Cisco's $95M Inlet Technologies Buy Strengthens Videoscape

Cisco's $95 million acquisition of Inlet Technologies will expand Videoscape's capability to deliver video adjusted to the viewer's available bandwidth and device.

Cisco said on Feb. 4 it will acquire digital-media company Inlet Technologies to strengthen its online video-delivery capabilities.

Cisco will pay approximately $95 million in cash and retention bonuses in exchange for all shares of the privately held company. The deal is expected to close in the first half of the year, after which all Inlet employees will be integrated into Cisco's Service Provider Video Technology Group, the company said.

With this acquisition, Cisco will add Inlet's ABR (Adaptive Bit Rate) digital-media-processing platform to its new "Videoscape" service, which is aimed at helping service and content providers deliver video online, the company said. Unveiled at CES 2011, the service offers video broadcast, streaming video and on-demand content for any mobile device, computers and TVs.

"The acquisition of Inlet will enable our customers to leverage the network as a platform to deliver innovative video experiences to consumers on any device," said Enrique Rodriguez, senior vice president and general manager of Cisco's Service Provider Video Technology Group.

Raleigh, NC-based Inlet was founded in 2003 and makes video-encoding and transcoding products used by companies such as Yahoo, Microsoft's Xbox Live, NBC's Sunday Night Football, BBC and Major League Baseball, according to the company Website. The company was also behind NBC's online video stream during the 2010 Winter Olympics in Vancouver.

Inlet's Spinnaker trans-coding appliances for live streaming use ABR to dynamically adjust the video stream to the viewer's bandwidth and device capabilities in real time. As demand for online video continues to grow, ABR will increasingly be used to adapt the video stream to network conditions and eliminate delays in video delivery. ABR is used in Major League Baseball's online service, which understands what kind of device the viewer is using, such as a desktop on broadband or a laptop on a wireless hotspot, and provides the feed adjusted to the available bandwidth, Inlet said.

With Inlet products, content providers can take one video feed and turn it into several outputs simultaneously for different devices such as mobile, high-definition and the Internet. Inlet supports over 1,000 consumer devices, according to its Website.

Inlet also developed technology to insert ads into live video streams, which it offers broadcasters and service providers to monetize their video offerings, according to the company's Website.

The Spinnaker appliance is also optimized for handling Apple's version of ABR. Inlet was one of the first companies to offer streaming video for iPhones and iPads, according to the company. Inlet also supports Microsoft's Smooth Streaming ABR.

The acquisition confirms Cisco's focus on its video strategy. In a mobile-data forecast released at the end of January, the company projected a big surge of demand for video across smartphones, tablets, laptops and other devices. The company also has made a number of video acquisitions in the past year, including the consumer-oriented Flip digital cameras and Norwegian video-conferencing company Tandberg. The software-based content-management system from Cisco's Extendmedia acquisition powers Videoscape's content-management system, the company said.

Cisco aims its Videoscape service at service providers interested in combining digital TV and online content with social media elements, the company said. "Cisco's Videoscape platform will play a key role in reinventing the TV experience," Rodriguez said.

Although Inlet does not disclose financial information, Raleigh-based TV station WRAL estimated Inlet generated more than $15 million in revenue in 2010.