Following some media speculation, IBM (NYSE:IBM) has confirmed that it has acquired Ustream. The livestreaming video service will help Big Blue strengthen its cloud video platform, and IBM will utilize the technology to help enterprise clients.
Ustream garners approximately 80 million viewers per month that tune in to various channels, and IBM estimates the total cloud-based video market at $105 billion. Financial terms were not disclosed, but The Wall Street Journal pegs the purchase price at $130 million.
Does it matter?
The deal comes just less than two years after Amazon.com (NASDAQ:AMZN) acquired Twitch for $970 million. Ustream is a much smaller livestreaming rival, but also has broader appeal beyond Twitch's specialty of livestreaming e-sports and video games.
Purchasing Ustream makes more sense for a company like IBM, since it has little need for a consumer brand like Twitch. IBM is all about the enterprise, and making a targeted acquisition with a smaller price tag will allow it to get the underlying livestreaming technology that it wants and redeploy that technology to its core customer base of enterprise clients.
While IBM and Amazon continue to compete in the market for cloud-computing services and infrastructure, this purchase technically means they now compete in another (relatively small) arena.
Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.