AOL Buys StudioNow for $36.5M

January 25, 2010

The acquisition will allow AOL to integrate a fully functional video creation platform into its newly-launched content management system, Seed.com. StudioNow will also continue to develop its existing business as a provider of online video creation, management, storage and syndication services to commercial companies.

The acquisition of StudioNow closed on January 22 and was valued at $36.5 million in cash and stock with a portion of the cash paid out over multiple years.

“The successful combination of a talented team, innovative technology, seasoned/professional video creators and strong client service has rapidly established StudioNow as a leader in online video creation and syndication. Those strengths bring AOL significant strategic benefits and we’re delighted that StudioNow is joining the AOL family,” said Tim Armstrong, AOL CEO and Chairman. “Premium original video creation is a fundamental part of AOL's strategy to offer consumers world-class, stimulating content at scale and the integration of StudioNow into Seed.com will enable us to increase our video content/offerings significantly.”

Founded in January 2007 with headquarters in Nashville, TN, StudioNow partners with blue chip, mid-sized and local companies to create, store, and manage content and syndicate it to online video channels and portals. The company connects clients with its more than 3,000 freelance filmmakers, editors, animators, voice talent and writers/producers to create quality, professional video at an affordable price. In 2009, StudioNow was selected for inclusion on the AlwaysOn Global 250 Top Private Companies List, which honors private, emerging technology companies that create new business opportunities in high-growth markets.

“StudioNow and AOL share a passionate commitment to high-quality content, services and technology and that makes us a natural fit for this new partnership,” said StudioNow's co-founder and CEO David Mason. “This new chapter for StudioNow presents a tremendous opportunity for our growing professional creative network to reach new audiences, diversify their assignments and increase their income as the number of projects coming from the numerous AOL properties will create a surge in video assignments.”

AOL's newly launched content management system, Seed.com, assigns, buys and distributes work for all of AOL’s properties in order to meet consumer demand for relevant content in areas including entertainment, news and sports, lifestyle, technology, money and finance, among others. Seed.com allows talented professional contributors to be seen, heard and read on AOL's more than 80 premium branded and niche content sites. Seed.com will harness StudioNow's technology platform and national network of more than 3,000 creative professionals to develop and produce quality, professional video at the request of AOL editors in a way that is rapid, efficient and scalable.

AOL also expects to leverage StudioNow's technology and resources to complement the ongoing work of its in-house studios, both for AOL productions, which creates original video programming such as AOL Sessions, Unscripted, Moviefone Minute and the Engadget Show, and for its branded advertising and content partners.

“The distributed production capabilities offered by StudioNow, combined with our in-house production studio and video resources, help position AOL to capitalize even more fully on the projected growth of video as it establishes itself as a key form of brand advertising in the digital space,” said Armstrong.

eMarketer projects that U.S. online video advertising spending will increase from $734 million in 2008 to $5.2 billion by 2014. This growth will far outpace any other online format, with a compounded annual growth rate of approximately 39% between 2008 and 2014.