Last week I listed Accordent Technologies as one of the hot companies to watch in this space and today, Polycom announced it would acquire Accordent Technologies for approximately $50M in cash. It's a nice payout for Accordent which had $9M in revenue for 2010 and over more than a decade of operation had only raised $4M in funding. For Polycom to pay 5x revenue in today's market is a clear sign of just how strategic Accordent's technology will be to the company and also an indication of how well Accordent was doing in the industry. Ploycom's CEO Andy Miller wrote a letter to customers letting them know why the Accordent deal is so strategic to the company which you can read here.

All of Accordent's employees will stay on with Ploycom and Accordent's technology will fall under a new product and services group at Polycom called "video content and management delivery" which is under the unified communications and strategy umbrella at Polycom.

The unified communication space in general is getting ready to be dominated by the big players like Cisco and Polycom and I expert we'll see more acquisitions of this size soon. Like any service that has been around long enough, it's usually taken over by larger companies with more resources and a global reach. Cisco got into it this segment of the market when they acquired WebEx, Polycom has now entered with their purchase of Accordent and it's only a matter of time before more deals like this take place.

Today's deal clearly has companies like Sonic Foundry, Qumu, MediaPlatform and others hoping they can get this kind of buyout and evaluation in the market down the road.

In 2006, Comcast acquired thePlatform for what was rumored to be about a $70M acquisition. (Note: I've never seen that number verified.) Now five years later, multiple sources are telling me that Comcast is looking to divest itself of thePlatform and has been shopping the company for the past couple of months. I've heard that so far, the only really interested party is KIT digital who in November raised $90M $102M saying that the proceeds would be used for a "transformative" acquisition.

While KIT digital has never mentioned by name what company they are in talks with, at a financial conference last week, KIT's CEO showed a slide that broke out thePlatform's revenue to be $48M and during KIT's Q4 earnings call, the company said that they expected to be able to announce an acquisition in the very near future, "in the vicinity of $50 million of total revenues." The company also said that while the deal has been taking longer to close than they anticipated, that's primarily due to the "larger kind of parent share holding dynamic" of the company they are looking to acquire having, "other irons in the fire, so to speak." Sounds a lot like KIT is describing Comcast's recent merger with NBC if you ask me.

Sources I have spoken to say that Comcast is still looking at all of their options in the market and that there is no guarantee that KIT digital will be the buyer. If in fact a deal is finalized between Comcast and KIT digital, I expect the asking price will be between $40-$50M, which is all KIT can afford to pay, and I would expect it to be an all cash transaction, something else that KIT mentioned on their Q4 earnings call in regards to the terms of the deal they are working on.

In the financial community, rumors have been speculating for a few months now that thePlatform is the company KIT digital is looking to acquire and while KIT was originally expecting to announce their acquisition news sometime this quarter, the company is now saying they will have more news sometime in April. Other financial analysts have speculated that the company KIT digital is looking at is Deltatre, which is in the media asset management business but their revenues of $65M does not match KIT's earlier comment that the company they were looking to acquire was in the $50M range.

Of course all of this acquisition talk makes one wonder why Comcast would want to sell off thePlatform to begin with? I don't know how much Comcast relies on thePlatform's technology for their Xfinity service, but if thePlatform is crucial to their Xfinity offering, why sell it to a third party company that Comcast would now have to rely on for support? One could suggest that maybe Comcast gets to keep the technology for their own internal use, but then why would KIT digital acquire the company if the revenue associated with Comcast's use of thePlatform would disappear? Financially, it would not make a lot of sense for KIT digital.

The other scenario is that Comcast doesn't plan to use thePlatform's technology moving forward and hence can afford to divest the company. If thePlatform is in fact doing $48M a year in revenue, that's not much growth for a company that they purchased five years ago so thePlatform is not contributing a lot of revenue to Comcast. It clear that Comcast is looking for a buyer for thePlatform, but whether or not they reach a deal with KIT digital remains to be seen.

Note: Not surprisingly, when I reached out to Comcast and KIT digital for comments, Comcast said they don't comment on rumors and speculation and KIT's CEO would not confirm or deny who they may be purchasing.

At the Streaming Media East show in May, Microsoft is holding two half-day workshops on Monday May 9th entitled "Upgrading From Windows Media to The Next Generation Microsoft Media Platform" and "Using SharePoint for Video Delivery and Content Management". These workshops cost $245 to attend but Microsoft is nicely giving away some free passes to attendees who work at enterprise companies tasked with deploying video inside the firewall.

