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Streamticker 2007: The Year in Mergers, Acquisitions, and Fundings

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Oh, for the simpler times of 2006. That was an era in streaming when alliances were formed and pawns moved into position. Battle lines had not yet been drawn, and the hype hadn’t quite reached 1999 levels.

What a difference a mere 12 months makes. The declaration last year that 2007 was going to be the year of legitimate peer-to-peer networking and high-definition streaming proved accurate, as both got off to a robust start in 2007. But the bigger news was that the "big kids" got involved in the streaming space in a way that left some smaller companies in awe of their larger siblings’ ability to notch up the rhetoric and the market cap to a level that many in streaming had only dreamed of.

In some ways, the streaming industry’s not too different from the late-2007 presidential primary jockeying in Iowa and New Hampshire: big names, upstarts, and those in between saw the rising tide float many boats, some toward the open sea and some into the safe harbor of a merger or acquisition.

Let’s explore some of the key acquisitions, mergers, and major plays of 2007.

The Big Kids Come to Town
John Chambers has made no bones about his intent to make video a cornerstone of Cisco’s growth. Cisco wasn’t the only data or telecom company to move into the space. From Juniper and Level 3 to Ericsson and Nokia, the big kids set their sights on streaming and video delivery.

Ericsson started off the year with an announcement that it was acquiring Redback Networks, a company that managed wireline DSL connections for 15 global DSL carriers. The deal, worth approximately $2.1 billion, put Redback and its portfolio of almost 50 million DSL end users in a leverage position for Ericsson, which was keen on Redback’s reputation for VoIP, IPTV, and on-demand video services. The acquisition put Ericsson in direct competition with two of its partners, Cisco and Juniper, both of which made IPTV and VoIP prime target verticals for the 2007 earnings year.

Ericsson didn’t just want Redback, though—its acquisition of Redback created a working laboratory for Alan Lippman, Ph.D., who joined Redback as chief video architect. Lippman is best known for his work at RealNetworks, where he was one of the first five employees. While there, he provided a significant amount of the code for the core RealAudio and RealVideo codecs.

Lippman left RealNetworks in 2000, when, in his words, "a lot of the challenge was gone." But he returned to the video space in 2003 with the launch of Trusted Networks, a company with a mission to push the boundaries of streaming. Trusted used latent bandwidth to push content to an end user’s machine, with the promise of "no wait" internet TV.

"Video is the biggest game-changer in network routing today. It is also the single biggest force driving network upgrades worldwide. We’re thrilled Alan Lippman is joining our Redback team," says Scott Marshall, senior vice president of engineering and product management at Redback Networks. "Redback is laser-focused on accelerating video network innovation on behalf of our carrier customers."

Broadband transport companies, the big kids among the internet-backbone providers, also decided that streaming was a market that could boost their bottom lines. In much the same way that traditional telecoms sold services to increase minute usage, the backbone providers are using media services as a way to sell large-scale transport.

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