Australian operator Telstra is investing US$270 million to increase its stake in Silicon Valley-based Ooyala, a video streaming and analytics provider, from 23 per cent to 98 per cent. The operator previously invested US$61 million over the last two years.
Ooyala will operate as an independent subsidiary and be led by current CEO Jay Fulcher. It will keep the Ooyala brand and continue to be headquartered in Silicon Valley.
According to analysts, the investment makes Ooyala one of the highest-capitalised video and analytics firms in the world and will help it accelerate growth in offering hosted video solutions for media and online companies.
The acquisition, part of Telstra’s new digital-first strategy, is the first investment for its Global Applications & Platforms Group, which aims to find growth in sectors that are adjacent to its core businesses.
451 Research VP Declan Lonergan noted that the deal shows how serious Australia’s number one mobile operator is about expanding into relevant adjacent markets.
“Telstra is hoping to capitalise on online companies’ increased demand for managed, cloud-based video delivery solutions,” said Lonergan. “One of the key opportunities is to provide an efficient multiscreen capability to address the phenomenal growth in video consumption on smartphones and tablet devices.”
In a statement Telstra CEO David Thodey said the investment gives the companies the opportunity “to establish a consolidated global company to deliver platforms and services on which the next generation of TV and video will be built. Ooyala delivers a personalised video platform as an end-to-end cloud offering, which saves customers high upfront investments in online video infrastructure and helps increase the return on their content.”
Ooyala, founded in 2007 and now with 330 staff, expects revenue of US$65 million this year. Its customers include broadcasters, pay-TV operators and online media sites, which collectively have a global footprint of 135 million users in nearly 240 countries.
The transaction is expected to be completed within two months, once it receives US regulatory approvals.