Social networking giant Facebook announced late Thursday it had bought a video-compression specialist called QuickFire Networks.
The move appears aimed at improving the video experience for subscribers to Facebook , which has been rethinking its approach to video services in recognition of their growing appeal.
Facebook has not disclosed the financial terms of the deal, but "key members" of the QuickFire team are set to join it, according to an update on QuickFire's own home page.
In that statement, QuickFire also said it would "wind down" its business operations in San Diego after contacting individual customers and partners.
QuickFire's technology has been designed to reduce the amount of bandwidth that is needed to stream a video online without compromising the image and sound quality.
The company says it was founded on the premise that "current network infrastructure is not sufficient to support the massive consumption of video that's happening online" -- a view that Facebook presumably shares.
While the social network's original focus was on text-based messages and photo-sharing, users have been increasingly eager to take advantage of the video-recording features on the latest smartphones and tablets, as well as the growing availability of high-speed networks.
Although Facebook allows customers to insert links to YouTube Inc. or other video-sharing websites in their posts, it has seen advantages in hosting the content directly.
Besides preventing users from quitting their Facebook session to view another site, hosting should help the company to generate more revenues from advertising by giving it "ownership" of the content.
Facebook is now believed to handle more than 1 billion video views on a daily basis and obviously recognizes that a disappointing video experience could persuade many users to revert to including YouTube links in their posts.
As a result of technical alterations Facebook made last year, videos on its website start playing (albeit silently) as soon as they appear -- instead of when a user clicks the play button -- making QuickFire's technology even more important to Facebook.
The social network is likely to be especially concerned about improving the video experience on mobile phones and tablets.
Facebook's Android and iPhone apps are among the most popular in the world, but the video experience can be disappointing on slower mobile networks.
QuickFire is one of several companies whose technology is aimed at delivering improvements in this area.
Last September, a Silicon Valley-based company called Qwilt launched a new technology designed to help mobile operators support rising usage of over-the-top (OTT) video services on their networks.
Based on SDN, the Qwilt technology lets operators "cache" content on their networks as and when needed. (See Qwilt Launches NFV-based Caching & Acceleration Solution .)
Leading operators including Telecom Italia (TIM) have recently warned the telecoms industry that it must invest more in OTT-style technologies, such as caching and web acceleration, to support the skyrocketing volumes of video traffic on today's networks. (See Cache or Crash?)
— Iain Morris, News Editor, Light Reading