Wednesday, February 13, 2019, 10:37 PM ET|Posted by Will Richmond
Brightcove has inked a deal to acquire Ooyala’s online video platform (OVP) business for $15 million, with $6.25 million paid in cash and the remainder in Brightcove stock. The deal joins two companies that were among the earliest entrants in the video platform industry in the mid-2000s and competitors ever since.
Ooyala had been previously bought by Australian telco Telstra in a couple of moves in 2012 and 2014 for over $300 million. Then it and other Telstra video investments were written down completely in 2016 and 2018, resulting in over $500 million in charges. Last fall Ooyala was spun off to management.
Brightcove’s Chief Product Officer Charles Chu told me in a briefing that the deal’s primary benefits to Brightcove are “expanding the company’s global reach and “solid presence in certain geographies worldwide” as well as “Ooyala enhancing Brightcove’s technology stack to bring best of breed video solutions to the market.” Charles called out Ooyala’s “significant inroads in Central and Latin America” and extensive talent based in its Guadalajara, Mexico office.
From my perspective, the deal illustrates the essential role video platforms like Brightcove/Ooyala continue playing for both media companies and brands and why scale is essential to competing effectively. While video was a sidelight when both of these companies were established, it has now become arguably the most strategic priority for a broad spectrum of industries and companies.
Competitive platforms must have capabilities including live streaming, support for multiple business models and devices, global delivery and more. And they must be able to power user experiences on a par with leaders including Netflix, YouTube, Amazon, Disney Digital (the prior BAM Tech business) and many others who are investing heavily.
In short, the bar is far, far higher than it was 5 or 10 years ago. Brightcove’s deal for Ooyala’s OVP business looks like strong bid for the combined entity to grow its competitive position.
The deal is expected to close in the first half of 2019 be accretive this year to Brightcove’s profitability.