The Biggest Streaming Media Mergers and Acquisitions of 2016
Niagara, IBM, ComScore, and More: 2016 yielded lower innovation, greater consolidation, and a whole lot of big-ticket M&A activity.
Learn more about the companies mentioned in this article in the Sourcebook:
When it comes to innovation, the streaming industry is on par with almost any technology sector. From new compression techniques to television-sized audience scaling, we tend to meet real-world challenges with innovative solutions.
Sometimes, though, innovation gives way to consolidation. With the continuing rise of over-the-top (OTT) delivery, it was only natural that the streaming industry reach an inflection point where consolidation begins to outweigh innovation. In hindsight, it appears that 2016 was one of those years.
This article outlines some of the last major acquisitions and mergers in chronological order, and it analyzes their implications for the industry.
Niagara Is Acquired, Once Again
There are precious few times that Niagara Falls’ powerful roar along the Canadian-U.S. border has been stilled. The reason? It’s just too powerful a force of nature.
The same might be said for Niagara streaming solutions. But in the case of these hardware-based products, the number of times that the Niagara brand of streaming devices has changed hands in the last few years exceeds the number of times that Niagara Falls has frozen over.
The most recent acquisition took place in January 2016, led by Mike Galli and a number of unnamed investors. Galli joined ViewCast—the original owner of the Niagara Streaming brand of devices—as the company’s new vice president of marketing in 2012. Prior to that role, Galli had been with multiple companies, including Grass Valley and SGI-spinoff Kasenna.
As ViewCast went through economic uncertainties, the company sold off Niagara Streaming to Valdor Fiber Optics, a Canadian company listed on the Toronto Stock Exchange (TSX). ViewCast itself was acquired by Variosystems, a company that had provided contract manufacturing services for the ViewCast Osprey line of video encoding cards.
Galli, now CEO of newly formed Niagara Video Corp., led the purchase of the Niagara brand from Variosystems, and he plans to introduce new Niagara products through the Pleasanton, Calif.-based company. He is assisted by Tom Fong, the new company’s vice president of product development, who has had technical and management roles at several companies acquired in the past by the likes of Juniper Networks and Pace.
What’s still unknown about this acquisition is the impact the sale of the Niagara brand will have on Valdor’s bottom line. At the time of the 2014 acquisition of Niagara from ViewCast, Valdor paid $500,000 plus an additional $600,000, secured by a promissory note, and agreed to pay ViewCast a 7 percent royalty “on gross sales from the VideoWare business ...over a five year period, to a maximum of US$1,750,000,” according to the press release announcing the deal.
IBM Acquires Ustream
Live streaming platform Ustream was acquired by IBM in early 2016, and it was subsequently rolled into the new IBM Cloud Video offering. IBM paid approximately $130 million for Ustream, which had been expanding its product offering to include video on-demand (VOD) content playout for a variety of customers.
I was able to talk to Alden Fertig, who started at Ustream in 2010, at the 2016 Streaming Media West show. Fertig is now vice president of product at Ustream, which IBM is allowing to run as an independent entity for the foreseeable future.
“When Ustream started, we were pretty much solely focused on live streaming,” Fertig told me as part of the Streaming Media West interview. “Over the years we’ve expanded, though. Now, we’re live streaming and full on-demand video capabilities, as well. What we’ve been able to contribute to the IBM Cloud Video overall ecosystem is that live streaming expertise as well as bundling our cloud-based transcoding and a multi CDN offering.”
Merger of ComScore and Rentrak Completed
In last year’s feature, we mentioned that ComScore and Rentrak, two analytics and audience measurement companies, intended to merge. Finalized in February 2016, the new ComScore now has 3,200 clients across 75 countries.
The merger was good for the company’s stock, at least initially, with ComScore (SCOR) rallying to almost $43 per share on the NASDAQ within a few weeks of the merger. But the stock dropped almost 35 percent on a single day in March 2016 and has yet to recover. In fact, the stock fell an additional 28 percent in June, after the company’s self-imposed deadline to update shareholders on an “ongoing audit of certain accounting issues” was missed.
