AWS Buys Video Processing Firm Elemental Technologies for $500M

Fast-growing, Portland, Oregon-based video-streaming infrastructure company Elemental Technologies is becoming a property of Amazon Web Services. AWS has reportedly clinched a deal to acquire Elemental, which will continue to operate under its own brand name, for $500 million.

Founded in 2006, Elemental provides cloud-based software that lets its customers more easily reformat and stream video from live and on-demand sources onto laptops, tablets, smartphones and other devices. The company has more than $44 million in funding, in addition to hundreds of big-name customers that include the BBC, Comcast, ESPN, HBO and Sky.

The acquisition is believed to be among the largest made by either Amazon or its AWS brand, although terms of many of the company's purchases are not disclosed. Amazon's $1.2 billion purchase of shoe and apparel retailer Zappos in 2009 is likely its biggest. The company also acquired the streaming video service provider Twitch for $970 million last year.

A 'Key Element' in Media Equation

"Elemental has some impressive carrier wins and video media content provider wins," Gartner Inc. analyst Akshay Sharma told us. "They provide cloud-based video solutions like transcoding technology that used to require dedicated hardware, but via their technology can run on standard hardware, like in Amazon Web Services."

Sharma said AWS' acquisition makes sense in light of Amazon's expanding presence in the video-streaming market. "With Amazon Prime, Amazon buying Twitch, they are becoming a media player as well, and Elemental Technologies can be a key element in this equation," he said.

Earlier this year, Gartner identified Elemental Technologies as one of several "cool vendors" in the communications service provider infrastructure space.

"While there are other vendors in this new SDV [software-defined video] space, Elemental Technologies is unique in being the first to bridge the cloud, with networking supporting 4K UHD TV with deployments at cable multisystem...

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