Yahoo Inc (NASDAQ:YHOO) YHOO announced earlier this month that it is acquiring the Israel based high quality video streaming platform RayV. RayV’s goal was to build a revolutionary video distribution platform for providing a better video experience to audiences over the internet. It also worked on creating an easy distribution process for content creators.
RayV operated as an independent company for almost eight years before Yahoo decided to buy it. The RayV technology will be integrated with Yahoo’s research and development efforts in Israel. So far, no financial details regarding the acquisition were made available to the press. Since its inception, RayV had raised around $16 million, and Yahoo has likely valued the company way above its book value.
RayV posted an announcement on its website saying “we are excited to announce we are joining Yahoo’s Cloud Platforms and Services Team! We believe Yahoo will be a perfect fit for our people and capabilities, as Video and Mobile offerings are a central part of Yahoo’s vision. Yahoo’s global scale and broad content base, combined with its amazing leadership and appetite for success, creates an ideal environment for our team to thrive and be pushed to the next level.”
Prior to the acquisition by Yahoo, RayV was competing with New York based Joost, the internet TV service created by Skype and Kazaa founders, Niklas Zennström and Janus Friis. Joost was acquired by the Adconion Media Group.
In recent months, Yahoo also tried to buy out Hulu and DailyMotion, but both attempts were futile. Yahoo needed access to a high quality video streaming technology to circulate videos to a huge number of terminals because it is trying to enter the on-demand streaming service for TV shows, movies, webisodes, and other new media content with Yahoo Screen.
Yahoo Screen is competing against Google’s (NASDAQ:GOOG) GOOG +0.44% YouTube by offering better revenue sharing with creators. Where YouTube takes a 45% commission from video creators, Yahoo Screen will offer better deals to lure creators to post their videos on its service. The acquisition of RayV will likely provide Yahoo Screen with certain competitive advantages against its competitors like YouTube and NetFlix (NASDAQ:NFLX) NFLX +0.13%.
Since the start of 2014, Yahoo’s year-to-date revenue has gone down by 14.3 percent, and investors have become pessimistic about the future prospects of the company. In addition to the 14.3 percent decline in revenue, Yahoo’s market capitalization has gone down by 18.2 percent (YTD).