Leading Scandinavian video-on-demand (VOD) service provider, Voddler, today announced a funding of USD8 million in a round led by Nokia Growth partners. Its video service is based on a patented streaming technology which becomes more efficient in the presence of more customers. The investment will be used to expand its service offerings to handheld devices such as smartphones, tablets, set-top boxes etc and the transaction is expected to lock in before Q1 2011 ends.

“We are very pleased to lead this investment in Voddler and support the expansion of a very compelling video on demand service and business model. There are great opportunities ahead in innovating media delivery digitally and we believe Voddler is well positioned to do so,” according to Bo Ilsoe, partner at Nokia Growth Partners.

Voddler went public last year, boasting 5 million domestic and international movies across catalog of 3500 titles. It has a consumer base of 850,000 across Sweden, Finland, Norway and Denmark.

“The entire entertainment industry is moving into digital distribution,” said Marcus Backlund, CEO of Voddler. “Viewing films on computers and handheld devices are becoming more and more common. I know we’ll benefit tremendously from Nokia’s vast experience in mobility. Together we are creating significant potential for future growth and industry leadership,” he added.

It is safe to view this as Nokia’s rebound following the failure of its Ovi Unlimited music service. Online video is a growing trend and there’s been a lot of focus on it on the cloud. Similar other strategies around online video include the acquisition of Goviral Video Network by AOL for $74.1 million. And it looks like Europe is the place to shop for VODs.  Amazon also acquired the European equivalent of Netflix called LOVEFiLM International Unlimited. Video monetization company, Auditude, recently got a funding of $11 million to expand to mobile video, IP-enabled devices and premium distribution channels.