Australia’s Telstra acquires leading US video technology firm Ooyala

Australia's telecom major Telstra yesterday agreed to buy privately-held US video platform start-up Ooyala, the industry's fastest-growing video technology company, for $270 million, aiming to create a global leader in the field. 

The investment will boost Telstra's ownership in Ooyala from 23 per cent to 98 per cent. This is in addition to the $61 million Telstra had invested in the Silicon Valley firm over the past two years.

Telstra chief executive officer, David Thodey, said Telstra's investment and controlling stake in Ooyala would help build it into a world leading personalised video platform company.

''Ooyala is one of the industry's fastest-growing personalised video platform companies. The company provides solutions for customers such as broadcasters, pay-TV operators and online media sites globally.''

In a blog post to its employees, Ooyala's president and chief executive officer Jay Fulcher said, ''Our strategy for leadership in this market is now backed by Telstra's full-throttle commitment to establishing an independent, world-leader in cloud-based personalised TV and video technology.''

Ooyala is a privately-held company that provides online video technology products and services. It was founded in 2007 by brothers Bismarck Lepe and Belsasar Lepe, and their colleague and friend from Google, Sean Knapp. 

Ooyala has offices in Mountain View, California, New York, Los Angeles, London, Sydney, Guadalajara and Tokyo and has over 330 employees.

The company's 2014 revenue is estimated at $65 million.

Ooyala has a global footprint of 135 million users in nearly 240 countries. Its users include some of the largest names viz. Telstra, ESPN, Univision, Telegraph Media Group, Dell, Sephora, Foxtel, NBC Universal, Comedy Central, News Corp and The Washington Post.

According to a recent study by Ooyala, smartphones and tablets are playing a key role in the consumption of online videos. 

During the first quarter of 2014, 21 per cent of all online video-plays around the world were completed through mobile devices or tablets, registering a five-fold growth in the past two years.

According to Ooyala, the market for the online video technology will be worth tens of billions in the next few years and to win requires a heavy investment in people, R&D and technology.

"We see the acceleration of mobile video consumption happening globally, as consumers in every region adopt mobile and tablet video faster, and interact with it longer," Fulcher said.

Telstra is now looking to build new businesses in new high-growth markets around the world, with video as one of its key focus areas, and  Ooyala being the centre-piece of this video strategy.

 Telstra, one of the world's largest telecommunication companies has deep expertise in digital media space and can provide the required investments to build Ooyala's leadership in personalised video.

''Our investment allows Ooyala to take their solution to the next level and thereby further accelerate its growth,'' Thodey said.

''Telstra gives us the opportunity to operate at this scale and provides access to global partners who can help us exponentially in the coming years,'' Fulcher said.

On completion of the transaction, Ooyala will become a subsidiary of Telstra and operate independently under Telstra's Global Applications and Platforms group, and will be headed by Jay Fulcher, Ooyala's current CEO.

The transaction is expected to close in the next 60 days, subject to customary closing conditions including the receipt of US regulatory approvals, Telstra said.