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Brightcove Intends to Purchase Ooyala's OVP Division for $15M

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Cloud video services company Brightcove announced in an earnings call this afternoon its intent to acquire Ooyala's online video platform (OVP) business. Brightcove will gain all of Ooyala's OVP technology, including Backlot (its video content management and publishing platform) and its Analytics and Live components, all underlying intellectual property, plus related patents.

Brightcove will pay $15 million, of which $6.25 million is in cash and the remains in Brightcove shares. The deal is expected to close in the first half of 2019.

The deal might not seem a natural fit, considering that Brightcove already has an OVP, but according to Brightcove chief product officer Charles Chu (right) there's a lot about Ooyala's technology and global customer base that his company finds attractive.

"We enhance our global reach into different geos around the world and we also are able to improve our overall tech stack," Chu told Streaming Media. Elements from both OVPs will be combined into one unified platform. Chu couldn't get specific about what elements of Ooyala's technology Brightcove is most interested in, as his company has company has only signed an intent to acquire and the two are still operating as separate companies. Look for a fuller disclosure of Brightcove's strategy after the purchase closes.

Ooyala has been through troubled times recently, with former parent Telstra taking a total write-down on the company in early 2018 and management buying the company from Telstra in late 2018. With those kind of problems, why does this purchase make sense for Brightcove? It comes down to synergy.

"It does expand our customer base. They do continue to have strength in certain geographies around the world, and that helps expand Brightcove's reach," Chu said. Ooyala customers include Turner, Tribune Media, Dell, Audi, and Sephora. Brightcove expects the acquisition to be accretive within a year, meaning it will boost earnings per share and market value beyond the sales price.

Ooyala's OVP division is based in Guadalajara, Mexico. In a statement, Brightcove said it will take on "substantial portions of Ooyala's engineering, support, and sales staff." Chu wouldn't comment on whether there might be layoffs from synergies following the acquisition, but a Brightcove PR representative emphasized that the Guadalajara division is a cohesive unit, and Brightcove is excited to bring them on board. Chu also wouldn't comment on whether any of Ooyala's upper management will join Brightcove following the closing.

With its OVP division soon to be sold, Ooyala will focus on Flex, its broadcast workflow offering. Flex resulted from Ooyala's 2015 acquisition of workflow software and services company Nativ.

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