Digitalsmiths moving to Durham's American Tobacco

Digitalsmiths, a 35-employee startup whose video search system is used by film studios and websites, is moving from Morrisville to American Tobacco Campus in downtown Durham.

The company has signed a long-term lease for about 7,000 square feet in ATC, said Matthew Berry, one of the company's co-founders and its chief technology officer.

The company will move into its new space over the Thanksgiving break.

Berry said Digitalsmiths considered locating in American Tobacco three years ago, when the company moved to the Triangle from South Carolina, but couldn't make it work.

Digitalsmiths is one of many companies that has used the economic downturn as an opportunity to move into nicer, more higher-profile office space.

"There's certainly something to be said about the ability to recruit high-level talent and just being where they want to work and being around like-minded people," Berry said of American Tobacco.

American Tobacco is making a big push to become a hotbed of start-up activity. It recently opened a 26,000-square-foot space, called American Underground, that offers cheaper rents to entrepreneurs.

American Tobacco is already home to such companies as PocketGear, which helps smart-phone makers and wireless carriers sell applications. The Taiwanese cell phone maker HTC is currently considering opening an office in the park.

Digitmalsmiths' VideoSense system allows video to be searched by actor, line of dialogue, location, genre or product. Advertisers can use the system to strategically place advertisements within video clips.

Customers include Paramount Pictures, Warner Brothers and the gossip website TMZ.

The company doesn't disclose financial information, but Berry said revenues are up "significantly" this year.

He said Digitalsmiths expects 2011 to be a breakout year for the company as more people consume video over the Internet and cable operators and programmers embrace a connected world.

"Now there's this big convergence happening and we just think we're in a great position," Berry said.

Digitalsmiths raised $12 million in venture financing in November 2008, from investors that included the Aurora Funds of Durham. In January 2009, Cisco Systems also invested in the company.