VitalStream Inserts Eonstreams’ Technology Into Advertising Lineup

For several months, there’s been speculation about VitalStream’s plans for meeting customer demand for ad insertion technology and per-user billing capability. That speculation came to a close last week when the company announced the purchase of streaming media service provider Eonstreams. The all-stock deal also provided Eonstreams’ stockholders the benefit of publicly traded VitalStream’s expected growth.

"With our acquisition of Eonstreams, VitalStream is now positioned to provide turnkey advertising solutions to a wide range of customers looking to monetize their web content as the Internet continues to claim an ever-increasing share of viewers," said VitalStream chair and CEO Jack Waterman in a press release.

The story behind the story, though, is even more interesting. Specifically it reveals how Knoxville, TN-based Eonstreams moved from being a small streaming hosting provider into a key niche—online ad insertion—and the level of interest that move created among various suitors. In the bigger picture, though, it also shows how the streaming media market is maturing from a series of small players into consolidated partnerships encompassing robust solutions and toolsets. These partnerships are not only beneficial to the companies involved and their customers, but lay the foundation for significant merger and acquisition activity over the next 12 months.

As a February 2006 streamingmedia.com article notes, Eonstreams CEO Steve Newman came from a background in traditional and net-based media sales. Newman’s media career started as the head of sales for HGTV and The Food Network, now a part of Scripps-Howard, in Knoxville. Newman was interested in staying in Knoxville but also wanted to explore the challenges brought on by new media.

When Newman came on board in 2002, Eonstreams was primarily focused on generic streaming services, although a large part of its client base was radio stations. The company had begun work on an ad insertion tool, however, to address a specific needs of its radio station clients, which were not allowed to play some of their on-air commercials as part of their Internet stream.

"At that time, very few new media companies were focused on long-term strategies," says Newman. "I wanted to take my skillset—media marketing—and find a way to apply those skills against a new media tool."

The company continued to work on the ad insertion technologies, and brought a representative from Clear Channel on to its board of directors. Clear Channel’s interest was more than cursory, as the technology allowed its wide range of radio stations to stream their shows while inserting targeted advertising content for various geographies or demographics.