SeaChange drops $5.5M to buy OTT video specialist Xstream

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SeaChange’s new deal for Xstream comes shortly after the company reported third-quarter earnings. (iStock)

SeaChange International is looking to deepen its over-the-top video business by acquiring European OTT video platform provider Xstream in a deal worth $5.5 million.

SeaChange is paying $4.6 million in cash and 541,738 shares of SeaChange common stock for Xstream. Xstream’s customers include Canal Digital (Telenor), Star Online (Dimsum), ALT Digital Media Entertainment (Balaji), Mayo Clinic, Altibox, and Our Star Club.

“Xstream provides us a managed service, over-the-top video solution that already serves more than 5 million active subscribers globally and generates approximately $6 million in annual SaaS revenues. Xstream’s MediaMaker video platform will enhance the SeaChange end-to-end video framework and enable us to gain near-term revenue synergies,” said Ed Terino, CEO of SeaChange, in a statement.

Terino said described Xstream’s engineering resources as being “in close proximity” to SeaChange’s engineering and development organization in Warsaw.

“We anticipate achieving several million dollars of cost synergies from the combination of our organizations within the first half of fiscal 2020. In addition to leveraging Xstream’s experienced engineering resources, we expect to realize cost synergies in sales, marketing and administrative functions, including the consolidation of multiple locations into our Warsaw offices this fiscal year,” Terino said.

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SeaChange’s new deal for Xstream comes shortly after the company reported third-quarter earnings. SeaChange swung to a loss of $2.5 million compared with income from operations totaling $0.9 million one year ago. But Terino said sequentially things were looking up for the company.

“Our third quarter revenues were a substantial improvement over our prior two quarters of fiscal 2019.  We were successful in closing several seven figure deals in Q3, as well as deals with several new companies.  We are seeing good pipeline opportunities for sequential bookings growth in Q4’19, including software upgrade opportunities within our service provider customer base as well as several PanoramiC opportunities with new customers.”