Shortly after missing the audit, one of the cofounders, Magid Abraham, stepped down as executive chairman of the ComScore board of directors, with a July 22 press release stating that he planned to finish his board term, which ends in 2018. Just a bit over 4 months later, though, the company’s new chairman of the board, Bill Henderson, announced that Abraham had resigned his board position too.
The ComScore justification for merging was to “create the new model for a dynamic, cross-platform world” using an “unmatched data footprint [that] combines proprietary digital, TV and movie intelligence with vast demographic details to quantify consumers’ multiscreen behavior at massive scale.”
For his part, William Livek, CEO of Rentrak, received almost $15 million in stock and cash, according to Bloomberg, and is now ComScore’s executive vice chairman and president. Livek inherits a company that is, by any analytic standards, massive. In the United States alone, ComScore says it measures “behavior on more than 260 million desktop screens, 160 million mobile phone screens, 95 million tablet screens, 40 million television screens, 120 million video-on-demand screens, and 40,000 movie theater screens representing well over a hundred million movie-goers.”
Verizon Digital Media Services Acquires Volicon
When Verizon Digital Media Services (VDMS) acquired Volicon, that meant that Volicon was now part of AOL. If that simple statement seems confusing, since AOL itself was acquired by Verizon in June 2015, you’re not alone in your confusion.
The difference here is that the initial AOL-Verizon deal allowed AOL to operate independently. In turn, Verizon created a “stack” that includes rolling VDMS into AOL, giving advertisers and publishers a B2B platform that AOL said “simplifies the preparation, delivery and display processes for content of any size, to audiences on any device, everywhere.”
At the outset of the 2015 acquisition, VDMS management reported to AOL management, which in turn reported to Verizon’s product innovation and new business management.
That structure continued through at least 2016, as the Volicon announcement allowed VDMS to augment the VDMS Video Lifecycle Solution, providing Volicon’s more than 1,200 broadcast customers across the globe “a seamless option to take existing broadcast feeds and channels directly to OTT cloud-based delivery models.”
The AOL-Verizon working arrangement, in which AOL is “powered by Verizon,” continued into late 2016. VDMS president Bob Toohey was promoted to an executive VP at AOL, while Ralf Jacob—who joined VDMS when the company acquired Uplynk in 2013—moved from his chief revenue officer role at VDMS to become president of VDMS.
AOL also acquired Paris-based AlephD in early 2016, wrapping it into the AOL publishing platform.
Beamr Acquires Vanguard Video
As a way to combine two parts of the video encoding supply chain, video optimization company Beamr acquired a video codec company, Vanguard Video.
“Marrying Beamr Video with a best of breed encoder like Vanguard is an excellent way to ensure the highest quality for a given bitrate,” stated Streaming Media’s Dan Rayburn in a March 2016 blog post. According to Rayburn, Netflix uses an HEVC SDK from Vanguard Video to encode its 4K content.
Beamr didn’t detail the cost of its Vanguard Video acquisition, which occurred at the same time that Beamr completed a $15 million raise from a number of venture capital firms it had worked with during an initial funding round.
Late in 2016, Beamr announced that Verizon Ventures had invested an additional $4 million in Beamr, which the company plans to use for market expansion.
Futuri Media Acquires StreamOn
While Futuri Media’s acquisition of StreamOn took place in 2015, the company didn’t release press information on the deal until early 2016. StreamOn has focused on audio streaming, as a standalone division of Toronto’s O.K. Radio Group, including early ventures into ad-driven streaming radio.
Futuri, for its part, focuses on interactive technologies for the media and entertainment industry, and StreamOn chief technology officer Andrew Snook. Snook had worked with the Futuri engineering team to update its Streaming Transmitter, which uses Apple HTTP Live Streaming (HLS) and media source extensions (MSEs).
Snook joined Futuri in the newly formed role of VP of streaming systems, with a goal of bringing social media and newer technologies to an HTML5 audio player that combines Futuri’s software-as-a-service (SaaS) platform for mobile-based audio with real-time analytics.
Google Acquires Anvato, Moodstocks
With an eye toward assisting media companies with getting their content online, Google announced in July that it was acquiring Anvato.
According to Recode, the acquisition is meant to drive business to the Google Cloud Platform.
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