Kontiki Acquired by VeriSign for $62 Million

Verisignlogo2006 Kontikilogo2005_4 VeriSign, a company that provides what it calls "intelligent infrastructure services" for the Internet and telecommunications networks, has signed a definitive agreement to acquire Kontiki, a privately held, Sunnyvale, Calif.-based company that provides managed, peer-to-peer delivery systems for broadband IP video. The cash deal, expected to close in the current quarter, values Kontiki, which has 34 employees and which to date has raised approximately $46.5 million (note: Verisign is both an investor in and a customer of Kontiki), at approximately $62 million. Kontiki's customers include BSkyB (which uses its technology to enable its recently launched Sky by Broadband service), the BBC (which used its technology to enable its recently completed Integrated Media Player broadband VOD trial), AOL (which uses its technology to enable its newly launched In2TV service), and Verizon. According to Kontiki, its technology is designed to speed up distribution of digital files by allowing users to share unused bandwidth on their computers and servers. It provides digital rights management and allows content providers to specify how many times their content can be viewed and whether it can be copied. Because, unlike most peer-to-peer technologies, Kontiki's allows content to be centrally managed, it is possible to prevent the distribution of content over the system that violates copyright.

According to Verisign, its acquisition of Kontiki signals its intention to become a major player in the broadband content services market: it says that the company's broadband delivery capabilities will complement its mobile content services infrastructure (note: it recently completed the acquisition of 3united Mobile Solutions for 55 million Euros) and expand its digital content services portfolio, allowing it to deliver video and other rich media over wireless and broadband networks to mobile devices, PC's and TV sets: "In today's 'any era,' where consumers are driving demand for how, when and where content gets delivered, VeriSign is investing in building an intelligent infrastructure for operators, Internet portals, media companies and brands to use to deliver content to all three screens," Vernon Irvin, EVP and general manager of VeriSign Communications Services, said in a prepared statement. "Kontiki immediately enters us into the broadband content market so we can help carriers and others compete in today's digital world." (Note: for an in-depth overview of Kontiki and its technologies, see [itvt]'s interviews with the company's VP of business development, Scott Sahadi, in Issues 6.34 and 6.50.)

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