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Twitter Buys Magic Pony... Not That Kind

Mari Silbey
6/20/2016
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In Twitter's continuing drive to be an outlet for all things video, the social networking entity announced today that it's acquired London-based company Magic Pony Technology, which develops visual processing technology and combines it with machine learning.

Twitter Inc. didn't release any financial details of the transaction, but Tech Crunch is reporting that sources say Magic Pony collected $150 million in the deal, including retention bonuses for executives.

Not this kind of magic pony.
Not this kind of magic pony.

There are a lot of potential uses for Magic Pony's brand of visual processing technology, but the most immediate application for Twitter is likely video compression. The human eye intuits information about an image even when complete data is unavailable. Based on that concept, video providers can remove or downgrade select image data to decrease video file size, and/or apply different compression techniques based on the type of video being delivered to improve quality and efficiency.

In a pitch posted online earlier this year, Magic Pony boasted that its technology can help video providers "achieve at least another 50% additional compression," and that its solution can be used in conjunction with any video workflow and any type of existing video codec.


Want to know more about video TV market trends? Check out our dedicated video services content channel here on Light Reading.


Twitter certainly isn't the first to venture into a field that some call perceptual video processing. Netflix Inc. (Nasdaq: NFLX) is a major proponent of using perceptual quality to continuously compare different encoding schemes and tweak video performance as needed. Earlier this month, the streaming video company even decided to open source its method of assessing quality using perceptual video techniques by releasing its Video Multimethod Assessment Fusion tool to the technology community.

Arris Group Inc. (Nasdaq: ARRS) has also worked on perceptual video processing for many years. In one example, three of the company's engineers filed a patent application for a system that quantifies the complexity of a video scene based on factors like spatial measurements and motion vectors and encodes the content accordingly. (See Netflix Isn't the Only One Rethinking ABR.)

Beyond compression, Twitter may also be looking at the technology from Magic Pony for new image recognition and video recommendation features, as well as for future virtual reality applications. The company has made clear that video is high on the operational agenda for its business. In a letter to shareholders earlier this year, the company listed live video as one of its top five priorities for 2016. Usage of Twitter's live-streaming Periscope app continues to grow, and the company recently committed to streaming live Thursday Night Football games this fall. (See Twitter Fire Hose Now a Video Tsunami.)

Twitter says the Magic Pony team, which includes 11 PhD developers, will join Twitter Cortex, "a team of engineers, data scientists, and machine learning researchers dedicated to building a product in which people can easily find new experiences to share and participate in."

Prior to buying Magic Pony, Twitter also acquired machine learning companies Madbits in 2014 and Whetlab in 2015.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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brooks7
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brooks7,
User Rank: Light Sabre
6/21/2016 | 5:42:17 PM
Re: What Twitter should be doing
No - it didn't.

It SOLD its Network Services business 1/2 to Siemens and it ran as a separate company.  It then bought back into the Network Business and then added ALU.

When Nokia sold its cell phone its business was nothing.

seven

 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
6/21/2016 | 5:30:45 PM
Re: What Twitter should be doing
Nokia had a healthy network services businesses to pivot to. Twitter has no analogous business. 
danielcawrey
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danielcawrey,
User Rank: Light Sabre
6/21/2016 | 1:32:56 PM
Re: New RedEye technology from Rice University
Twitter has done well with image implementation, but I would argue it needs something like Magic Pony in order to up its video technology. 

Facebook, for example, is a leader in video when it comes to social networks. This acquisition by Twitter just seems like a way for it to try to keep up. 
TV Monitor
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TV Monitor,
User Rank: Light Sabre
6/21/2016 | 1:01:26 AM
Re: What Twitter should be doing
Mitch Wagner

Based on Twitter's string of aquisitions, they appear to be moving toward automatic AI tagging of photos and videos so that they become searchable.

Google image search has the benefit of texts in HTML pages from which to draw tagging context from. Pictures and videos posted on Twitter don't enjoy such benefit, so AI will tag them for users.

In other word, Twitter is making a shift from text tweets to video/photo tweets.

Additional factor in favor of Twitter is the rise of Ad Blockers that is starving ad revenues for content providers. Twitter clients are immune from the effect of Ad Blockers.
brooks7
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brooks7,
User Rank: Light Sabre
6/20/2016 | 8:50:37 PM
Re: What Twitter should be doing
Mitch,

They have enough money/stock that they can buy other businesses.  You are making an assumption that may or may not be true that Twitter will remain as they are.  

Let's use a telecom example.  Nokia.  Dead as a cell phone supplier...poof now they aren't.

So, you can always reposition.  The question is what is the best path forward for the shareholders.

And it is a $10B enterprise value (approx).  It is a big stock in any case.  Very few companies have the kind of money to buy them.  If you are going to sell the company, you have to figure out who/why they would be bought.

seven

 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
6/20/2016 | 8:11:20 PM
Re: What Twitter should be doing
brooks7 - You disagree that Twitter is doomed?

I don't see a way forward for them. 

The best they can hope for is to find an enlightened owner who is willing to accept it for what it is and realize it's never going to be Facebook-scale. 
brooks7
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brooks7,
User Rank: Light Sabre
6/20/2016 | 8:02:32 PM
Re: What Twitter should be doing
Mitch,

Just be warned, that has an awful lot of "nobody needs more than 256K RAM" to it.

seven

 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
6/20/2016 | 4:12:23 PM
What Twitter should be doing
Twitter needs to stop messing around with acquisitions and instead focus on finding an acquirer. If it's not too late. Twitter has no future as a standalone company. 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
6/20/2016 | 4:11:30 PM
Re: New RedEye technology from Rice University
Rice University is coming out with RedEye technology. Twitter is buying Magic Pony. Microsoft is providing software for cannabis research. 

The industry is turning into a Grateful Dead concert. 
mendyk
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mendyk,
User Rank: Light Sabre
6/20/2016 | 3:52:46 PM
Re: New RedEye technology from Rice University
RedEye sounds like something Microsoft may be interested in.
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