RGB Acquires Mobile-Video Vendor RipCode

Privately held RGB Networkshas 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 (VMG), in the form of an Intel-based "blade" scheduled to ship in the fourth quarter. At that point, RGB will have an integrated, three-screen solution that promises to let service providers deliver services to subscribers on TVs, PCs and mobile devices.

"Nobody has anything like this," RGB CEO Jef Graham said. "The dilemma that all the vendors delivering PC and mobile video have is that they aren't carrier class. They can't scale for a complete carrier-class rollout."

According to Graham, RGB calculated that it would need about 12 months to develop mobile-video delivery capabilities for its core video-processing platform -- and so the company decided to buy the technology instead.

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 over 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 will also provide live and file-based video transcoding, ad insertion and adaptive delivery with support for Apple Live Streaming, Microsoft Silverlight and Adobe HTTP streaming.

As part of the deal, 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.

To date, RGB has more than $150 million in sales since it was founded in 2001 and is profitable, according to Graham. He's looking to take the company public around this time next year.

RipCode CEO Brendon Mills and the rest of his company's employees have joined RGB, with the exception of chief financial officer Brian Alton. RGB will maintain the RipCode office in Austin, Texas, as the development center for the mobile environment.

In addition, RGB will continue supporting RipCode's existing transcoder hardware and software customers, which include News Corp.'s MySpace.

The combined company will have about 175 employees and more than 200 cable, satellite, telco and Internet service provider customers worldwide.