In fairness, that's not their sole strategy. They already have an existing video sharing site, eatlime.com, with 500k global monthlies (per quantcast), and they've been leveraging that technology to offer more speed. This was already covered in http://venturebeat.com/tag/cotwitvidcom/

I don't mean to be an ass, but if you couldn't meet the asking price for twitvid.com that ought to have thrown up a red flag. Did you have market research/business intelligence on your competitors in the video sharing space before launch?