Streamticker 2022: The Biggest Streaming Mergers and Acquisitions from Last Year
[Editor's note: This article was originally published in the 2022 Streaming Media Industry Sourcebook, and only covers mergers, acquisitions, and funding deals from 2021.]
Two years into a global pandemic, one that shows little sign of abating—in no small part due to variants that keep popping up, which further delay the return to "normal" office work—the streaming industry continues to grow at an accelerated rate. The byproduct of this growth is that the industry has attracted significant funding, not just for startups but also for established companies looking to leverage their growth into further capital investments.
I'll explore the highlights of a busy year in the streaming media vendor space, but first, I'll look at another key area that's thrived during the pandemic: content libraries. The pandemic's slowing of content creation led to a direct bump in their value. And, while several of the following deals have been in talks for longer than the term "COVID-19" has been in common use, the pandemic has provided ample reason to accelerate these mergers.
OTT Content Deals
We often hear the expression "content is king" when it comes to media libraries that are available to OTT streaming platforms. However, 2021 hastened the consolidation of content libraries that have forced the consumer to subscribe to more OTT services just to be able to view disparate content, which was once as easy as changing the channel. This also created confusion among consumers, but that's another topic.
For instance, Alex Sherman, writing for CNBC in late May 2021, points out that the merger of telecom giant AT&T's WarnerMedia with Discovery, as well as Amazon's acquisition of MGM Studios, puts pressure on other major media companies to consider a merger with once-sworn rivals. "ViacomCBS and NBCUniversal are both likely to decide they are too small in their current form to compete against Disney, Netflix and Amazon in the streaming wars," according to the article.
In fact, John Malone, director of Liberty Global and the controlling shareholder of Discovery, says he believes NBCUniversal was interested in acquiring WarnerMedia, at least before the regulatory environment heightened the likelihood of the WarnerMedia-Discovery deal. Malone has left the door open to a future merger that includes bringing NBCUniversal into the Discovery orbit, even as industry pundits suggest a better pairing would be with ViacomCBS. "If the regulatory environment permitted, down the road, all kinds of relationships could be contemplated between this enterprise that we're creating and [NBCUniversal]," says Malone. "I think there are many opportunities for this … enterprise to work with NBCUniversal to develop successful businesses."
Had preliminary talks back in 2018 about merging AT&T's newly acquired WarnerMedia with Comcast's NBCUniversal come to fruition, the streaming OTT subscription landscape would have been slightly less cluttered. In the meantime, since the parties couldn't come to an agreement, WarnerMedia launched HBO Max, and Comcast rolled out Peacock.
Other content library deals that occurred in 2021 might not have been as big as the WarnerMedia-Discovery deal—which at $43 billion, plus regulatory hurdles, is still not finalized as of the writing—but they were still impactful to both consumer choice and potential media delivery efficiencies. For instance, while the NBCUniversal-owned Fandango's acquisition of Walmart's Vudu purchase-and-stream platform officially occurred in 2020, the result of welcoming Vudu into the NBCUniversal fold was only evident to consumers in late 2021 when the FandangoNOW apps—and any previously purchased movies or TV shows—were merged into corresponding Vudu apps and customer content libraries.
Both services had the same philosophy of allowing customers to purchase content rather than pay a monthly fee to view content that might disappear when the licensing window ran out. As this purchasing model is almost directly akin to that of Apple's iTunes, it's worth noting that media companies still see a value in delivering OTT content purchased from their content libraries. After all, NBCUniversal has a very large content library, which Vudu did not possess. Still, the Vudu service had both a much better brand recognition and a much bigger customer base, so the Vudu name won out. However, the deprecation of the FandangoNOW brand and the ascension of the Vudu brand might cause confusion as to who acquired whom.
Streaming Platform Consolidation and Investment
Beyond content, there have been a number of investments, mergers, and acquisitions—and even one initial public offering (IPO)—in the online video platform space. Consulting firm Deloitte notes that streaming platforms, as they mature, will likely move beyond subscriber counts to include metrics such as "lifetime customer value." We've seen this play out in the cable television space and—to a much lesser extent, at least from a consumer-facing standpoint—in the mobile and cellular space.
Let's look first at the IPO, which our industry hasn't seen many of in the past few years. Kaltura, which hit an all-time high of $13.61 in early August 2021, just a few weeks after its IPO and inclusion on the NasdaqGS, was trading about four times lower than that high in mid-January 2022. The company is expected to release quarterly results around the time this article is published, but Ron Yekutiel, Kaltura's co-founder, chairman, and CEO, notes in the most recent earnings release that the company is growing on several fronts. "Total revenue, subscription revenue, and Annualized Recurring Revenue [are] each growing at or above 40% year-over-year," says Yekutiel, noting further that Kaltura is "a long-time leader in the Enterprise Video Content Management market and a strong recent entrant into the Meeting Solutions and Virtual Event spaces."
In mid-October 2021, online video platform provider Brightcove announced it was acquiring the HapYak technology suite from Newsela. At first glance, the timing might appear a bit odd, since Newsela announced its acquisition of HapYak on Oct. 13, 2021, and Brightcove announced it had acquired the HapYak technology the following day. Both press releases included quotes from Kyle Morton, the founder of HapYak. In reality, Newsela, with its focus on its core K–12 instructional content platform, first completed its acquisition and subsequently agreed to allow Brightcove to acquire HapYak's commercial interactivity technology as well as its global customer base.
