News Corp/Google Eyeing blinkx?

Posted by: Catherine Holahan on May 09

Is blinkx looking to sell?

Speculation that News Corp., Google, and others have their sights on the video search engine—traded on the London Stock Exchange under the ticker BLNX—sent shares skyrocketing 26% May 09 to 31.50 pence per share. The market cap of the company is now 35.5 million pounds, or $68.5 million dollars. That’s up sharply from a roughly 30% drop since its IPO in May 2007.

The company played down rumors of an impending sale soon after the share spike. “The Board of blinkx plc notes the recent increase in the Company’s share price and confirms that it is not aware of any reason for the movement,” said company executives in a statement emailed to media.

Despite corporate’s official line, there’s reason to think blinkx has the attention of potential acquirers. As more video has gone to the Web, the demand for technology to filter through all that media has grown. Blinkx’s video search engine crawls the Web and categorizes more than 18 million hours of video.

Like many video search engines, blinkx identifies what is in a video using the text descriptions or “tags” supplied by video creators themselves. It also uses videos’ soundtracks and image recognition technology to determine the identity of videos and properly categorize them. Blinkx hosts clips of the videos it finds on its site and then directs users back to the hosted site.

Blinkx’s technology is the key to its desirability. Unlike many video sites that rely solely on advertising revenue, blinkx has made much of its profits from licensing its video search technology to the likes of Time Warner’s AOL and others.

Blinkx also serves ads related to the videos it shows. It determines the relevancy of ads based, in part, on the same technologies that allow it to categorize videos. On May 08, blinkx announced it was doubling the size of its ad sales force to strengthen this portion of its business.

Also potentially driving acquisition interest is blinkx’s recent move to become a peer-to-peer online television destination, akin to Joost. A player such as News Corp could want that technology to serve its own videos.

Blinkx’s search technology, however, is more likely to be the main driver of interest. Peer-to-peer technology, which allows large media files to be downloaded relatively fast thanks to myriad computers hosting the file, is widely available. The technology to identify and filter videos, and serve ads based on the content inside of them, is harder to find.

Many companies have been trying to find the right way to serve ads on video. Google recently rolled out ads on YouTube that are served, largely, based on the category the video was submitted to. Blinkx’s technology promises to enable ads to be served based on the images and words in the video, rather than simply what people say the video is about.

Whether that technology twist is enough for Google or News Corp to want to acquire the company remains to be seen.