Online video publishing provider Brightcove announced that it is buying Zencoder, a 2-year old start-up that provides cloud-based encoding, transcoding and an HTML5 video player, for $30m.
The deal values Zencoder at approximately 15X revenue, a rich valuation for the start-up. Brightcove justified the high price tag by saying that Zencoder’s technology will help it expand its offering, and that the transcoding will grow at a CAGR of 24% between now and 2017.
Zencoder was founded in 2010 when it raised $2m from Andreessen-Horowitz and Ignition Partners. The company saus it has 1,000+ customers for its cloud-based encoding service, and more than 24,000 websites use its video player.
The Zencoder team will join Brightcove and become the Brightcove Bay Area Development Center. Brightcove says it will continue to develop, operate, support, and promote the Zencoder products in their current form as distinct product offerings.
“We believe the Zencoder acquisition will advance Brightcove’s position as a leading cloud platform provider that not only provides rich, end-to-end solutions for digital content publishing and distribution, but also offers scalable standalone building blocks for developers to build custom systems,” said Jeremy Allaire, Brightcove chairman and CEO.
Video transcoding, whether cloud- or appliance-based is a hot topic these days, because the technology is required to achieve interoperability between disparate file-based production systems, and to facilitate multi-platform content publishing and distribution. There has been considerable M&A and financing activity in this space including:
- In April 2012, audio processing specialist Wholer bought transcoding provider RadiantGrid in a move that the company said will accelerate its move into file-based operations
- Envivio revived its plans for go public in a Goldman Sachs-led IPO
- Envivio closed a $16.5m funding round in January 2012, bringing the total raised to $95.1m
- PE firm Thoma Bravo bought out Telestream in December 2011
- Telestream bought fellow transcoding vendor Anystream in September 2011
- Cisco bought Inlet Technologies for $95m in February 2011
- Elemental Technologies closed a $7.5m fundraising round in 2010, bringing the total raised to more than $14m
- RGB Networks bought transcoding vendor Ripcode in 2010
Even after all of the above deals, there are still several stand-alone transcoder vendors in the market, most notably AmberFin (backed by Advent Venture Partners) and privately-held Digital Rapids.
Press Release: Brightcove Signs Definitive Agreement to Acquire Zencoder
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