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After Twitch, Is Ustream the Next Billion-Dollar Target?

The $970 million in cash Amazon is paying to purchase Twitch isn’t just good news for the founders of the company that live-streams people playing videogames. Another player that’s quietly operated in the wings, Ustream, could now also benefit and find itself the next billion-dollar takeover target.

Ustream certainly has roots entrenched in Hollywood that makes it attractive to the industry’s largest entertainment conglomerates.

The San Francisco-based company has live-streamed red-carpet premieres and other events for “The Hunger Games,” “Twilight,” “Neighbors,” “Game of Thrones” and “Pretty Little Liars” for Lionsgate, Universal, HBO and ABC Family. Other clients include TMZ, Showtime, Discovery, and the UFC, which has tested pay-per-view events.

Ustream’s technology also is embedded inside Sony’s PlayStation 4, enabling gamers to upload what they’re playing at the press of a button.

Ustream admits it’s recently had prospective buyers kick the tires of the privately owned company.

“We have seen a definite uptick in M&A inquiries in the past few months -– likely driven by the Twitch conversation, rising awareness surrounding streaming video, and our surging enterprise video business, which now accounts for approximately one-third of all live business video,” Ustream CEO Brad Hunstable told Variety. “We are going to wait before taking any ​offers. Live video was previously expected to triple in the next three years, and now we think that might be a conservative estimate.”

And that doesn’t come as much of a surprise to analysts.

“Over time, Ustream will be a highly desirable acquisition candidate, but the marketplace has to develop a full appreciation for what a volume distributor of live streaming video content can do,” said Steve Vonder Haar, a senior analyst of enterprise webcasting and streaming at Wainhouse Research told Variety.

He also notes that “live video delivered in a streaming environment is not a technically easy thing to do at scale. Ustream is focusing on creating a hosted solution that does just that.”

But what could make Ustream even more appealing to potential buyers is the fact it’s focused on more than just Hollywood. The company was responsible for streaming a third of all live business video last year and is used by Facebook, LinkedIn, Intuit, NASA and Salesforce.

Those kinds of clients, however, should raise questions whether Ustream is right for Warner Bros., Disney, Sony, DreamWorks Animation, even Legendary Entertainment and Relativity Media, which are increasing their investments in digital ventures.

What those companies are buying, however, are ventures like Maker Studios, AwesomenessTV, Nerdist and Geek & Sundry — companies with connections to talent making content watched by a young audience.

SEE ALSO: Why Amazon Acquired Twitch

Ustream is more of a distributor, whose technology could attract the deep pockets of Google.

Amazon’s acquisition of Twitch signaled that there’s a lot of value in the live streaming of entertainment programming online — not a surprise given that live broadcasts are also significant ratings generators on broadcast television.

Yet while Twitch spent all of its resources turning itself into a popular brand with gamers, Ustream has focused on finding a far larger audience — usually more than 80 million viewers in a month, far more than the 50 million gamers that logged onto Twitch in July — namely clients looking to get the word out about a product or service whether it’s to their consumers at trade shows or employees through internal presentations.

But as it does mature, that will only increase the value of the companies that appear to be at the forefront.

In addition to Ustream, there’s Newtek Tricaster, Livestream, Monetize Media, Bit TV, Streamup, BlogTV and Kyte.

There also is Major League Gaming, which like Twitch, live streams videogame competitions and events.

SEE ALSO: Major League Gaming, Twitch Compete to Become the ESPN of Videogames

Ustream has raised around $60 million to date from investors that include SoftBank and DCM, its primary investors.

Why Ustream hasn’t yet been acquired also doesn’t surprise observers.

“It’s early days in the streaming technology sector,” said Vonder Haar, noting how YouTube is only a decade old. “This is really going to fundamentally change traditional media and video enriched business communications. Change that important takes a long time to evolve.”

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