The Biggest Streaming Media Mergers and Acquisitions of 2014
2014 started with a bang, at least when it came to merger talk, especially from traditional media companies. Deals continued to be made throughout the year, with acquisitions of U.S. companies by foreign investors.
Let’s start first with the biggest merger announcement of the year, this one from a traditional media company.
Comcast
The biggest (potential) merger of the year came when Comcast announced its intent to acquire Time Warner in early February 2014. The causes behind the merger proposal have always been a bit muddy, but with cable companies failing to attract a generation of “cable nevers” to move from watching content online to watching it through a set-top box (STB), it seems that the time for pure-play cable companies was rapidly coming to a close.
“This transaction will create a leading technology and innovation company,” both companies announced in a joint press release, “differentiated by its ability to deliver ground-breaking products on a superior network while leveraging a national platform to create operating efficiencies and economies of scale.”
Comcast chairman Brian Roberts went on to address the pure-play attraction of adding Time Warner to Comcast’s dominant position in the industry. “Rob Marcus and his team have created a pure-play cable company that, combined with Comcast, has the foundation for future growth. We are looking forward to working with his team as we bring our companies together to deliver the most innovative products and services and a superior customer experience within the highly competitive and dynamic marketplace in which we operate.”
The last few words of that statement have been the sticking point for critics and congressmen alike. While Comcast is the largest cable company in the U.S.— trailed by Charter, Cox Communications, and Time Warner Cable—the combination of the No. 1 (Comcast) and No. 4 (Time Warner Cable) into a single operating entity had many critics crying foul. In fact, the second and third slots for multi-system operators (MSOs) in the U.S. are held not by other cable providers but by satellite providers (DirecTV and Dish Networks, respectively).
Perhaps not surprisingly, the merger discussions have continued throughout 2014 and into 2015. As of the time this article was written, in late January 2015, the merger has not yet been approved by congressional watchdogs concerned about the lack of competition and marketplace dynamics the merger may produce.
Ooyala
2014 brought the completed acquisition of online video platform (OVP) company Ooyala by Australia telecoms giant Telstra. Telstra was no stranger to Ooyala, having invested approximately $61 million over 2 years, providing it with a fully diluted 23 percent stake in the company. But a quarter of Ooyala wasn’t enough for Telstra, which plans to use Ooyala to create a personalized, cloud-based television platform. In August, Telstra invested another $270 million, increasing its ownership stake to 98 percent.
In an end-of-year blog post, Ooyala CEO Jay Fulcher illustrated the importance of the Telstra acquisition in a blog post. “This year we secured the backing of Telstra, which valued Ooyala at nearly twice our nearest competitor and who shares our belief and commitment in building the next market leading video platform company,” Fulcher said.
Once it was a Telstra subsidiary, Ooyala wasted no time in branching into additional investments and acquisitions. The first of these was the acquisition of the video advertising platform provider Videoplaza.
Videoplaza, according to Ooyala’s statement around time of the acquisition in late October 2014, “operates one of the world’s largest premium video ad serving platforms and programmatic trading solutions, delivering ads to viewers across all devices.”
The Videoplaza acquisition makes sense on several levels, including geographical overlap with Telstra and Ooyala’s business in the Asia Pacific region. Videoplaza also is used by a number of European broadcasters.
More importantly, Ooyala can jump into the video advertising market without having to build its own solution. According to Ooyala’s press release, its move into video advertising coincides with a point in time at which “major media agencies are recommending their clients move up to 25 percent of their TV ad budgets to digital.”
It’s true that video advertising online is growing— some estimates put digital video ad revenue growth at more than 13 times that of traditional television advertising (40 percent versus 3 percent yearly for the U.S. market) so it will be interesting to watch if the Ooyala-Videoplaza integration allows the combined company to leverage the new advertising platform in the lucrative, but fiercely competitive, North American ad market.
Finally, Telstra also made a strategic investment in video encoding and transcoding company, Elemental Technologies. The company joined with Sky, which we discuss at length in the European version of the 2015 Streaming Media Sourcebook’s Streamticker article, to provide Elemental with a $14.5 million in series D financing led by Telstra, Sky, and existing Elemental investors.
The win for Elemental here, besides stockpiling cash, is that Telstra plans to implement the entire Elemental product line, including the emerging Delta product line that offers just-in-time packaging and dynamic advertising replacement.
“This investment round led by Telstra, combined with the funding participation by Sky and our accelerated growth to more than 600 customers, illustrates the momentum behind our vision for software-defined video,” says Sam Blackman, CEO and cofounder of Elemental. “We are thrilled to partner with Telstra and Sky, two of the most technologically advanced operators on the planet.”
Twitch
This acquisition was fun to watch for several reasons: First, many in the streaming media world, at least the world occupied by StreamingMedia.com readers or Streaming Media tradeshow attendees, had never heard of Twitch, which focuses on gaming and esport live broadcasts. They likely would’ve known about Justin.tv—the company’s name until 2014—as Justin.tv was an early lifecasting site started by Justin Kan, Kyle Vogt, and two other cofounders. Twitch Interactive, with Vogt still in the picture, after a stint at Socialcam, shuttered Justin.tv in July 2014.
Second, the rumors flew for almost 5 months about just exactly who would acquire Twitch, which live streams a number of esports tournaments. Even we at Streaming Media got it wrong, announcing that Google and/or YouTube and/or Yahoo would acquire Twitch just a few short weeks after one of Twitch’s senior technical engineers keynoted the 2014 Streaming Media East conference.
When the dust settled, after both Google and Yahoo walked away from potential acquisitions of Twitch, Amazon acquired the company in a $970 million cash deal.
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