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HomeWhat's OnAWS Buys Video Processing Firm Elemental Technologies for $500M

AWS Buys Video Processing Firm Elemental Technologies for $500M

Fast-growing, Portland, Oregon-based video-streaming infrastructure company Elemental Technologies is becoming a property of Amazon Web Services. AWS has reportedly clinched a deal to acquire Elemental, which will continue to operate under its own brand name, for $500 million.

Founded in 2006, Elemental provides cloud-based software that lets its customers more easily reformat and stream video from live and on-demand sources onto laptops, tablets, smartphones and other devices. The company has more than $44 million in funding, in addition to hundreds of big-name customers that include the BBC, Comcast, ESPN, HBO and Sky.

The acquisition is believed to be among the largest made by either Amazon or its AWS brand, although terms of many of the company’s purchases are not disclosed. Amazon’s $1.2 billion purchase of shoe and apparel retailer Zappos in 2009 is likely its biggest. The company also acquired the streaming video service provider Twitch for $970 million last year.

A ‘Key Element’ in Media Equation

“Elemental has some impressive carrier wins and video media content provider wins,” Gartner Inc. analyst Akshay Sharma told us. “They provide cloud-based video solutions like transcoding technology that used to require dedicated hardware, but via their technology can run on standard hardware, like in Amazon Web Services.”

Sharma said AWS’ acquisition makes sense in light of Amazon’s expanding presence in the video-streaming market. “With Amazon Prime, Amazon buying Twitch, they are becoming a media player as well, and Elemental Technologies can be a key element in this equation,” he said.

Earlier this year, Gartner identified Elemental Technologies as one of several “cool vendors” in the communications service provider infrastructure space.

“While there are other vendors in this new SDV [software-defined video] space, Elemental Technologies is unique in being the first to bridge the cloud, with networking supporting 4K UHD TV with deployments at cable multisystem operators (MSOs), over-the-top (OTT) providers and CSPs,” the Gartner report stated. Those kinds of services are increasingly appealing for the cost savings they can offer to content service providers looking for additional ways to earn revenue from video, the report added.

Aiming for ‘the Entire Video Pipeline’

“We have been working with Elemental to address shared customers in the Media & Entertainment (M&E) business for the past four years,” Jeff Barr, chief evangelist for AWS, said in a blog post yesterday. “During this time we have been impressed by their penchant for moving fast and their long-term vision for software-defined video. We quickly realized that we could work together to create solutions that spanned the entire video pipeline.”

With Elemental as an AWS property, the two companies will be able to “work even more closely together to provide media companies with a family of on-premises, hybrid, and cloud-based solutions for Internet-based video delivery,” Barr said.

“The media and entertainment industry is at a unique inflection point, and as a part of Amazon, we will be in an even stronger position to help our customers delight their viewers globally,” Sam Blackman, co-founder and CEO of Elemental Technologies, said in a statement.

While terms of the acquisition were not disclosed, The Information — citing “a person familiar with the situation” — said the deal was worth more tha $500 million in cash. The purchase is expected to be completed in the fourth quarter of this year.

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