BitTorrent trys to avoid squeeze — strikes deals, raises more cash?

bittorrent.bmpSan Francisco’s BitTorrent used to enjoy all the buzz surrounding video downloading. Its peer-to-peer file sharing technology allowed for cheap, easy distribution at a time when video streaming technologies were nascent. That’s changed, despite its announcement today of deals struck with major studios.

Today, it will unveil deals with Paramount, MTV Networks, 20th Century Fox and some other studios. Users will be able to purchase or rent movies from these sources, in a video store to be launched in February. The deals follows BitTorrent’s earlier deal with Warner Bros.

Trouble is, BitTorrent has never gained mass appeal among regular consumers. It is best as a back-end distribution protocol. Now major retailers have entered the market, from Apple, which offers its own movie downloading service, to AT&T, Amazon.com, Microsoft and WalMart (see news yesterday), offering similar services — all making it easy for regular folk to watch movies from their TV screens. You’d think BitTorrent would be more focused on becoming the distribution partner for some of these players, rather than try to become the consumer destination. There’s a summary story in the Mercury News today, which suggests consumers using BitTorrent’s service will be able to play downloaded videos only on their computers — though the company says it will try to change that, to allow watching videos in their living rooms.

There are rumors that chief executive Bram Cohen has departed, and that the company has raised at least $15 million in a venture round from Accel Partners, and existing backer Doll Capital Management (which invested $8.75M in BitTorrent more than a year ago). VentrueBeat has confirmed that Accel’s Ping Li is the point person on the deal. Stay tuned.

Update: BitTorrent tells VentureBeat there’s nothing to the rumor about Bram departing; he’s there to stay, a spokeswoman said.