Brightcove pitched the acquisition as a way "to help advance video interactivity," noting that it has been partnering with HapYak since 2013 on a number of projects. "With the integration of the HapYak technology, Brightcove users can quickly and easily incorporate interactivity into virtually any video," the Brightcove press release says, "including clickable hotspots, quizzes, shopping cart purchases, personalization, choose-your-own adventure paths, and a variety of calls to action."
With interactivity and low latency continuing to advance in lockstep over the 2-year pandemic time frame, this looks to be a good strategic move for Brightcove. The company's stock doesn't necessarily reflect this, though, as it dropped more than 20% (from $12.27 the day of the announcement to $9.65 2 weeks later) before settling in around $10 for the remainder of 2021.
Carlyle Group–LiveU–Francisco Partners
In mid-July 2021, New Jersey-based LiveU announced it was being acquired by Nasdaq-listed Carlyle Group. Longtime Streamticker readers might remember that LiveU was purchased by Francisco Partners back in 2019. At that point, a LiveU press release noted that Francisco Partners "together with co-investor IGP Capital, have acquired LiveU from its existing shareholders to accelerate further the company's global expansion."
Having crossed the $100 million sales threshold during the Francisco Partners ownership period, the handoff to Carlyle Group appears to be a play to accelerate the growth of LiveU even further.
In July 2021, European-based OHVcloud announced it acquired Austin, Texas-based BuyDRM. The goal, as OVHcloud's CTO Thierry Souche notes, is to "develop together advanced and innovative solutions" for a customer base that is transitioning to cloud technologies.
This is the second acquisition of BuyDRM in the last decade, with Korean company Inisoft purchasing it in 2012. During both acquisitions, BuyDRM CEO Christopher Levy has remained with the company, and the 2021 OVHcloud press release specifically mentions that "the entire BuyDRM team and their founders will join the Group's workforce as of today to build together a single roadmap."
OVHcloud sees the acquisition of BuyDRM and two other companies (OpenIO and Exten Technologies) as a way to build out its platform-as-a-service (PaaS) solutions. "The ambition is to accelerate the development of integrated PaaS solutions," OVHcloud notes in its press release, "based on an open infrastructure … and strictly respectful of data sovereignty."
V-Nova–Intesa Sanpaolo Group
London-based V-Nova, which focuses on video and image data compression, raised Series C round funding of €33 million (approximately $38.9 million based on July 2021 exchange rates) from Neva SGR, which is Intesa Sanpaolo Group's venture capital firm focused on the tech industry. The Neva First fund is geared toward "Italian companies with global growth plans or international companies that intend to develop projects with positive effects on industrial and production chains in Italy." V-Nova fits into the former category, having been launched in Italy before moving to London.
According to the press release announcing the news, V-Nova's solutions "help reduce environmental impact by improving video performance on existing hardware without the need to replace it and by reducing energy consumption in data centers due to the decrease in the computational capacity demand for video processing." This approach to lower-complexity video compression is certainly of interest to me and others who are focused on Greening of Streaming initiatives—and has historical precedent in the lower computational requirements of On2's VP6, VP7, and VP8 codecs—but, to my knowledge, there has been no independent testing of the claims.
I'll wrap up this article with a company that's chosen to take the investment route rather than the "going public" IPO route. Wowza Media Systems, one of the longer-running companies in the industry and creator of the game-changing Wowza Media Server (now known as Wowza Streaming Engine), announced that it's taken a significant investment from a relatively new firm, Clearhaven Partners.
When interviewed by Streaming Learning Center's Jan Ozer, who is also a contributing editor for Streaming Media magazine, Wowza CEO and co-founder David Stubenvoll noted that the company "never considered going public. This investment and partnership gives us flexibility to invest on a much broader scale without the restrictions and hassle of being a listed company." In addition, he said that the investment "will allow us to go much further much faster."
While Stubenvoll said that an IPO hasn't been considered, he was also quick to note that an exit at some point—whether it's a sale or a public listing—will need to occur. Still, in the meantime, the already-profitable company is using the funds to accelerate growth of existing products—several of which have moved to the cloud—as well as develop new offerings, such as the Real-Time Streaming at Scale solution, which I reviewed in October 2021. "[W]e're analyzing our enhanced go-to-market capabilities now," said Stubenvoll of the investment funding's ability to look beyond in-house products. "[T]his could take the form of company or product acquisitions, or could involve opening up new offices if it helps develop and maintain deep relationships with our customers."
The acquisition will give customers greater insights into content and subscriber analytics
After the pandemic scuttled an IPO in 2020, the 15-year-old enterprise and education video platform company floated on NASDAQ and raised $150 million to grow marketing, sales, and tech efforts.
CEO David Stubenvoll says the investment from Clearhaven Partners will let Wowza accelerate innovation and growth, and possibly even open new offices, without the "restrictions and hassle of being a listed company."
Newrow gives Kaltura's Meeting Solution increased collaborative features like group white board, synchronized viewing, and real-time quizzes and polls
Companies and Suppliers Mentioned