Livepeer snags $20M for decentralized video transcoding

Livepeer has raised $20 million for its decentralized video transcoding network built on the Ethereum blockchain. It’s another sign that blockchain, the transparent and secure digital ledger behind cryptocurrency, is inspiring a sea change in computing toward decentralization.

DCG led the round with participation from Northzone, Coinbase Ventures, CoinFund, Mike Dudas’ 6th Man Ventures, and Animal Ventures. The company previously raised an $8 million institutional round led by Northzone.

Livepeer’s network empowers developers to provide cost-effective, resilient, and scalable video streaming. Its core utility is processing raw video submitted by apps and turning it into high-quality and reliable streams for viewers.

The creator economy

As a fundamental part of the creator economy, the raw volume of live streaming video continues to grow rapidly. Across all platforms worldwide, live streaming minutes doubled from 2019 to 2020, with viewers watching a total of 27.9 billion hours.

Yet there’s another side to these numbers: With the top platforms owned by Amazon (Twitch), Google (YouTube), and Facebook (Facebook Live + Gaming), there is little room for challengers, Livepeer said. Most startups end up using transcoding infrastructure owned by one of the giants, essentially lining the pockets of a competitor.

As the first decentralized video streaming network, Livepeer is an alternative to existing gatekeepers, said CEO Doug Petkanics, in a statement. The company’s open video infrastructure allows the next generation of creator economy services to rely less on centralized infrastructure that’s expensive and subject to the whims of big tech.

Livepeer’s on-demand platform provides scalable streaming at a cost-effective price without sacrificing performance or reliability, according to the company. That way, developers can build world-class livestreaming apps at a fraction of the cost of cloud providers, Petkanics said.

As more content innovators seek to capture some of the $70 billion video streaming market, the Livepeer network has been growing steadily. It regularly transcodes over a million minutes per week, with some weeks easily exceeding 2 million minutes. Livepeer’s growth is being driven by the booming creator economy, where applications need infrastructure to manage hundreds (or thousands) of streamers broadcasting live video concurrently.

Thanks to its network of 70,000 graphics processing units (GPUs), the Livepeer network can encode all the real-time video streaming through Twitch, Facebook, and YouTube combined. The streaming infrastructure needs will only increase as VR/AR applications and high-resolution formats like 4K and 8K video move into the mainstream.

Building Web3

Above: Livepeer is taking share back from the big video companies.

Image Credit: Livepeer

Northzone partner Wendy Xiao Schadeck said in a statement that Livepeer has a laser focus on building Web3 technology that impacts real users. She said she is excited to see the team continue to realize their vision of decentralized video while creating a better experience for developers and streamers.

The funding will be used to expand the team and continue investing in the Livepeer protocol, including expanding into new use cases such as scene classification, object recognition, song-title detection, video fingerprinting, and video stack expansion.

Petkanics and Eric Tang founded the company in 2017 with the aim of enabling livestreamers to bring their content to the market affordably without big usage fees. To date, Livepeer has streamed tens of millions of minutes, passing a key milestone: a record 2.3 million minutes streamed in a single week, a six-fold increase from the start of 2021.

The founders noticed that the domination of the big tech companies creates weird dynamics where a new streaming service just lines the pockets of a competitor.

“We started Livepeer to rebalance these dynamics and power video streaming applications at a highly efficient price, with infinite scale,” Petkanics said in an email to VentureBeat. “Livepeer enables innovations that aren’t economically feasible under traditional, centralized cost structures. These new dynamics will unlock new ways to communicate and entertain, as well as a new way to earn returns from digital assets.”

The market is massive, as streaming infrastructure needs will only increase as VR/AR applications and high-resolution formats like 4K and 8K move into the mainstream across entertainment and gaming. The company has 20 employees.

Why it matters

Above: Livepeer is for devs, users, and broadcasters.

Image Credit: Livepeer

Video is about 80% of the content on the internet. A crypto-coordinated video infrastructure can tap into a competitive network of operators to enable a global, scalable, cost-effective infrastructure, with token holders and node operators competing to earn a slice of that spend, Petkanics said.

“Rather than the dollars flowing into the margins of the centralized big tech infrastructure platforms, they flow into the network of token holders and node operators. As video grows, so does the addressable market of the Livepeer network,” he said.

Livepeer’s network has two parts: infrastructure and staking. On one side, the company has node operators that perform transcoding by harnessing GPUs that may be used for other tasks, like crypto mining. These node operators are rewarded based on minutes processed. Livepeer’s network already features over 70,000 GPUs, which is enough aggregated power to encode all of the video streaming through Twitch, YouTube and Facebook combined.

“On the other, we have community participants that support network security by staking tokens, and in return, they can earn a portion of the fees,” Petkanics said. “By aligning interests, Livepeer’s open video infrastructure allows the next generation of creator economy services to rely less on centralized infrastructure that’s expensive and subject to the whims of big tech. That way, developers can build world-class livestreaming apps at a fraction of the cost of cloud providers.”