Brightcove acquires online video platform business from Telstra-owned Ooyala

After receiving a $270 million investment in 2014 from Telstra, Ooyala will sell its online video platform business to video cloud services provider Brightcove.
Written by Campbell Kwan, Contributor

Video cloud services provider Brightcove has announced it will acquire the online video platform (OVP) business of Telstra-owned Ooyala.

The OVP technology to be acquired from Ooyala includes its video content management and publishing platform Backlot, Analytics, Live, and any underlying OVP IP and associated patents.  

Brightcove will also acquire substantial portions of Ooyala's engineering, support, and sales staff, including the company's operations in Guadalajara, Mexico. Brightcove intends to take on all customer, reseller, and partner relationships utilised by Ooyala's OVP business globally, the company said in a statement.

"This transaction, which includes immediately growing our highly skilled and committed global workforce, accelerates our ability to deliver faster innovation and deeper support for all customers," Brightcove CEO Jeff Ray said.

The sale followed Telstra in FY18 announcing that it had written-down the value of Ooyala to zero, and taken a non-cash impairment of AU$273 million.

"This was a business that Telstra purchased when the market dynamics were very different. When we announced the initial impairment 18 months ago, we indicated that we would be working closely with the team to turn around the performance," former Telstra group exec of Technology, Innovation, and Strategy and Ooyala chair Stephen Elop said at the time.

The telco had also announced a separate Ooyala-related impairment as part of its FY16 financial results.

Telstra acquired the Silicon Valley-based video streaming and analytics company in 2014 with a $270 million investment, which had given the Australian telco giant a 98 percent holding of Ooyala.

Prior to that, Telstra invested $61 million into Ooyala over a period of two years for a 23 percent stake.

On the same day of the OVP sale, Telstra released its first-half financial results which left much to be desired for shareholders of Australia's largest telco. Revenue was down by AU$223 million to AU$12.6 billion, total income was down by AU$593 million to AU$13.8 billion, and profit dropped from AU$1.7 billion to AU$1.2 billion.

Telstra had blamed its lacklustre results to "very different" circumstances thanks to the National Broadband Network (NBN), with Telstra CFO Robyn Denholm saying the decreased earnings under the NBN were "expected".

"The largest reason for the decline in our results is the NBN," Denholm, who will soon be leaving Telstra to begin her role as chair of Tesla, said during the financial results call on Thursday morning.

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