In a rare foray into M&A, Amazon Web Services Inc. (AWS) is buying venture capital-backed Elemental Technologies Inc. Owned by Amazon.com Inc. (Nasdaq: AMZN), AWS is the leading provider of cloud-computing infrastructure in the world. Elemental develops software that enables companies to re-format video produced for traditional broadcast networks so that it can be distributed over the Internet on PCs, smartphones, tablets and TV. Terms of the deal, announced late Sept. 3, are undisclosed, but reports peg it at $500 million.
Elemental has raised about $44 million in venture capital funding from firms including General Catalyst Partners, Luminari Capital, Norwest Venture Partners, Steamboat Ventures, Telstra Ventures and Voyage Capital. To date, Portland, Oregon-based Elemental boasts more than 700 media companies as customers and provides the technology behind over-the-top TV (OTT) applications, including the BBC’s iPlayer, CNNGo, ESPN ScoreCenter, HBO GO, MSNBC Shift, Sky Go and Sky Now. Additionally, Elemental is supporting the world’s first 4K Ultra HD services including those that were delivered by the BBC during the 2014 World Cup.
The acquisition brings together Elemental’s video technology with the AWS Cloud platform to provide media and entertainment companies with tools to scale video infrastructures more efficiently and more economically, as the media industry increasingly moves to Internet-based delivery. “Together, we’ll collaborate on deeper technology integrations and new infrastructure offerings so that media and entertainment companies can evolve their hybrid and cloud models as they continue to innovate their services for viewers,” says Andy Jassy, senior vice president of AWS.
Since Seattle, Washington-based Amazon launched AWS in 2006, it has become the leading cloud-computing infrastructure provider in the world, with more one million customers using the services lower information technology costs and scale applications globally. AWS is comprised of a broad set of computing, storage, database, analytics, application, and deployment services from data center located in the U.S., Australia, Brazil, China, Germany, Ireland, Japan, and Singapore.
Traditionally, Amazon has grown organically or made small acquisitions. The $970 million purchase of Twitch Interactive Inc., an online community of video gamers, in 2014 was a departure from the company’s usual M&A strategy and represents its biggest deal to date. For more on middle-market deals in cloud computing, see Thoma Bravo & Others Bet Big on the Cloud.