Leading telecommunications company Verizon Communication has announced its acquisition of the subscription video startup Vessel and plans to shut its doors on users at the end of the month.
The acquisition of the online video service was announced by the telecom giant on Wednesday. The service would be shut down and the technology behind it deployed in the carrier’s Go90 platform.
However, the terms of the deal were not made public. The transaction should be finalized within the next 30 days, according to Recode.
Vessel was started in 2013 by former Hulu Chief Executive Officer Jason Kilar and former Hulu Chief Technology Officer Richard Tom. To date, it has raised almost $135 million from investors, including Greylock Partners, Institutional Venture Partners, Benchmark, and Bezos Expeditions, owned by Amazon CEO Jeff Bezos.
Tom and a number of Vessel employees will be joining the Go90 mobile video service team. The Vessel co-founder will serve as the CTO for digital entertainment efforts of Verizon.
“With Richard Tom leading technology and operations and Lonn Lee heading up product, we have the utmost confidence in our ability together to rapidly executive and enhance our products,” said Chip Canter, general manager of Verizon Entertainment.
Kilar will not be joining up with Verizon, at least not on the long-term.
With the acquisition, Verizon desires to use the technology and software powering the Vessel video service to speed up the growth of its Go90 platform. Canter told Recode in an interview that some social features of the online video service would be integrated into the existing content strategy of Verizon.
Vessel offered users access to content by top video creators, including YouTube stars, for a monthly payment of $2.99. Non-paying users were allowed access to ad-supported videos. The startup founders never revealed the number of subscribers on the service, but Kilar claimed it was 10 times more profitable to content creators than YouTube.
Verizon is believed to be interested in how the Vessel model can help its free Go90 video service transition to paid subscriptions.
The Vessel deal, which was first hinted at by Recode last month, is the latest in a string of acquisitions by Verizon, which aims at building a future-focused TV service for mobile users. The telecom giant acquired Intel’s over-the-top video business OnCue in a deal valued at roughly $200 million in 2014. The technology behind OnCue is the foundation of the Go90 service.
Earlier this year, the wireless carrier acquired the digital media player Complex, in partnership with Hearst. It also has a 24.5 percent stake in the media and entertainment company Awesomeness TV.
Verizon bought AOL in a $4.4 billion deal last year and has its sight set on combining it with the core business of Yahoo, which it is currently working to acquire.
In a blog post, Vessel founders said the service will be brought to an end on Oct. 31. Annual subscribers will be given a prorated refund, Tom said. All users are to enjoy the service for free this month.