New York-based KickApps has mostly been known for social networking tools that publishers could use to build communities on their websites, but lately has extended its capabilities to create social environments through online video players. Using Adobe’s Open Source Media Framework (OSMF), KickApps enables publishers to add social tools to videos with its drag-and-drop App Studio. According to KIT Digital CEO Kaleil Isaza Tuzma, whom we spoke to in a phone interview, those capabilities are already mostly integrated into its video management platform.

Meanwhile, San Francisco-based Kyte brings mobile expertise to KIT, with tools for broadcasting video to and from multiple mobile devices. Isaza Tuzma told me it was clear that KIT needed to fill in gaps in its product capabilities when it went up against Kyte for some business that it didn’t end up winning. “We lost a couple of pitches to Kyte based on their mobile publishing tools and mobile SDKs,” he said. “If you can’t beat ‘em, join ‘em.”

As for Kewego, the Paris-based video platform provider will give KIT a stronger presence in Western Europe. It also has a focus on enterprise video offerings, according to Isaza Tuzma, and has developed some behind-the-firewall applications that KIT could use for its corporate clients.

In addition to the technology features KIT Digital gains through the acquisitions, the company is also adding some key personnel. As one example, KickApps CEO Alex Blum will assume the role of COO at KIT. Kyte COO Gannon Hall will be taking on EVP of marketing at KIT, while Kewego Chairman Michel Meyer joins as senior VP of product management.

The acquisitions should also boost KIT’s revenues. According to KIT Digital, KickApps had annualized revenues of more than $12 million; Kewego reported sales of $10.2 million in 2010; and Kyte had $3.7 million in revenues. KIT reported revenues of $27.7 million during the third quarter last year, and expects to have sales exceeding $100 million when it reports full-year earnings.

The new acquisitions follow KIT’s modus operandi of picking up assets on the cheap; prior purchases over the last few years include Benchmark Broadcast Systems, Multicast Media, The Feedroom, Nunet AG and Narrowstep, all of which were picked up for less than $20 million.

Investors in KIT’s latest acquisitions probably didn’t fare much better, considering the total purchase price versus how much each of the companies had raised. KickApps, for instance, raised approximately $27.5 million since being founded in 2005, while Kyte has raised $23.4 million and Kewego raised $19.4 million. Without going into the individual terms of each deal, Isaza Tuzma said that about $15-16 million of the total purchase price would be paid in cash, while the remainder would be paid in stock over time, based on the entire company’s performance.

While KickApps, Kyte and Kewego add new features to its video management platform, KIT isn’t done shopping. Late last year, it issued a public offering of more than $100 million of its stock. And Isaza Tuzma said KIT is planning to use that cash to reel in at least one more major acquisition using that cash.

So far, it appears KIT Digital’s aggressive acquisition strategy appears to be working, as its revenues have more than doubled over the previous year. In KIT’s third-quarter earnings statement, Isaza Tuzman is quoted as saying KIT Digital looks to increase its global market share from approximately 20 percent to 50 percent within the next 12 to 24 months.

As for the broader video management segment, KIT’s ability to acquire so many of its competitors, especially at what appear to be fire-sale prices, shows how quickly the tide has turned for what was once a fast-growing portion of the market. Despite a string of funding announcements from a number of online video platform providers just a few years ago, it seems that capital has largely dried up. While the market for online video publishing continues to grow, it apparently hasn’t grown quickly enough to support the large number of startups offering cloud-based video management platforms.

Photo courtesy of (CC BY-SA 2.0) Flickr user Tracy O.

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1. What’s the one big issue/law/attitude/restriction that you think is holding back the industry?

Until recently, technology itself has been a real hurdle in moving the needle forward for online video, but we finally seem to have reached the tipping point for 360-degree video publishing and monetization –- tools are in place to easily publish video to online, mobile and social platforms, content can be monetized in multiple ways including advertising, pay-per-view and subscription services, and there is now critical mass that chooses to consume online and mobile content.