Some of the topics that will be covered include:

• Learn how to easily upgrade your Windows Media infrastructure to the next-generation Microsoft core media platform, built on Silverlight, Expression Encoder, and IIS Media Services.
• See how to easily deliver your existing audio and video content (including Windows Media, MP3, Flash, QuickTime, and other formats) and learn how to create new content at higher quality and with smaller file sizes.
• Learn how to deliver video adaptively, cross-platform and cross-device, at the highest possible quality for each user. 
• Learn how to use SharePoint to deliver live and on-demand audio and video and see how you can serve content directly from your SharePoint database or from your media servers, and make that content easily searchable.

If you are interested in getting a free pass to the workshop, please email me and I'll provide you with more details. Thanks to Microsoft for providing attendees with this free opportunity.

Today at 2pm ET I'll be moderating another StreamingMedia.com webinar on the topic of live webcasting. The focus of the webinar will discuss delivery systems, performance monitoring, and audience capturing for live event streaming of events large and small, enabling the best quality experience while maintaining cost-effectiveness.

Presenters from Highwinds, Adobe, Microsoft and Conviva will discuss the following:

• Preventing on-site gear expansion when end-device count increases
• Managing redundant paths for premium events
• Deliver high quality video consistently across all devices and platforms
• Use multicast and peer to peer technologies to increase video quality and decrease bandwidth and infrastructure costs
• Add network DVR and social features to engage and expand your audience
• Learn about existing components that you can use for building your own live streaming event

We'll also be having a Q&A session with all four presenters, so sign up here for the webinar and bring your questions about live webcasting.

In 2009 I wrote a post detailing what Netflix's direct costs were for streaming movies and TV shows over the Internet. Since then, Netflix's cost to stream two-hours of video has dropped by about half and I estimate the company will spend about $50M this year with third party CDNs for video delivery.

Two years ago, Netflix paid about five cents to stream a movie and today, pays about two and half cents. While most video contracts with third party CDNs are typically priced on per GB delivered model, Netflix and other large content distributors usually pay the CDNs on a per Mbps sustained model. They pay not for the total number of bits they transfer each month, but rather the total amount of bandwidth they peak at each month, a pricing model also referred to in the industry as 95/5. This means that a customer can burst above their committed rate of Mbps less than 5% of the time with no penalty, but once they go over that, they pay for overages.

Like most videos viewed on the web, Netflix's movies and TV shows are encoded at multiple bitrates to allow for the different broadband connection speeds and performance of today's ISPs. Netflix has given out some details that shows the average user streams Netflix at just over 2Mbps (2000Kbps) even though they encoded video for twice that speed. Most Netflix users watch content in 480p or 720p quality, but Netflix does offer a limited amount of content in 1080p, only available via playback on the PS3.

What's really interesting about the bitrate data that Netflix provides is that it shows just how bad most consumers ISPs really are at delivering video. In 2009, most users were getting about a one and half to two Mbps stream from Netflix. Two years later and Netflix's data shows most users are getting about 2Mpbs. That's almost no video quality improvements in the rate of Kbps being delivered in two years time. That's not to say that Netflix isn't improving their video quality because they are working to make their encoding more efficient as well as working with their partner CDNs to deliver the bits more efficiently. But even with those efforts, Netflix has no control over the last-mile providers, who still treat Netflix traffic as if it's a burden on their network.

While there has been a lot of talk lately about new bandwidth caps by AT&T, that really has no impact on Netflix because as we can see from Netflix's own data, bitrates and video quality aren't exactly growing very quickly, if at all. AT&T said that 2% of their users account for 20% of the traffic and the caps are a way for them to manage performance on their network. I think rather than going after the 98% of their customers with caps they should really go after the 2% causing the problem, but that aside, caps from Comcast or AT&T won't have any material impact on Netflix now or anytime in the near future. Years from now they could, if the ISPs don't raise their cap levels, but right now caps are not a big deal to Netflix.

Some might suggest that the Netflix pricing data shows that bandwidth pricing is falling fast, and while it is for a company like Netflix, most content owners aren't seeing this big of a decline in CDN pricing because they don't grow traffic as fast as Netflix. Overall, I expect the average CDN customer, which Netflix isn't, to see a pricing decline of about 20% this year. Of course the good news for Netflix in all of this is that their pricing to stream video continues to decline and it's cheaper to stream than mail DVDs through the mail. And with video bitrates not growing very fast, Netflix's cost to deliver video remains very stable and overall, is a very small percentage of their cost to run their streaming service.

I'm pleased to announce that the first group of speakers have been confirmed for the Streaming Media East show, May 10th-11th in NYC. We've already got a great lineup of cable networks, broadcasters, MSOs and device manufactures who will discuss topics around cord cutting; monetizing over-the-top video; the impact Netflix is having on the broadcast TV business; winners and Losers in over-the-top video; the impact of broadband-enabled devices; and a lot more.

