News

RGB Buys Into Third Screen

6/28/2010 12:01 AM Eastern

RGB Networks CEO Jef Graham
figured his engineers would need about 12
months to develop mobile-video delivery
capabilities — so the company decided to
buy the technology instead.

Privately held RGB last week announced
it has acquired RipCode, a 26-employee,
venture-backed firm that develops solutions
for mobile IP video. Terms of the deal weren’t
disclosed, except that RGB is buying RipCode
with stock in a private-to-private deal.

Sunnyvale, Calif.-based RGB plans to incorporate
RipCode’s technology into its Video
Multiprocessing Gateway, in the form of an Intel-
based “blade” scheduled to ship in the fourth
quarter of 2010. At that point, RGB will have an
integrated, three-screen solution that promises
to let providers deliver services to subscribers
using TVs, PCs and mobile devices.

“Nobody has anything like this,” Graham
said. “The dilemma that all the vendors delivering
PC and mobile video have is that
they aren’t carrier-class. ”

RGB competes mainly with video-processing
solutions from Harmonic, Cisco Systems
and Motorola.

Still, while delivering video to “three
screens” has been a hot industry topic in the
last few years, U.S. video operators at this
point are mainly looking to deliver live TV
to PCs, Graham acknowledged. “We’ll probably
see mobile take off more quickly internationally,”
he said.

RGB’s existing chassis-based Video Multiprocessing
Gateway provides MPEG-2 and
MPEG-4/H.264 stream processing functions,
including transcoding, ad insertion,
transrating and grooming. With the addition
of RipCode, the VMG also will provide
live and file-based video transcoding, ad insertion
and adaptive delivery with support
for Apple Live Streaming, Microsoft Silverlight
and Adobe HTTP streaming.

Investors in both RGB and RipCode ponied
up an undisclosed amount of cash to cover
part of RipCode’s burn rate and “to make sure
they’ve got skin in the game,” Graham said.

RipCode, founded in 2005, raised $32 million
from investors including Granite Ventures,
Hunt Ventures, El Dorado Ventures, Vesbridge
Partners, Covera Ventures and ATA Ventures.
RGB’s backers include Comcast, Accel Partners
and Kleiner Perkins Kaufield & Byers.

The combined company has an implied valuation
of $220 million, according to Graham,
who is looking to take the company public
around this time next year.

The combined RGB-RipCode:

Description: Provides transcoding
and digital-program insertion equipment
for TV, Web and mobile video.

U.S. offices: Sunnyvale, Calif.; Austin,
Texas

Employees: 175

Primary investors: Comcast, Accel
Partners, Kleiner Perkins Kaufield &
Byers

Customers: More than 200 cable,
satellite, telco and Internet-service
providers.

SOURCE: RGB Networks

September