Web Video Players Jumping Into Bed

Sep 21, 2008  •  Post A Comment

Online video technology firms Anystream and Voxant are set to join forces today in a merger that could kick off a fresh wave of consolidation in the online-video sector.
Financial terms for the merger were not disclosed and the companies have not decided on a name for the combined entity. But the partnership of the technology-centric Anystream and the distribution-focused Voxant suggests the business of Internet video is entering a phase where companies that provide the picks and the shovels will need to pair up in order to stick around.
“If you remain too small in a booming market, you miss opportunities,” said Kaan Yigit, analyst with Solutions Research Group. “Demand for online and multiplatform video will increase nearly exponentially in the next five years, so all the companies in that ecosystem can benefit from increased scale to manage growth.”
The first round of consolidation in the online video sector began in earnest two years ago when Comcast purchased online video technology provider thePlatform. The content buyouts came next in the summer of 2006: Viacom bought Atom Films for $200 million, Sony purchased Grouper for $65 million and turned it into online video destination Crackle.com, and then Google gobbled up YouTube for $1.65 billion in late 2006.
Activity calmed down a bit until the start of this year, when Yahoo snagged online TV technology provider Maven Networks for $160 million.
Still, venture capitalists and broadband analysts have been predicting an inevitable “shakeout” in which some companies are bought, some are sold and some shut down. That phase appears to have begun.
Anystream’s content management software handles the production, encoding and business management of Web video for programmers such as NBC, CNN and HBO. Voxant is an online marketplace that syndicates news videos within a network of more than 500 content providers and more than 30,000 publishers.
“The new entity creates a new infrastructure and distribution system for the syndicated video economy,” said Fred Singer, CEO of Anystream, who will be the CEO of the combined company. Voxant CEO Marcien Jencks will be president of a new division.
The new company can operate as a one-stop shop for programmers, Mr. Singer said. As an example, an Anystream client such as NBC could have immediate access to Voxant’s 30,000-plus-affiliate distribution network.
Softbank is an investor in both companies and helped bring the two together for the merger. Softbank declined to comment for this report, but other venture capitalists said the merger is an important guidepost in the online video economy.
“The bottom line is that like any industry, consolidation will help the leaders in the online video industry get stronger and enable the overall ecosystem to thrive by creating well-branded technology providers who can offer a suite of services,” said Neil Sequeira, a partner with venture capital firm General Catalyst in Boston, which is invested in online TV technology firm Brightcove.
“In certain instances there are companies that can get stronger through consolidation in the online video market. In cases where there is a significant overlap of customers or platforms, a combination can provide the opportunity to dominate a market and be the industry leader. There are also instances where vertical integration makes sense, which is relevant to the Voxant-Anystream deal,” he said.
Indeed, the Anystream-Voxant marriage is perhaps a different approach to consolidation than some have expected, said Will Richmond, industry analyst with Video Nuze.com.
“By marrying content management and publishing with extensive distribution, the new company is staking its future to the ongoing development of what I’ve called the ‘syndicated video economy,’” he said. “The new company is making a major bet that, going forward, media companies will be attracted to providers that can offer not just top-notch technology, but also the ability to distribute their content widely and monetize it effectively.”

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