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Cisco To Buy Video-Streaming Startup Inlet For $95 Million

Plugging a gap in its "TV Everywhere" lineup, Cisco Systems announced plans Friday to acquire privately held Inlet Technologies, a provider of adaptive-bit-rate video processing platforms, for $95 million.

Inlet's video-encoding technology adapts the quality of a video stream based on real-time network conditions as well as the capabilities of the target device. According to Cisco, the Raleigh, N.C.-based startup will strengthen the capabilities of the Videoscape TV platform, by letting service and content providers deliver video to any device over any IP-based network.

Videoscape, which Cisco debuted at CES last month, cobbles together different product families in a framework designed to let TV service providers merge traditional television with online content, as well as integrate social media, videoconferencing and mobile devices.

"Cisco's Videoscape platform will play a key role in reinventing the TV experience, and the acquisition of Inlet will enable our customers to leverage the network as a platform to deliver innovative video experiences to consumers on any device," said Enrique Rodriguez, senior vice president and general manager of Cisco's Service Provider Video Technology Group.

In a related deal, last year Cisco acquired ExtendMedia, a provider of content management systems for Internet video distribution, in a deal sources said was worth $65 million.

Inlet's customers include the BBC, HSN, MTV, Major League Baseball Advanced Media, Microsoft, NBC Sports, Technicolor, AEG Digital Media, Ascent Media, Broadway Video Digital Media and Yahoo.

Founded in 2003, Inlet has raised more than $20 million in funding from investors including Capitol Broadcasting Co., Core Capital Partners, Technology Venture Partners and Telecommunications Development Fund.

The acquisition is subject to various standard closing conditions and is expected to be complete in the first half of 2011. Inlet employees will be integrated into Cisco's Service Provider Video Technology Group.

Inlet has approximately 65 full-time employees, the majority of whom Cisco expects to remain with the company. "Cisco acquires companies as much for the people as for the technology," spokeswoman Kristin Carvell said in an e-mailed statement. "Our acquisition strategy is based on growth and that requires the retention and development of the talent that is acquired."

Inlet chairman and CEO CEO Don Bossi "is committed to the business continuity and integration of Inlet within Cisco," Carvell said, but didn't indicate whether he would remain with the company in the long term.