M&A in the internet video sector ignited during the first three months of 2011. More than 17 deals have already been announced with little more than one week to go before the end of Q1. That is a massive increase over the same period last year when only two transactions were announced. The highly successful IPO of Chinese video sharing site Youku at the end of last year set the pace for the 2011 market (it is currently up nearly 35% YTD), and there are no signs of the market slowing any time soon.
Many acquisitions in the space have been strategic, with media companies purchasing technology to build out or expand their existing video offerings. Transactions including YouTube’s purchase of Green Parrot and Next New Networks fall into this category as Google’s video site aims to improve and expand its content beyond amateur user videos. KIT Digital made four acquisitions already this year , which expand upon the video asset management provider’s ability to monetize and distribute internet video more effectively. KIT may not be done with its acquisition spree either. The company recently announced that proceeds from a December $110.4 million public equity offering will support a “prospective larger acquisition” that is expected to be announced in a few weeks.
Venture capital firms also continue to show their Interest in the sector as well. PPLive, a Chinese online video company, raised $250 million at the beginning of February from Japan-based Softbank, an amount larger than what rival Youku — often dubbed China’s YouTube — raised in its IPO at the end of 2010 ($203 million). Other video companies are also bringing in funding, but on a more modest level; video conferencing solutions provider Vidyo , raised $11.5 million at the end of January.
We’ve written previously that global online video revenue is expected to reach $12 billion by 2012, and with the way companies are buying into the sector, it looks as though the market believes those estimates are true. Video traffic management firm Bytemobile recently found that 60% of all traffic on mobile Web devices is expected to be for video in 2011. New, more advanced mobile and tablet technologies are being announced what feels like every day, helping to drive the need for better video technology and further innovation. We expect M&A and investments in the space to continue torrid growth through the remainder of the year as the shift from traditional media to Web 3.0 is fulfilled.
Video M&A Transactions, YTD 2011
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