Limelight Moving Up The Stack, Acquires Kiptronic For Mobile Ad Delivery

Images This morning Limelight Networks announced it has acquired privately held Kiptronic to further Limelight's expansion into the mobile video space. Over the past year, Limelight has been building out their mobile video offering, currently being used by MLB amongst others, and with the Kiptronic acquisition, Limelight is looking to combine their mobile delivery with Kiptronic's platform for delivering ads to mobile devices. Updated: While neither company will discuss the terms of the deal, I've learned that Limelight valued Kiptronic at around $12M. Updated 8/6: On Limelight's Q2 earnings call, the company said they paid $1M for Kiptronic. Looks like the finance person I spoke to had no clue what Limelight truly valued the company at.

Over the next twelve months I expect we'll see more acquisitions like this since Limelight's goal is to move up the video ecosystem stack and do more than just delivery. All of the CDNs are talking about "value add services" these days and are trying to diversify their revenue stream and do more than just deliver bits. For small companies that provide valuable pieces in the ecosystem, many of them are going to be natural acquisition targets for some of the larger CDNs.

Kiptronic was a small company of 15 developers so with Limelight now providing them with scale and resources, Kiptronic can do a better job of showing value to the largest content publishers. Kiptronic counts customers such as NPR, FOX, The Guardian, Conde Nast,
The Economist, and NBC.com as customers and Limelight has to also be
hoping that the acquisition gives them access to these customers to convert them over to Limelight's network for mobile video delivery.

I expect that over other next few months, other CDNs are now going to feel pressured to put out a story on how they too support mobile video or what their mobile video strategy is, even though the vast majority of them don't have one, which I think is ok. While this is a smart, strategic long-term move for Limelight, it's very, very early in the
mobile video space and the market is not that big in the U.S. from a revenue perspective.

One interesting thing to note is that Limelight has confirmed that Kiptronic will continue to work with publishers that use other CDNs that are not Limelight.

  • shaun noll

    this surprised me quite a bit. i think this little company got a very good deal from Limelight, $12M in these times seems quite expensive given the likely size of the revenues Kiptronic is generating. with funding as tight as it is i would probably prefer to see Limelight hold their cash rather than be very early like this.

  • http://www.BusinessOfVideo.com Dan Rayburn

    Keep in mind it was not an all cash deal. It was cash and stock.

  • Bubbleboy

    From other sources, I’ve heard it is a fraction of that amount.

  • Steve

    I heard it was $10M, so Dan’s number may be a bit high, but I think it’s close. Probably why Dan used the word “around”. ;)

  • Daniel

    This is sooooo frustrating…. Limelight eventually have some good news and win the lawsuit but now they go and waste $10M.
    Kiptronic have very little and what they do have is not a good solution even in mobile. What is happening at Limelight???
    I waited for a long time to see what my IPO purchase would be used for and when they eventually make an acquisition they buy Kiptronic? Arrrgggg (that is not a pirate’s arrrgggg…. you’ll get the connection below).
    I would sell my stock if it was worth even half as much as I paid for it. One mistake after the next at Limelight. How long will this go on before we see some changes? We should call the CEO of Limelight Captain Nemo as their shares seem destined to be 20,000 leagues under water for a long time……Arrrggggg!

  • Mel

    CDNs are all looking at mobile now as a viable revenue stream and those who think strategically will succeed but others like Limelight, will jump into the market with no expertise in mobile and spend millions on mediocre products. Sorry Kiptronic but that is a compliment.
    The leadership? at Limelight are may be reacting to what is a small threat. Their VP Mobile set up competitive offering called Mobile CDN recently and they are winning big deals. I heard the Limelight Board were really p…..d with the exec team at Limelight. Is this the result?
    What happens if Akamai go out and buy someone with real potential in mobile? Mobile seems to fit better with both Akamai’s business model, living higher up the value chain than other CDNs, and their network architecture, better for delivering small files in more locations.

  • Dr Dean

    Limelight are treading water. I am afraid that this acquisition will be another problem pulling them down.