IBM Said to Pay $130 Million to Acquire Video Startup Ustream

IBM Corp. Exteriors Ahead Of Earnings Figures

Pedestrians walk past International Business Machines Corp. company offices in New York.

Photographer: Craig Warga/Bloomberg
  • Deal will help IBM sell more video services to NFL, HBO
  • New video unit to be created, combining IBM's other purchases

IBM is buying live video stream provider Ustream to help sell more video services to clients including the National Football League, HBO and the Food Network, through its cloud platform.

With the acquisition, International Business Machines Corp. will create a unit that combines Ustream’s services with related technologies including those from previous purchases: multi-device video delivery platform Clearleap, data storage seller Cleversafe and file-transfer software provider Aspera. IBM is spending about $130 million to buy the startup, according to a person with knowledge of the matter, who asked not to be identified because the terms are not public. 

IBM is planning to use the combined technologies to help clients bring expanded video services for consumers and businesses to more devices, said Braxton Jarratt, who served as chief executive officer of Clearleap and will lead the new IBM unit. The market for cloud-based video software can reach $105 billion by 2019, he said. Jarratt declined to comment on the deal price and Ustream’s revenue. The news of the acquisition was previously reported by Fortune.

The new unit will “allow us to take services that HBO, the NFL, and other companies are using today global overnight,” he said.  “We’ll have the ability to stream video to any device at a very high quality.”

IBM isn’t the only large tech company to tap into the livestreaming and video markets. Amazon.com Inc. in 2014 bought Ustream competitor Twitch -- made popular by video game streaming -- for $970 million. Twitter Inc. last year purchased the livestreaming mobile application Periscope for an undisclosed price. Facebook Inc. and Snapchat have both focused on adding and improving the video capabilities in their services.

San Francisco-based Ustream, founded in 2007, raised about $50 million from investors including SoftBank Group Corp.’s venture arm and DCM Ventures. The company has data centers in San Jose, California, Amsterdam and Tokyo. IBM in 2014 said Ustream’s services would be available through the tech giant’s cloud platform. IBM Chief Executive Officer Ginni Rometty’s speech at CES, the annual consumer electronics show in Las Vegas, was also broadcast live on this platform.