While TV still dominates the bulk of video-related revenues, I believe the second half of 2010 and beyond is when we’ll see the online and mobile video business really explode.

2. What industry buzzword do you never want to hear again?

I’d be happy to never hear the term “release windows” ever again — the content industry really needs to rethink their approach here. While the Web has changed the “release windows” game for good, the majority of major content creators have yet to adapt.

For example, if you want to watch the latest episodes of Mad Men in Switzerland, you have to wait until next year. Does anyone really think that Mad Men fans in Switzerland are going to wait until the series runs on live TV to see how it ends? If episodes were offered legally online, there is no doubt that fans would pay for them and broadcasters need to continue to move towards this model.

3. If someone gave you $50 million to invest in a company in this space, which one would it be? (Mentioning your own doesn’t count.)

Facebook already has plenty of money, so I doubt that $50 million would really make a significant difference there. Ruling out Facebook, I would invest in the PerformGroup. They run an impressive digital media platform business with their e-player — owning content rights, distributing and monetizing the content via major publishers, powered by Perform’s technology. Very interesting and promising model.

4. What was the last video (that you weren’t personally involved with) that you liked enough to spread to others?

I loved the NIKE World Cup commercial. Doing everything I can to build soccer fever in the U.S.!

5. WILD-CARD: In the escalating war between Flash and HTML5, what role will Kyte end up playing? And who do you think will be the victor?

We are supporting both Flash and HTML5. At the end of the day, the consumer doesn’t care about technology as long as the experience is compelling and engaging, and this is where Kyte tries to focus our efforts. There is no doubt that competing technologies like Flash and HTML5 are creating additional technical hurdles for publishers, so we need to stay focused on giving our customers the ability to deliver rich video experiences to multiplatform audiences, regardless of the devices and technologies they’re using.

For instance, to provide flexibility and reduce technical challenges regarding video delivery to the iPad, we decided to support our customers with both an SDK for developing Kyte-powered iPad apps for distribution through the Apple iTunes App Store, as well as web-based support for the iPad through the use of a universal embed code that outputs HTML5 video.

Our iPad SDK was designed specifically to reduce the time, cost and complexity of building interactive video applications and allow developers to focus on creating great user experiences instead of having to worry about media optimization, complex communication protocols or the need to build server-side components.

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The application framework is designed to increase viral distribution of its customers’ videos by enabling viewers to find videos when browsing a publisher fan page and be notified when a new video is published. Kyte has also added support for new features that Facebook announced at its f8 developers conference last week, including social plugins that will allow its customers to add a ‘Like’ button to their videos or to embed a Facebook recommendations box on their page.

Kyte isn’t the only video distribution player to roll out support for Facebook’s new social video plugins. Brightcove also announced support for Facebook’s open graph and social plugins last week. But Kyte has been pretty aggressively pushing social video for some time. That, as well as a focus on mobile video sharing, has been a key differentiator for Kyte as it tries to sign up media companies to use its platform.

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The biggest changes that the console makes are around the user experience, reducing the number of steps it takes for customers to accomplish basic tasks and allowing them to customize the editorial workflow to streamline processes. The new console also provides more advanced scheduling of shows and other videos on the platform and the ability to create manual or smart playlists.

The ability to serve video to multiple mobile and social environments is one of the key advantages to the Kyte platform. But serving to all those places requires advanced management of different players that are served in different environments. Kyte’s platform also supports management of multiple forms of video, from premium produced or branded content, to mobile uploads, to user-generated content uploaded by consumers. But ingesting, managing and moderating video in all those different forms requires a management system that makes it easy for customers to complete multiple tasks in a short period of time.

Kyte rolled out the new console to all of its users this morning, but had provided training to customers ahead of time to get them up to speed on all the changes, and already has new customers working on developing APIs for the new features that it’s releasing, according to Hall.

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