by Jim Lundy
On February 11th, Synacor announced its new merger with Qumu. Synacor, a cloud-based company offering a variety of software services and enterprise technology solutions, is acquiring Qumu, a leader of enterprise video offerings. We were surprised to see Qumu sold to Synacor, but at the end of the day a sale is a sale. In this blog, we give some of our predictions about the impact this sale may have on the enterprise technology market more broadly.
Why Did Synacor Acquire Qumu?
The biggest reason for this deal is probably the fallout of the Synacor AT&T deal for portal services. That deal was a loss to Synacor and some estimates say it would have been worth up to 25% of its total revenues. When a deal doesn’t happen, you have to look at other options and now we end up with this merger.
Merger Details: Synacor and Qumu
When the deal is settled, Synacor shareholders will own 64% of the combined entity and Qumu shareholders will own 36%. The merger will create a company that should generate $120 million of revenue, with over half of it being recurring revenue. Synacor CEO Himesh Bhise will remain as CEO and Qumu CEO Vern Hanzlik will join Synacor as Chief Revenue Officer (CRO) of software and services.
The merger between Qumu and Synacor brings a collaboration provider and an enterprise video provider together.
Who Is Synacor?
Synacor, a public technology and services company, has been in the game for some time. They are known for their portal offering, their identity and access management offering. Synacor also owns Zimbra, a popular niche email offering, which it acquired in 2015.
Zimbra Collaboration, a collaborative email based software suite, continues to gain a foothold with enterprises. In fact, due to its account wins, Synacor reported a strong last year for this flagship product.
The Demand for Video Is Growing
Aragon feels that the demand for video continues to increase. Synacor acquires Qumu at a time when demand for video and webcasting is growing. As streaming infrastructure becomes more efficient, cheaper, and more widespread, video will be deployed more and more throughout the enterprise to solve different workflow problems. Whether it is the employee onboarding process, the human resources department, the marketing team, or in the boardroom, video can be counted on to take over more functions that have been traditionally reserved for text and images.
Last year, Aragon published a globe illustrating our predictions and assessments of the enterprise video market. To get a deeper handle on the shifts that will be coming to video adoption, check out our research. Many have reported on the growth of video as a solution for enterprise learning needs. In general, video shows tremendous promise as a growth trend in enterprise.
The Bottom Line
The Synacor-Qumu merger is yet another story of consolidation in the enterprise technology market. While the fallout from the AT&T deal is the main cause, it’s clear that Synacor has noticed the value of investing in enterprise video at this time and chosen to move forward aggressively. With successful collaboration technology offerings like Zimbra under its belt, we expect Synacor to make effective use of this new Qumu acquisition, driving forward its growth in the enterprise video market.