Yahoo! Paid Too Much for Maven Networks

As I'm sure you've read by now, Yahoo! (YHOO) announced earlier in the week it had acquired Maven Networks for approximately $160 million. While I see some of the synergy of the deal, I think Yahoo! paid too much. Based on the price tag, Yahoo! paid about 11x the sales revenue that Maven had in 2007. It's a good deal for Maven shareholders, but for Yahoo!, that's a high evaluation in my eyes in today's market.

Clearly, Yahoo! bought Maven for their technology platform and IP, but at some point, you have to also look at the buy vs. build numbers. Acquiring Maven gives Yahoo! a platform today, as opposed to them having to build one themselves, but at what cost? Considering the state of the rest of Yahoo! business, selling a software video platform is very different than the way Yahoo! has sold everything else for years. And not really knowing what Yahoo! strategy is as a whole moving forward casts doubt on what will truly become of a Maven/Yahoo! integration.

While it sounds like the product will still be branded under the Maven name, Yahoo! should re-brand this immediately and bring it under the Yahoo! brand. With the state of flux that Yahoo! is in as a company, I think it needs to do everything it can to put forth one clear brand, strategy and core set of products.

I think over time the Maven platform could be a good core product for Yahoo!, but only time will tell how successful the integration will be and whether or not Yahoo! sticks to the set of current products offerings they have in the market today.

In my eyes, it's hard to for Yahoo! to say to the market that it is dedicated to any product platform, while at the same time laying off 1,000 employees. How much will Yahoo! truly support the Maven platform with additional dev work and new products features and functionality?

Comments

[aripap]

They bought them for access to the ad inventory of their partners, not for the IP. Yahoo has good video sell-through, buying Maven gives them an instant ad network. This is the same rationale for Ad.com buying Lightningcast.

[Terry S]

Dan,

I totally agree with you. The price tag does appear rich.

I think it may be rich for another reason however. You stated, "Clearly, Yahoo! bought Maven for their technology platform and IP". Interestingly, to my knowledge, their ad platform and IP is not even patented. As it stands right now, one would wonder why Yahoo is paying that much for technology that Maven doesn't even yet currently own? They state it's "patent pending" but that's a long way from having a single patent physically issued to cover their IP. As the patent process progress's, I have a feeling they are going to find another company front and center in their priot art search.

You see, my research indicates their technology "appears" very similar to another company which already owns and has patented Maven's described technology. This company, Arizona based Modavox, is ironically already involved in a patent infringement suit against Tacoda for their behavioral targeting technology. www.modavox.com/news/0...

As you know, Tacoda was recently acquired by AOL and just last week, mysteriously David Morgan, it's founder left or "apparently left" AOL causing me and I'm sure some others to wonder if this doesn't have something to do with the situation he left AOL in when he sold them technology he didn't own and that appears to be infringing on Modavox's. Tacoda was sold for $275 million and again owned no patented IP top cover it's technological process.

Tacoda's platform was supposedly to be a cornerstone of their forthcoming Advertising company, "Platform A". One now must wonder how Modavox's suit plays into this since they own the seem to own the patented process allowing for the customization of content (Ads)to end users. You can have the audience and the advertisers, but if you can't customize the content to them, well you have a major issue prohibiting the actual monetization of online advertising initiatives.

Let's take a look at Maven and Modavox side by side based on available data. My research indicates the following:

Modavox has direct parallel/competitive services in their Interactive division. Maven’s advertising platform and Internet TV platforms look similar in terms of feature sets, and I would not be surprised to learn that Maven is a likely infringer on Modavox's patents in particular with their advertising platform.

CAPABILITIES
Media Management (CMS) (Modavox and Maven)
Work Flow (Modavox and Maven)
Player Experience (Modavox and Maven)
Self Publishing (Modavox and Maven)
Advertising (Modavox and Maven)
Analytics (Modavox and Maven)
Patented Infrastructure (MODAVOX only)

My opinion is there sure seems like there may be an indication of infringement on AD Platform: Customization of advertising content as announced in October 2007 by Maven….Modavox's original patent was issued years prior, their new patent was issued in 2007. Maven was founded in 2002. www.modavox.com/news/0...

“A unique component of Maven’s ad platform is the patent-pending dynamic ad insertion engine, which automatically determines optimal ad viewing points within a video clip based upon historical usage analytics (e.g. user viewing behavior and video popularity) and associated metadata (video length, topic, etc.). THIS ENABLES THE RELEVANT AD TO BE DELIVERED AT THE APPROPRIATE TIME TO THE RIGHT VIEWER"

Here is my understanding of Modavox's patented IP in layman's terms found from another online sourse:

"Modavox owns patented technologies that customize content to the end user. They don’t gather the information or spy on the user, behavioral marketing companies do that. What they are is simply the mechanism of what you do with that information once you have it. They might know know you’re a golfer, know you are 50 and they know I go to espn.com, now they might send me the Callaway Big Bertha driver advertisement just for me and those like me. That’s the company's intellectual property at work. It is a process of associating content and who or where you are, and customizing the delivery of that content to you. Its much broader than just behavioral. It has applications in many other technology verticals. Behavioral is just one of the most blatant and obvious offenders."

Now let's look at the Benefits of both company's platforms.

BENEFITS
Multi Platform and Device Support (Modavox and Maven)
Search Engine Optimization (Modavox and Maven)
Concurrent Publishing (Modavox and Maven)
Ad insertion (Modavox and Maven)
Media Management (Modavox and Maven)
Patented Infrastructure (MODAVOX only)

So did Yahoo pay too much for Maven? If my research is correct and Modavox does in fact own the patented technology that Maven may be infringing on just like Tacoda likely is, then my own answer, like your, is a resounding YES but perhaps for differing reasons.

Keep up the good work, I always enjoy your commentary here and in other sources.

John