as sales agents for Brightcove KK, along with its U.S. parent.

"Japanese business culture is very different than U.S. or European business culture," Allaire said. "There's an enormous premium in doing business with well-established brands in Japan."

The nearly $5 million initial investment should be sufficient for Brightcove's Tokyo-based offshoot to ramp up operations over the next 18 to 24 months, said Allaire. While Brightcove also maintains a small presence in Beijing, the company has no immediate plans to expand elsewhere in Asia.

"We believe there are many other strong geographies in Asia for Brightcove, and those are things we'll be looking at over time," Allaire said. Besides the U.S. and Asia, Brightcove also has European outposts in London, Brussels and Berlin.

It has raised about $87 million in private financing to date, including a $59.5 million round in 2007 from investors including The New York Times Co. and top investment manager AllianceBernstein L.P.