The deal is worth about $150 million, including potential future payments if Ustream hits performance targets, according to a source familiar with the deal. IBM is paying $130 million for Ustream excluding earn-out provisions, Fortune and the Wall Street Journal reported. (IBM said terms of the deal are not being disclosed.)
Ustream, founded in 2007, had raised about $60 million from investors including DCM Ventures and SoftBank Capital. Customers include Facebook, HBO, Nike, Discovery Channel, Cisco, Sony, Intuit, NASA, Mazda and Samsung. The company claims it powers 2 million broadcast streams per month, 80 million viewers per month, ranging from corporate keynotes to live music concerts.
With the deal, IBM has formed the Cloud Video Services unit, which combines assets from Ustream and the recent acquisition of video-on-demand management firm Clearleap. The unit also will create solutions integrating technologies from other IBM investments, including Aspera and Cleversafe. IBM Cloud Video Services will be led by GM Braxton Jarratt, former CEO of Clearleap.
“Video has become a first-class data type in business that requires accelerated performance and powerful analytics that allows clients to extract meaningful insights,” said Robert LeBlanc, senior VP of IBM Cloud. “Aligning our expansive video and cloud innovations into an integrated unit will create opportunities for clients to take advantage of this medium in the most strategic way possible.”
Big Blue sees Ustream bulking up its cloud-based services biz. In 2015, IBM Cloud revenue totaled $10.2 billion, up 57% year-to-year. The tech company estimates that cloud-based video will represent a $105 billion market opportunity by 2019.
Ustream is based in San Francisco, with a development office in Budapest, Hungary, and data centers in San Jose, Calif., Amsterdam and Tokyo. IBM said it will integrate Ustream’s development platform into Bluemix, its open cloud development platform.
Separately, last October IBM acquired the Weather Company’s business-to-business properties, with the Weather Channel remaining a separate entity.