Veoh Gives Up On Life, Preps For Bankruptcy

After less than five years in business, Veoh has decided to shut down operations and lay off the remainder of its staff. It is also preparing to file for Chapter 7 bankruptcy protection at some point in the near future, according to MediaMemo.

The closure marks an inglorious end for one of the early web video players. The company began life as a video-sharing site that competed with YouTube, Babelgum, Joost and others as a destination where viewers could find and share online videos with friends, and Veoh raised more than $70 million from multiple blue chip investors, including Adobe (s ADBE), Goldman Sachs (s GS), Intel (s INTC), Spark Capital, Time Warner (s TWX), and Michael Eisner’s Tornante Company.

For a long time, Veoh was seen as one of the rising stars in the online video space, but it never reached the same scale as YouTube, which was bought by Google (s GOOG) in 2006, and it had a hard time differentiating itself against other video aggregators.

At the same time, it faced a legal battle with Universal Music Group that didn’t end until last September. While it was ultimately victorious in the copyright infringement suit, the legal issues were a distraction to staff and management and scared potential investors and content partners from working with the company.

In the last 18 months, Veoh tried to right the ship with personnel cuts and shifting focus away from its video aggregation site, with more efforts put behind its Video Compass technology for video search and discovery.

Veoh isn’t the only video aggregation site to struggle in the wake of YouTube’s dominance. After three years of failing to make a business out of running an online video portal, Joost was acquired by advertising and branded entertainment firm Adconion Media Group late last year. And Babelgum shut down two of its European offices last November.

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