On February 15, 2013, Opera (OB: OPERA; market capitalization: $789mm) announced its acquisition of video delivery optimization provider Skyfire for up to $155mm. Architect Partners was the financial adviser to Skyfire on this transaction.
Skyfire’s flagship product, named Rocket Optimizer, enables mobile carriers to optimize video or other multimedia content on crowded cellular networks, including 3G and 4G LTE. On average, Rocket Optimizer provides mobile networks a 60% boost in capacity by optimizing video streams based on available bandwidth. Skyfire can identify when particular users are experiencing poor video quality or connections and intervene instantaneously to minimize long start times, rebuffering and stalls on video and audio streams. Skyfire’s technology is cloud-based, meaning that network operators can boost effective capacity and improve user experience without expensive network upgrades.
Skyfire also offers Skyfire Horizon, a mobile browser extension and toolbar platform that allows users to personalize their mobile browsing experience. Carriers that preload Horizon on phones gain valuable new “beach front” real estate that can be monetized via promotions, advertising and/or commerce. Skyfire has over 20mm worldwide app downloads to date. The company currently has three large U.S. mobile operators as customers for its Rocket Optimizer and Skyfire Horizon solutions, and is in trials with ten other operators around the world.
Founded in 2006 and based in Mountain View, CA, Skyfire has raised $40.8mm in funding from Lightspeed Venture Partners (Peter Nieh), Matrix Partners (Andy Verhalen), Panorama Capital, Trinity Ventures (Ajay Chopra, Larry Orr) and Verizon Ventures.
Mobile data traffic is expected to grow 18x by 2016, according to Cisco’s latest VNI report, and two thirds of this traffic will be video. Mobile service providers are already stretched to support this massive growth without huge expenditures on network infrastructure and mobile video optimization will be one key step to solve this problem.
Opera is no longer simply a browser vendor, but has moved strongly to provision, measure and bill new revenue-generating services (such as Web Pass) for global operators – a new business direction that is showing growth.
Opera intends to keep the Skyfire team in Mountain View as an important cloud/mobile technology development asset in Silicon Valley
Opera and Skyfire’s synergies in technology, carrier relationships, product lines and customer base made this transaction a natural fit for both companies. Skyfire’s Rocket Optimizer adds a major new revenue opportunity for Opera, and Rocket Optimizer technologies can also boost Opera’s Web Pass offerings by letting global operators offer customized new data plans with enhanced video options. And Opera has also stated plans to use its compression and optimization technologies in core carrier network infrastructure.
Opera is not a major player in the desktop browser wars, but it has been quite successful with its mobile browsers, and more recently has moved into mobile advertising and new services to generate revenue for operators. With Skyfire’s Horizon toolbar and cloud content management system, Opera now has more ways to present ads and offers on mobile devices and can offer a full suite of ad sales, ad optimization and analytics.