Amazon to Buy Video Reformatter Elemental Technologies--2nd Update
September 03 2015 - 8:15PM
Dow Jones News
By Greg Bensinger
Amazon.com Inc. is putting itself at the center of the Web video
boom.
The Seattle retailer said Thursday it agreed to acquire
Elemental Technologies Inc., which helps media companies convert
video to be played on the Web and on mobile devices. The all-cash
deal is valued at about $500 million, which is roughly five times
the company's revenue, according to a person familiar with the
deal's terms.
Amazon declined to comment on the terms of the deal.
Streaming and Web-based video are becoming key battlegrounds for
technology companies as more consumers are seeking to cut their
cable bills in favor of a la carte offerings. Amazon and Netflix
Inc. have been competing for customers through original content as
well as deals for the portfolios of Time Warner Inc.'s Home Box
Office, Walt Disney Co. and others.
Elemental counts HBO, Disney's ESPN and the British Broadcasting
Corp. among its hundreds of customers using its video conversion
technology.
That means Amazon could become a central player in the rush to
feed consumers video on any device and at any time. More consumers
are seeking specific content from their tablets and smartphones as
opposed to watching television. Amazon manufacturers tablets
optimized for viewing video and streams film and TV shows as a perk
to its $99 Prime delivery membership.
The takeover, expected to close in this year's final three
months, would represent Amazon's biggest deal since it bought
videogame streaming site Twitch last year for around $1 billion.
Amazon will fold Portland, Ore.-based Elemental into its Amazon Web
Services cloud computing division.
Amazon beat out Ericsson AB, which had a deal in place to buy
out the company, according to a person familiar with the matter.
Cisco Systems Inc. had also considered a bid for Elemental, this
person said.
Spokesmen for Ericsson and Cisco had no comment.
Amazon's AWS is one of its faster-growing units, providing
computing power and cloud storage for startups and some bigger
firms like Netflix. The unit had $3.39 billion in sales in this
year's first half, a 65% jump from a year earlier, and it doubled
its operating income to $655 million.
Nine-year-old Elemental had raised about $44 million from
Telstra Ventures, General Catalyst, Norwest Venture Partners and
Sky PLC, a customer and unit of 21st Century Fox Inc.
Write to Greg Bensinger at greg.bensinger@wsj.com
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(END) Dow Jones Newswires
September 03, 2015 20:00 ET (00:00 GMT)
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