Last week we reported that Viddy is currently undergoing a round of fundraising that puts valuation of $370 million on the company. A report today from the Wall Street Journal via Mashable puts a value of the company a $200 million. Either way, the company is still undergoing fundraising efforts after hitting 26 million users.

Launched just a year ago, Viddy has benefitted from celebrity endorsements, including a video posted by Mark Zuckerberg of his dog Beast, and its integration into Facebook. The company’s celebrity backers include Will Smith, Shakira and Jay-Z, all following the example of Zuckerberg.

Sold as an “Instagram for video”, the service has seen competition from the likes of Socialcam, who now sits at around 36 million users. With a growth rate of about 1 Million a day, Viddy may soon catch up.

Both Viddy and Socialcam lead the way for the virally trending video sharing apps on the market today. Some investors are waiting to see how this plays out, however, as video takes up a lot of bandwidth when compared to images. Once subscribers see the change on their wireless data costs, they may not be so keen on using the app anymore.

As the Wall Street Journal reports, monetization also seems to be a big problem right now. Viddy now charges for extra tools like filters and effects, but haven’t seen a lot of revenue from these add-ons. Then there is the problem of advertising on mobile phones. Customers are often impatient with intrusive ads on such a small screen, especially when it comes advertising on user generated content.

Then again, Viddy may not be looking for big advertising dollars right now. If they grow large enough and fast enough, they may draw the attention of major players in the industry. Instagram saw this kind of success when they were bought by Facebook earlier this year.