Amazon has agreed to acquire Portland-based video processing startup Elemental Technologies.
Founded in 2006, Elemental helps big media entities like HBO and ESPN seamlessly process video content across a full slate of mobile devices. The company enables more than 700 clients take video that was destined for legacy video distribution systems — IPTV, managed cable network, broadcast over the air, or satellite delivery — and convert that video for delivery over IP Internet protocol networks to multiscreen devices.
Amazon will incorporate Elemental’s technology into its Amazon Web Services platform “to provide media and entertainment companies with a range of integrated solutions to efficiently and economically scale video infrastructures as the media industry increasingly moves to internet based delivery,” the company said in a press release. The two companies have been partners for the past four years.
“During this time we have been impressed by their penchant for moving fast and their long-term vision for software-defined video,” Jeff Barr, Chief Evangelist at Amazon Web Services, wrote in a blog post. “We quickly realized that we could work together to create solutions that spanned the entire video pipeline.”
Terms of the deal were not disclosed, but The Information reported the purchase price at around $500 million, which would be one of Amazon’s highest-priced acquisitions of all time.
A GeekWire source, however, pegs the deal closer to $330 million. We’ve reached out to Amazon and Elemental for more details and will update this story when we hear back.
Compared to some of its peers, Amazon has not made many acquisitions in its 21-year history, particularly as it relates to AWS. Other purchases include online shoe retailer Zappos ($928 million), robot systems maker Kiva Systems ($775 million), Diapers.com operator Quidsi ($545 million), and most recently game-streaming service Twitch ($970 million). Within AWS, Amazon has swooped up startups like ClusterK, AppThwack, Amiato, and 2lemetry.
Elemental will continue to operate as a standalone company. The acquisition is expected to close in the the fourth quarter of 2015.
“The media and entertainment industry is at a unique inflection point, and as a part of Amazon, we will be in an even stronger position to help our customers delight their viewers globally,” Elemental CEO and co-founder Sam Blackman said in a statement. “We’re thrilled to have Amazon supporting our growth and ongoing commitment to our customers’ success.”
In a blog post, Blackman wrote today that Elemental and Amazon share similar core values and have aligned cultural values.
“Elemental’s top core value of Integrity is similar to Amazon’s Leadership Principal ‘Earn Trust of Others,'” he wrote. “Amazon ups the ante on Elemental’s core value of ‘Customer Centrism’ with their ‘Customer Obsession.’ And Elemental’s third core value, ‘Innovation,’ is matched by Amazon’s ‘Invent and Simplify.’ This alignment around the fundamental, intrinsic cultural values shared by our teams ensures that we will do great things together.”
Blackman added that existing and new Elemental customers will see the company’s “pace of innovation accelerate and our investment in service and support increase,” while Elemental’s internal team will “substantially grow.”
When we sat down with Blackman in May 2013, he talked about an “enormous opportunity” in front of Elemental, particularly as people consume video over new Internet networks as opposed to legacy networks.
“It’s early, but you can kind of feel that this disruptive change is rolling through the video space across the entire planet and we’re as well-positioned as any company anywhere to win that battle to help consumers make that transition,” he said. “If we do so, it’s going to be a great outcome for a lot of people here in the city and state of Oregon.”
Blackman, who previously was a design manager at Pixelworks before helping found Elemental nine years ago, has long been an advocate for helping build Portland into one of the leading worldwide startup hubs. He told us in May that the city needed a “big tech success story,” particularly since he hadn’t seen one since Pixelworks IPO’d in 2000.
“That being said, the companies have a lot of promise here,” he said. “I keep a list of 30 startups here that have a lot of potential. When you have that kind of depth and breadth of strong, well-funded startups that have raised $10 million or more, a couple of those will hit and hit in a big way. I think you’ll start to see that happening and that starts the whole virtuous cycle of reinvestments in new companies with certain employees that are wealthy enough to start their own company.”
Given today’s news, it’s fun looking back on Blackman’s comments about his company having “an enormous amount to prove,” particularly as it relates to the Northwest startup scene.
“We have 100 people in Portland, Ore. and a long way to go before we actually create a sustainable, significant company,” he said two years ago. “That’s what I want to do: Prove you can build great technology companies in Oregon that people in Seattle have heard of. At some point I hope we will have done that and we’ll be able to take a step back and say we have achieved something. That’s a ways off to me.”
Elemental is one of Portland’s fastest-growing young tech companies and had raised $42 million from investors like General Catalyst Partners, Norwest Venture Partners, Steamboat Ventures, and Voyager Capital.
Other Portland-based startups acquired in the past few months include RipFrog (bought by Cloudability) and GlobeSherpa (acquired by RideScout). Venture capital database firm PitchBook notes 79 total acquisitions of Portland-based startups since 2005. The most lucrative deals include Tektronix selling for $2.85 billion in 2007, Tripwire selling for $710 million in 2014, Saber Corp. selling for $460 million in 2007, and Simple selling for $117 million in 2014.
