Tuesday, October 6, 2009

KIT Digital Acquires Online Video Pioneer The Feedroom for $9.8 Million

In yet another shake up within the online video space New York City-based web video and streaming pioneer, The FeedRoom, has been acquired by Czech Republic-based web company KIT Digital (KITD) for approximately $9.8 million worth of stock. A long-time player in the online video market, The FeedRoom remained at the forefront of online video communications for the last decade. Since launching in 1999 as a video aggregation site, The FeedRoom raised at least $66 million with $12 million just two years ago. According to Dan Rayburn, The Feedroom had agreed to the deal some time ago and changes have already taken place with the departure of top leaders, CEO Mark Portu and SVP Daniel Webster, and the pending closure of the San Francisco office. Many in the online video news space commented that it was not a good day for The Feedroom investors who ended up losing the majority of their investments. Dan Frommer called it a "Web Video Firesale", Ryan Lawler noted it "marks an inglorious end to The FeedRoom" and Dan Rayburn pointed out that being acquired was really their only option.

Dan said this about the deal:
"On paper, the services of KIT and FeedRoom fit nicely together and considering that KIT paid FeedRoom investors with all stock, it was an easy deal. While the deal makes sense on paper since it gives KIT a U.S. presence, enterprise and government customers, and all of The FeedRoom's technology, the success or failure of this acquisition will all come down to the integration of the two companies. KIT has a challenge ahead of them since they are doing multiple acquistions and integrations and can't yet know how much of The FeedRoom's revenue will remain come next year."

In 2004, The Feedroom transitioned to a SaaS (software-as-a-service) video platform for video management tools and went back to it's roots within the last year to power enterprise video with the FeedRoom 4.0 Enterprise Video Platform. The company has provided B2B video and digital asset management solutions for Marketing and Branding, Public Relations and Communications, Media and Publishing with a strong focus on ROI. As part of its end-to-end platform The Feedroom acquired digital asset management company Clearstory Systems late last year.

The Feedroom's $6 million annual revenue consisted of customers that includes Barnes & Noble, Best Buy, Hewlett-Packard, Intel, and both the U.S. Department of Defense and U.S. Department of Health and Human Services. A number of their customers were recognized for Excellence in Enterprise Video Awards by research firm Interactive Media Strategies.

Within the past few months The Feedroom announced a number of partnerships that extended their capabilities in social media with widget syndication service Clearspring and distribution and analytics with Tubemogul. I spoke with Matt DeLoca, SVP of Sales and Marketing earlier this year about The Feedroom's business objectives and refocus on enterprise video, some of the challenges in the marketplace and how The Feedroom differentiates itself from other video platforms. While it may seem ironic now given the acquisition, Matt was optimistic that The Feedroom would be remembered as one of the founders and leaders of the industry and be around to say that for a long time.

Update: Matt is now SVP, Sales and Marketing, KIT Digital and he'll be one of the featured speakers on the Best Practices Roundtable: Online Video Publishing Strategies and Tools, at the Online Video Platform Summit on November 18th in San Jose, California.

In addition to The Feedroom acquisition, KIT Digital also acquired German-based Nunet AG, mobile device video provider for about $11.5 million.

Gavin Campion, president of KIT digital told StreamingMediaGlobal:
“The acquisitions were a no brainer. Both come with their relative merits, both have great technology capability, and both come with immediate cross and upsale capability which strengthens our drive for organic growth. The synergies between our companies will be a lot easier to handle simultaneously. KIT CTO Andy Steward is working to integrate a one platform continuation of our current SAAS model.”
See Adrian Pennington's article KIT digital Acquires Nunet and The Feedroom for $21 Million to read more about how the two acquisitions expand KIT digital's presence in both the mobile and enterprise markets, while also giving the company a foothold in North America.

Expect to see more M&A activity continue to heat up in the online video space.


Updated10/6/09: Information on Matt DeLoca, Online Video Platform Summit and correcting KIT Digital's location as Prague, Czech Republic.