Limelight Moving Up The Stack, Acquires Kiptronic For Mobile Ad Delivery

This morning Limelight Networks announced it has acquired privately held Kiptronic to further Limelight's expansion into the mobile video space. Over the past year, Limelight has been building out their mobile video offering, currently being used by MLB amongst others, and with the Kiptronic acquisition, Limelight is looking to combine their mobile delivery with Kiptronic's platform for delivering ads to mobile devices. Updated: While neither company will discuss the terms of the deal, I've learned that Limelight valued Kiptronic at around $12M. Updated 8/6: On Limelight's Q2 earnings call, the company said they paid $1M for Kiptronic. Looks like the finance person I spoke to had no clue what Limelight truly valued the company at.

Over the next twelve months I expect we'll see more acquisitions like this since Limelight's goal is to move up the video ecosystem stack and do more than just delivery. All of the CDNs are talking about "value add services" these days and are trying to diversify their revenue stream and do more than just deliver bits. For small companies that provide valuable pieces in the ecosystem, many of them are going to be natural acquisition targets for some of the larger CDNs.

Kiptronic was a small company of 15 developers so with Limelight now providing them with scale and resources, Kiptronic can do a better job of showing value to the largest content publishers. Kiptronic counts customers such as NPR, FOX, The Guardian, Conde Nast,
The Economist, and NBC.com as customers and Limelight has to also be
hoping that the acquisition gives them access to these customers to convert them over to Limelight's network for mobile video delivery.

I expect that over other next few months, other CDNs are now going to feel pressured to put out a story on how they too support mobile video or what their mobile video strategy is, even though the vast majority of them don't have one, which I think is ok. While this is a smart, strategic long-term move for Limelight, it's very, very early in the
mobile video space and the market is not that big in the U.S. from a revenue perspective.

One interesting thing to note is that Limelight has confirmed that Kiptronic will continue to work with publishers that use other CDNs that are not Limelight.