Updated: Cisco To Acquire Extend Media In Deal Worth $80M

Unknown This morning, Cisco announced that it intends to acquire privately held Extend Media with the deal expected to close in the first half of Cisco's fiscal year 2011. Someone inside Cisco's Service Provider Video Technology Group, who didn't want to be named, told me that Cisco valued Extend Media at "around $40M". Cisco's PR department declined to comment on that number and said that they "aren't discussing financial terms of the deal." While the $40M number comes from someone inside Cisco who would know the details, the valuation seems high to me.

Updated: I have learned that the deal is actually worth about $80M. While that number initially seems high since that would give Extend Media a 4-5x multiple on revenue, as it was pointed out to me, Cisco paid more than usual due to competitive reasons. Extend Media and thePlatform are really the only two companies in the space with carrier grade solutions and with Comcast already owning the platform, Extend Media was really the only other company for Cisco to acquire for which they had to pay more of a premium.

Extend Media did have some well known customers but their customer count was small. The company which had raised just over $30M in VC funding was not profitable and like many smaller companies in this space, faced a tough choice of trying to raise another round, or find a suitable buyer. In this case, Extend Media made the right move as raising a fourth round in today's market would have been very difficult, especially with the industry being so competitive with numerous vendors. The sale to Cisco now gives Extend Media the resources they need to grow their business and Cisco gets a platform that does have some good functionality, but will require Cicso to make an investment into scaling out the platform.

Lots of folks are asking me if Extend Media was considered an online video platform (OVP) and if so, are there other companies similar to Extend that might be attractive to other large players like Cisco. The term OVP is very generic these days but Extend Media would not be classified as an OVP. Most OVPs provide solutions directly to publishers and content owners and Extend Media focused on selling their platform to telcos and carriers. Extend Media is a software play deployed inside the carriers network whereas OVPs offer their services via a SaaS based offering. Some of their customers include Bell Canada, AT&T and Verizon.

  • http://www.buydrm.com Christopher Levy

    Interesting news. Dan I think your perception of Extend’s product though is off. Anyone could deploy their platform on their website. It wasn’t just an OVP. It was a Online Commerce Platform with OVP properties. Their platform covered the player, the DRM, Ad management.the commerce, the user management and the streaming if need be with a CMS and metrics. An OVP on steroids if you will. http://www.extend.com/products/index.php I don’t know of a single “carrier network” that had deployed OpenCast

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

    Bell Canada is Extend Media’s largest customer and runs their TV Everywhere service off of it. Network carriers are the only kind of companies they have been targeting for the past 18 months. They also count Verizon and AT&T as customers.

  • http://www.buydrm.com Christopher Levy

    Yes they do, from Extend’s servers. Extend was an ASP or SaaS. Very straightforward. The Platform with eCommerce and DRM. UFC many others all use Extend but it’s via their SaaS offering. UFC didn’t deploy OpenCase in their hosting carrier network.

  • http://www.buydrm.com Christopher Levy

    Dan,
    Incorrect entirely. Extend Media has been selling directly into content brands and sites for years. UFC.com is not a “Network Carrier” of any kind. Neither is NBDDirect.com Not sure where you are getting this data from. I don’t think that previously you had ever covered Extend Media had you?

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

    They “had been” selling into content sites, but as the company recently told me in a briefing, they have not focused on selling direct to content owners over the past 18 months. Quote: “we are focused solely on the network carrier business”.
    I originally wrote about Extend Media’s involvement in the NBC Direct deal back in 2007. The company’s focused has changed since then: http://blog.streamingmedia.com/the_business_of_online_vi/2007/11/nbc-direct-to-u.html

  • http://www.buydrm.com Christopher Levy

    Which is of course just marketing speak and not real.
    They were actively and extensively “selling direct to content owners” over the past 18 months. Maybe they aren’t highlighting that now which I can understand.
    Here is a great example of a content customer they deployed directly: http://www.onet.pl/
    I was unable to locate your coverage of their NBC Direct story in my search…apology for that. We competed against them at large then and over the past 3 years for similar business. They won this business then only to lose it later to WideVine and Pando.
    With revenue of $14M and a $33M in VC on board, it seems like Cisco really overpaid here for what is basically a Monetization Focused OVP. Just my 2 cents.

  • http://www.vidcompare.com Kris Drey

    I disagree with the statement that Extend is not considered an OVP. They are, in fact, an OVP offering hosted video solutions to publishers and media clients of all types with OpenCASE. I’ve spoken to representatives at the company whom say they are an OVP and the “marketing” copy on their website supports that notion:
    “ExtendMedia provides OpenCASE, a carrier-grade platform for managing, publishing and monetizing video across PCs, televisions and mobile devices. With OpenCASE, network operators, media companies and consumer electronics companies can launch streaming and downloadable video services in an ad-supported, paid , rental or subscription model. Our customers can also leverage the quick time-to-market of a fully hosted offering or the flexibility of an easily customizable enterprise platform. Give us a shout and learn more about how we can help you manage your video business.”

  • http://www.buydrm.com Christopher Levy

    They were an OVP for sure with a focus on Monetization. Now that they are part of Cisco I suspect we will never hear from them again.