IBM acquires Ustream as it gears up for $105 billion market

IBM is creating a new cloud-based video unit to gain a foothold in the industry, reportedly worth billions of dollars in 2016.

Steve Marcus/Reuters/File
Ginni Rometty, chairman, president and CEO of IBM, speaks during a keynote address at the 2016 CES trade show in Las Vegas, Nevada, January 6, 2016. IBM confirmed it has acquired UStream Jan. 21.

In anticipation of a robust cloud video market, IBM has made another acquisition for better video capabilities.

On Thursday, IBM confirmed via press release it has acquired Ustream, the live video streaming start-up. The acquisition was targeted at adding video and media capabilities to the IBM Cloud platform. Although the financial terms of the acquisition were not disclosed, Fortune estimates the value at $130 million cash in addition to other terms.

Ustream was founded in 2007 and provides cloud-based video stream. Ustream’s service has been utilized by a large spectrum of companies, from customers like Facebook and NASA to live events like concerts and award shoes. Over 2 million live events are streamed over the service every month, according to the company’s website.

IBM’s interest in the company stems from its desire for more advanced cloud-based video and a multibillion-dollar market, according to general manager Braxton Jarratt.

“Through this latest acquisition and the creation of a new cloud business unit, IBM will provide an end-to-end suite of digital video solutions for the first time under one roof. As a result, clients will be able to take advantage of every stage of the video life cycle through advances in customization, digital access, visual analytics and more, all to enable the consistent delivery of video content globally."

Ustream will combine with IBM’s previous acquisitions Clearleap, Cleverspace, and Aspera to form the IBM Cloud Video Services unit. Researchers estimate 80 percent of data is inaccessible to computers due to a lack of structure, and video represents the fastest growing segment of the “dark” data, according to IBM. The IBM Cloud Video Service, among other duties, will help to make the video portion of the data more accessible.

IBM’s new unit will help clients “easily ingest, store and manage live and on-demand video, enhance them through analytics, apply rights management and language capabilities, and distribute them consistently across the globe,” the company says in the press release. 

Ustream’s role in the new unit will be focused on its Ustream Development Platform, which helps clients make video apps that allow video to be viewed across devices and applications. The platform will be integrated into Bluemix and provide a range of services to developers, according to IBM.

IBM has spent billions on acquisitions over the last decade. The company announced it would spend about $20 billion on various acquisitions over a five-year period in 2011 and dedicated an additional $1 billion for cloud services, according to Forbes. The Ustream acquisition shows that IBM is serious about estimates that cloud-based video services and software would be a $105 billion market in 2016.

With the formation of the IBM Cloud Video Services unit, acquisition of Ustream and other cloud-based video services, and possession of more than a thousand patents related to video software and services, IBM is positioning itself to dominate the potential multibillion-dollar market. 

Video is “becoming the favored form of communication, not just for entertainment, but also for business,” Brad Hunstable, CEO of Ustream, said in the press release. “We’ve built a video platform that is easy-to-use, yet incredibly scalable, secure and powerful and it is these qualities that made us an ideal addition to IBM’s portfolio.”

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