Yahoo Buys Maven Networks, Joining Google, Microsoft in Kendall Square

A rumor circulated by TechCrunch on January 31 that Yahoo intended to acquire Cambridge-based Maven Networks, whose Web video and advertising platform is used by dozens of large media organizations, seemed to go by the wayside after Microsoft launched its unsolicited bid for Yahoo the next day. But it turns out that the deal was real, with the official announcement on hold until after Yahoo dealt with the Microsoft offer (which it did yesterday, decisively, rejecting Microsoft’s $44.6 billion bid as “substantially” underpriced). Yahoo said today that it will acquire Maven for about $160 million in cash.

The Boston Globe‘s Scott Kirsner is reporting, based on conversations with Woody Benson of Maven backer Prism VentureWorks and Maven CEO Hilmi Ozguc, that Yahoo and Maven signed a letter of intent about the acquisition around Thanksgiving, but that the final papers weren’t initialed until February 10.

The acquisition will reduce the number of local Internet and mobile video companies by one (other big names in the cluster include Akamai, Blackwave, Boston.TV, Brightcove, Buzzwire, Choicestream, EveryZing, Extend Media, Hobnox, PeerApp, Veveo, Visible Measures, and WheelsTV). But Maven’s force of at least 60 employees at Four Cambridge Center will give Yahoo its first foothold in the Kendall Square technology corridor, joining rivals Google (which will soon move its Cambridge operation from two cramped floors at One Broadway into a larger digs at Five Cambridge Center) and Microsoft (which is renovating space to create a new concept development center and a wing of its research division at One Memorial Drive).

Maven, founded in 2002, offers software that allows content owners to create instant Internet video channels that play inside a customized player; upload and manage the videos that appear within those channels; insert interactive advertisements and other types of ads; and analyze audience behavior. The platform is already used by high-profile media organizations like Fox News, CBS Sports, Univision, and Canada’s CBC Television. (For an example of Maven’s technology in action, check out how the Food Network mixes ads and promos into Internet clips from shows like Rachael Ray’s 30 Minute Meals).

Plenty of companies are vying for a slice of what’s expected to be a $4 billion online video advertising pie by 2011, and Yahoo sees Maven as its knife. Hilary Schneider, Yahoo’s executive vice president of global partner solutions, writes today on Yahoo’s corporate blog that adding Maven to Yahoo’s arsenal will mean “more inventory, more choice, [and] more audience reach” for Yahoo’s advertisers and “consistently free access to high-quality video content and ads that are less disruptive [and] more relevant” for consumers.

On Maven’s blog, Ozguc called the acquisition a “huge win” for Maven, saying it validates the company’s vision for monetizing online video content. “This deal makes great sense for Yahoo to further grow its multi-billion-dollar advertising business, as its advertisers and publishing partners are looking for more advanced and highly scalable video solutions,” Ozguc writes. “The Maven platform will now be serving an audience size that is unparalleled, [with] 500 million visitors every month around the world.”

Actually, Yahoo hasn’t yet explained whether or how it intends to fold Maven’s platform into its existing Yahoo TV portal (its answer to Google’s YouTube and Microsoft’s MSN TV), other than to say that it intends to “invest in the growth of Maven’s overall video business” and “expand on the Maven offering with video monetization services allowing publishers to take advantage of Yahoo’s industry leading display [advertising] sales force.”

In most respects, Maven’s platform is similar to Cambridge rival Brightcove’s. In fact, Brightcove founder and CEO Jeremy Allaire was a board member and adviser at Maven until August 2004, and until last year, Maven owned a partial equity stake in, and licensed technology to, Brightcove, according to a Kirsner piece from last October comparing the two companies.

Maven and Brightcove compete for many of the same customers, and Ozguc has claimed in print that Maven has prevailed in most of these head-to-head contests. But to get to roughly the same point in its growth as Maven, Brightcove has taken in almost three times as much venture funding ($82 million, compared to something short of $30 million for Maven, mostly from Prism, General Catalyst, and Accel Partners). It’s hard to see whether Brightcove might now find an exit strategy as clean-cut, or as profitable for investors, as Maven’s sale to Yahoo.

Wade Roush is a freelance science and technology journalist and the producer and host of the podcast Soonish. Follow @soonishpodcast

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6 responses to “Yahoo Buys Maven Networks, Joining Google, Microsoft in Kendall Square”

  1. Mike says:

    You failed to mention publicly traded Roo.
    They may not have a Cambridge office but they have quite a few well heeled web partnerships.

  2. Zach says:

    I’m guessing Roo was left off that list for a few reasons. I mean, even if Roo was a local company, it would still have some considerable problems to deal with.

    And, while I’m glad to see Maven get this publicity, as it is truly one of my favorite local companies, I think there are obvious questions about the future of Yahoo! in the face of MS/AOL/Google, which make Maven’s future equally ambiguous.

    What happens to this acquisition if Yahoo! is taken over? Google certainly doesn’t need this technology and could potentially strip it out just to take the high profile client list. On the other hand, MS could use the technology more though, potentially making this a more favorable deal at $36/share.

  3. Mike says:

    Hi Zach,

    Maven will thrive under either Yahoo! or Microhoo ownership. I was reading AdWeek earlier today how Yahoo! ran tests last quarter on various ad delivery schemes over video. They found under certain conditions click-throughs were 8 percent compared to traditional values near 1 to 4%.
    Advertising over video is gold if you believe those statistics.
    I mentioned Roo because though they have problems they are being attended to (so it seems). Since they are a public company my interest is piqued.
    Thanks for the response.


  4. Wade RoushWade Roush says:

    @Mike: Roo doesn’t enter into the story because my focus was on companies based in the greater Boston area, and Roo is based in New York, London, and Australia. Glad you like the site!

    @Zach: Like you, I am a little surprised that the Maven acquisition went through in the midst of the total uncertainty over Yahoo’s future. But given that the deal has been under discussion since Thanksgiving, I definitely don’t think Yahoo is doing this to wheedle a sweetened offer out of Microsoft.

  5. Mike says:

    Wade, I read the post before I understood the nature of the site. I came to it from Google Blog Search.
    I like your site, ultra local in a hot zone!

    I’ll return often.

    BTW, Roo now has an office in Dubai :-)