Cisco to Acquire ExtendMedia, Strengthen Position in Internet Video Delivery

ExtendMedia, a video software company based in Newton, MA, is being acquired by Cisco Systems, the San Jose, CA-based networking giant. The news was announced in a press release this morning. Financial terms of the deal were not given, but the acquisition is expected to be complete by early 2011.

It’s an important move for Cisco (NASDAQ: CSCO), which views online video as a top priority across many areas of its business. That’s because consumer demand for watching video anywhere, anytime on all kinds of different devices—TVs, laptops, tablets, smartphones—is booming. And the deal is obviously an important next step for ExtendMedia, which provides content management systems that help service providers deliver Internet video to different kinds of consumer devices—and make money through subscriptions and advertising.

ExtendMedia’s main business is to provide hosted or turnkey video delivery systems to companies that want to get into the Internet video market. Back in May 2008, my colleague Wade wrote about the company’s efforts to help telecom companies deliver same-day movie downloads, starting in Canada. Later that year, ExtendMedia raised a $10 million Series C venture round from existing investors Atlas Venture, Venrock Associates, and TVM Capital. The company is a member in good standing of what we call the greater Boston Internet video cluster. (It’s hard to know how big a win this Cisco deal is for ExtendMedia’s investors, but it’s a pretty quick turnaround; the company had raised about $33 million since 2006.)

The majority of ExtendMedia’s 52 employees are based in Toronto, Canada. Most of the team will join Cisco’s Service Provider Video Technology Group, while the sales and professional services staff will join Cisco’s Sales and Advanced Services organizations. Cisco said in a statement that ExtendMedia’s software will integrate with Cisco’s current Internet video products, and will be a “core component of Cisco’s next-generation video architecture.” A Cisco spokesperson said the Newton office “will remain,” and that all of ExtendMedia’s staff will be joining Cisco.

ExtendMedia is led by president and founder Keith Kocho, chief executive Tom MacIsaac, and chief operating officer Marty Meyer, all of whom are based in the Boston area. The company was founded in Toronto in 1991, and relatively recently transitioned from a services firm to a products firm.

Cisco’s most recent acquisition for its service provider business was another Massachusetts company, Tewksbury, MA-based Starent Networks, in October 2009. That deal, which extended Cisco’s reach in the mobile sector, was worth a whopping $2.9 billion.

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