Amazon spent millions on this hot video startup

September 3, 2015, 10:27 PM UTC
Jeff Bezos, chief executive officer of Amazon, speaks during an event at Fremont Studios in Seattle, Washington, U.S.
Photograph by Mike Kane—Bloomberg via Getty Images

Amazon’s cloud computing arm, Amazon Web Services, said on Thursday that it bought a video-processing startup called Elemental to help television shows, films, and sports events stream more smoothly.

Terms of the acquisition were not disclosed, but a report by tech news site The Information said Amazon (AMZN) bought Elemental for roughly $500 million.

Elemental’s video processing technology is popular with several big name media companies and broadcasters like CNN, Comcast (CMCSA), and HBO.

The company is known for using a type of computer chip known as a graphics-processing unit to help media companies and content providers stream video more smoothly across the web. Its technology helped to power the live streaming of the 2014 Winter Olympics so that viewers could watch the games across a variety of devices like television, smartphones, and personal computers.

Elemental will continue to operate as a separate brand from Amazon Web Services, according to the announcement.

“We have been working with Elemental to address shared customers in the Media & Entertainment business for the past four years,” Jeff Barr, ‎chief evangelist for AWS, wrote in a blog post.

The deal makes sense for Amazon considering streaming video plays a big role in the technology giant’s business and viewers want to watch movies or sports events via the Internet without any hiccups ruining the experience.

Both Amazon’s instant video service and Netflix (NFLX) all run on Amazon’s cloud computing infrastructure.

The deal is expected to close in the fourth quarter.

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