Ooyala acquired by Telstra, setting stage for global growth

Updated: Streaming video distribution provider Ooyala has been acquired by Australian telecom Telstra for an undisclosed amount. The company will operate as a wholly owned subsidiary, with its management and executive team remaining at its Silicon Valley headquarters.

Telstra already owned 23 percent of Ooyala from a previous investment round in which the carrier put in $61 million. To raise its stake to 98 percent and set the stage for the acquisition, Telstra's ownership paid an additional $270 million. The purchase will close in about 60 days, according to a press release.

The investment is also the first for Telstra's GAP (Global Applications and Platforms) strategy, which is designed to invest in "long-term global growth in markets that are adjacent to Telstra's core business, where software disrupts traditional business models," according to the press release.

For the moment, things are business as usual at Ooyala, which will continue to serve its existing customers, including cable networks like Univision, Comedy Central and ESPN, as well as movie studios and other clients needing online video distribution services.

Jumping under Telstra's umbrella will give Ooyala a better position to work from, a TechCrunch article pointed out.

"Having the security of operating as a wholly owned subsidiary could shield Ooyala from dealing with the public markets, while serving a growing customer base," according to the article, which noted that its competitor, Brightcove, has struggled since going public two years ago.

Most importantly, Ooyala can chase down global business and scale to meet demand thanks to Telstra's backing, while Telstra can grow beyond its core telecom business into the expanding online video segment.

"With today's news, we combine the backing of one of the strongest telecommunications companies in the world with the intensity and agility of an independent Silicon Valley company," said Ooyala CEO Jay Fulcher in a prepared statement. "This combination accelerates our growth and pace of innovation, while we remain laser-focused on helping media companies everywhere win in an industry undergoing massive transformation."

Staying on the move is critically important for Ooyala as other online video distributors shift to a global strategy. In July, thePlatform formed a strategic alliance with Verizon Digital Media Services to provide its video management services over VDMS' multinational content delivery network.

For more:
- see the release
- TechCrunch has this story

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Updated Aug. 12 to clarify purchase details and Telstra's stake in Ooyala.