It was never made entirely public that Autonomy had an option to buy video search engine Blinkx, but when we interviewed Blinkx CEO Suranga Chandratillake a few years ago he gave a few hints, such as the fact that some of the company’s technology was licensed from Autonomy, where he had previously been the CTO.
Now Autonomy has exercised its options to acquire shares in Blinkx and will merge its own consumer division into Blinkx, and float the combined entity on London’s Alternative Investment Market. The combined operation will be listed as Blinkx.
Blinkx offers a searchable index of web video that contains more than 7 million hours of video content. The index is created using voice recognition to convert the spoken voice in a video into text, and then indexes the result, along with existing meta data in the video such as closed captioning.
Michael Lynch, CEO of Autonomy said, “Autonomy has invested over $150 million in its core IDOL technology. Recently we have expended further effort in applying our technology to the challenges of the consumer market. Having taken the consumer applications through the development phase and into commercial roll-out, now is the right time to split these activities from our core enterprise software business. They clearly have different market characteristics and funding requirements and we believe that shareholder value can be more quickly advanced as separate entities. Lynch will remain a non-executive director of Blinkx.
Shares in Blinkx are expected to start trading as a separate company in May 2007 after which Autonomy will hold 10% of Blinkx shares. Other sources have said that Blinkx will be raising around $50 million in the public share placement.
We have to say that Blinkx has an international reputation and should probably have gone public in the US, despite it costing far more there. It looks to us as if Autonomy is just cashing in its options chip, and it’s difficult to see how much of the money raised from the placement will go into the company and how much will go to Autonomy, since that’s not been revealed. There is potential for Blinkx to rise to a substantial value as one of the leading video search engines, and although it does a different job from YouTube, and does not focus on user generated video, it could be caught up in the general investor appeal for anything that deals with web video. Other rivals to Blinkx, such as Truveo, have been acquired, with AOL buying Truveo, for a figure thought to be around $50 million back in December 2005. Valuations for these types of companies are likely to be far higher now, and anyway Blinkx is a market leader ahead of Truveo in terms of the amount of accessible video that it has indexed, and it now has revenues, whereas back then Truveo was pre-revenue.