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At this time, financial terms of the transaction are not known. There’s a chance that the negotiations “could break down,” according to the WSJ report.
Xumo was started in 2011 as a joint venture between Viant Technology and Panasonic and delivers free streaming television content to customers. The company makes money by displaying advertisements against content streamed on the platform. Xumo acts as an ad distribution platform and as a marketplace, letting its partners parlay their own ads and offering inventory to others in the market for advertising slots.
Xumo also serves as the backbone for bespoke streaming services. The Wall Street Journal reports that it’s used by LG Electronics to power its free streaming service, LG Channels.
In April, Xumo’s chief executive officer, Colin Petrie-Norris, told Business Insider that the company served 35 million U.S. homes at the time, reaching 27 percent of the market. Petrie-Norris also told Business Insider that he expects Xumo to reach 80 percent of U.S. homes “in a year.”
Although Petrie-Norris didn’t disclose information about company financials in his April 2019 interview with BI, he did say that Q1 2019’s revenue was up over 300 percent from the same time in 2018, while the number of hours of content streamed over the platform doubled over the same period. More recent information about the company’s growth is not known at this time.
A reported bid for Xumo could be a part of Comcast’s broader strategy as it attempts to enter the crowded video streaming space. Comcast plans to launch a streaming platform of its own in the first half of 2020, and the company said it will primarily rely on advertising, rather than subscriptions, to generate revenue.
If Comcast snaps up Xumo, it would continue a trend of big-company consolidation in the video streaming sector. In January 2019, Viacom acquired ad-supported streaming service Pluto TV for $340 million. At the time of its acquisition, according to TechCrunch coverage of that deal, Pluto TV had 12 million monthly active users, of whom 7.5 million accessed the service through connected “smart” televisions.
The much talked-about cord-cutting trend is here to stay. With a surplus of high-quality content flooding the market, now might be the best time in history to be a television consumer. For companies vying for a slice of your limited time (and probably your disposable income), the competitive landscape is ruthless. It wouldn’t be surprising to see more consolidation at the start of the new decade.
Illustration: Li-Anne Dias