SeaChange Acquires Xstream in $5.5 Million Deal
SeaChange International has acquired Copenhagen-based Xstream AS, one of the earliest entrants in the OTT platform and services market, for $4.6 million in cash and 541,738 shares of SeaChange common stock, for a total value of $5.5 million.
In the past year, SeaChange has more clearly and aggressively defined its vision with its Panoramic Platform, an end-to-end solution for cloud-based, multiscreen live and VOD delivery. The Xstream acquisition buttresses that already robust offering.
"Xstream provides us a managed service, over-the-top video solution that already serves more than 5 million active subscribers globally and generates approximately $6 million in SaaS revenues," said SeaChange CEO Ed Terino in a press release. "Xstream’s MediaMaker video platform will enhance the SeaChange end-to-end video framework and enable us to gain near-term revenue synergies."
Xstream customers include Canal Digital (Telenor), Star Online (Dimsum), ALT Digital Media Entertainment (Balaji), May Clinic, and Altibox.
Xstream founder Frank Thorup began the company in classic tech startup style back in 2000—in his garage in Copenhagen. Xstream’s first major customers were Scandinavian newspapers, who in the first decade of this century employed video much more aggressively than their counterparts elsewhere in the world. Soon, the company began to focus on TV Everywhere and OTT. "We decided to fous on a certain few segments in the industry—telcos, cable operators, large broadcasters—rather than trying to run in multiple business segments," Thorup said in a 2015 interview with Streaming Media. "You can't be strong in all of them, and you give up your ability to deliver a competitive platform to each one." The company sold a majority stake to Danish private equity fund Capidea in 2014.
"Xstream’s engineering resources are in close proximity to our engineering and development organization in Warsaw, which will enable an accelerated integration and provide for increased velocity of roadmap deliveries," said Terino in the press release. "We anticipate achieving several million dollars of cost synergies from the combination of our organizations within the first half of fiscal 2020. In addition to leveraging Xstream’s experienced engineering resources, we expect to realize cost synergies in sales, marketing and administrative functions, including the consolidation of multiple locations into our Warsaw offices this fiscal year."
Xstream also has an office in Warsaw, in the same building as SeaChange's development and engineering team, and that should contribute to a smooth integration, according to a source familiar with the deal who did not want to be named. "Now [SeaChange gets] access to great developers, some great clients with lots of potential to grow, and a great OTT platform with proven client cases," said the source, who added that SeaChange will likely close the Copenhagen office.
In 2009 Xstream launched the Nordic Media Summit event, under the direction of chief marketing officer Brynhild Reidel-Vinskei. The event became the model for other one-day conferences in the Nordic region, and continues today under the name Nordic TV Summit, run by Vinskei at 24i Media.
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