Despite rumors, upstart VideoEgg has plenty of life left

Don't count out VideoEgg just yet.

Rumors have circulated that the San Francisco-based company is on the verge of a shutdown, but that's not the case, said Matt Sanchez, the company's CEO.

The rumors no doubt were churned up by the e-mails the company has sent notifying users of its decision to stop hosting videos uploaded to the site by the public and to scale back hosting services on the VideoEgg Publishing Platform.

"What we're doing is focusing on efforts around our ad network brand, the EggNetwork brand," Sanchez said Wednesday. "We want to focus on ad product and brand advertising online, so these are just steps we're taking to rationalize the business."

My.video.videoegg was used for "very small amounts of personal use," Sanchez acknowledged. "It was people trying out the service. In actuality, for many people it was a demonstration of the upload technology. That was where we started as a company."

Already, VideoEgg has shut off the uploading function on the site. The service shuts down completely on May 31, so users had better grab their clips now. As for the company's platform service, VideoEgg will continue the service for larger, profitable companies. Everybody else is out.

Sanchez said the 100-employee company hasn't cut back on staffing and will just "refocus" some employees. VideoEgg, founded in 2005, is still not profitable, but Sanchez said the company is encouraged by the growth of its advertising arm and is selling ads in eight markets in four countries.

VideoEgg employs a direct sales force to work with media-buying agencies. They can manage an ad campaign as it goes out over Videoegg's network--a collection of video, social, and gaming sites, Sanchez said. "We can concentrate now on making great tools for brand advertisers."