These are just a few of the topics that executives from the following companies will discuss including Comcast, CBS Interactive, Turner Broadcasting, MTV Networks, PBS, A&E Television Networks, EPIX, Huffington Post, AOL Video, Hearst, NHL, CNET, Boxee, Roku, TiVo, Western Digital, Sony PlayStation, MSN/Bing Video, Yahoo!, Revision3, The New York Times, Wall Street Journal and others.

In addition to these companies, another large group of content owners, MSOs, publishers and enterprise end-users are also in the stages of being confirmed. With more than 150 speakers over 40 sessions, including our dedicated track on HTML5 Video, Streaming Media East is the show to be at this year. And to make things easier on your wallet, readers of my blog can now register for the show using the promo code of DAN, which gets you into all the sessions and access to all the speakers for only $695.

You can also register for free for an exhibits pass and get access to the show floor, keynotes and the broadband-enabled device pavilion where you will be able to get hands-on with more than 30 streaming media devices.

By my count, there are more than 1,000 vendors in the online video industry. Some of them are quite large and get a lot of publicity in the media but most of them are smaller, don't have as much visibility in the market and are not as well known. Starting with this post, every few months I plan to highlight some of the smaller companies that I personally think are doing a really good job in the market. Here are the companies I have selected for this month:

Wowza Media: For nearly six years now, Wowza Media has been in the market offering streaming server software that does just about everything. Customers I speak to love that Wowza's server has streaming support for all of Apple's iDevices, Microsoft Silverlight and Apple QuickTime formats, Android and BlackBerry support as well as working with IPTV and set-top boxes. David and Charlie at Wowza have taken something that's complex in the market and made it much simpler, kept the server affordable and from what customers tell me, provide fanatical support. Selling server software isn't very sexy, which is why you don't hear too much about Wowza outside of the IT community, but the company really has done a good job over the past six years of making a name for themselves with a very good product and has a lot of happy customers to prove it.

Influxis: In just a few short years, Influxis quickly became known as the go to company in the industry for content providers and publishers looking for custom Flash Media Server hosting options. Many developers needing to run custom FMS applications or doing something unique quickly gravitated to the dedicated hosting options provided by Influxis and their expertise in delivering Flash content. Thousands of customers later, the company has now branched out into providing a lot of the custom development work around players and apps for live events, multi-user collaboration needs, P2P and DRM solutions and is now also specializing in prepping video for mobile applications.

PeerApp: While certainly not the only company providing media caching solutions in the market for telcos and network operators, PeerApp's name keeps coming up with customers as having one of the best solutions in the market. And while not widely known, PeerApp has a long list of customers using their technology to offer their own media caching solutions in the market, essentially white-labeling PeerApp's technology. As the media caching market has started to consolidate with Alcatel-Lucent buying Velocix and Juniper buying Ankeena, I suspect PeerApp is at the top of a very short list of companies that will be acquired next. Over time, the media caching market will be dominated by the big boys like Cisco, Juniper, Alcatel-Lucent, Bluecoat, Huawei etc. and it's only a matter of time before a dominant player in the space takes out PeerApp for their technology and customers.

Accordent: Truly a leader in the enterprise video space, Accordent has been providing enterprise class video platforms for more than a decade. In that time they have amassed more than 1,500 customers and have more than 150 of the Fortune 500 using their solution. Combine that with the fact the company has raised about $10M only $4M in funding over the past decade all while still continuing to grow their business and that speaks for itself. I constantly get feedback from a lot of enterprise customers about the video solutions they have deployed inside their network and to this day, I have yet to hear from a single customer who hasn't been happy with Accordent's technology. And if there was some kind of contest for being the nicest people to deal with, Mike and Jeremy at Accordent would be at the top of that list. That may sound silly, but it's one of the reasons why Accordent's customers are so happy and loyal.

Cotendo: When Cotendo launched in the market just over two years ago, the industry was already crowded with far too many CDNs primarily focused on delivering video. Knowing this, Cotendo made the smart decision to offer products, like app acceleration, that are more complex, have higher margins and what the industry defines as "value add services". While many of the other CDNs in the industry were trying to change their product portfolio to provide value add services and diversify their revenue, Cotendo was already blazing a trail signing up customers like Facebook and Answers.com. Two years later, the company has more than 150 customers, a major deal with AT&T and is quickly ramping revenue and getting a very good reputation in the industry. Adding to their creditability is the fact that that the leader in this space, Akamai, has filed a patent infringement suit against Cotendo, which clearly goes to show that the company is doing something right.

If you think there a company in the industry that I should consider as a "hot company to watch", please contact me and let me know why. I'm always interested in suggestions.

Disclaimer: At the time of writing this post, none of the companies highlighted are sponsors of my blog.