Comcast announced Tuesday it has agreed to acquire Xumo, an advertising-supported free streaming service that comes pre-installed on smart televisions.
Financial terms of the acquisition weren't disclosed, though people familiar with the matter said Comcast paid more than $100 million for the company, which has 55 employees and about 10 million monthly active users through the company's preferred placement on smart TVs. Xumo will operate as an independent business inside of Comcast. The deal will be immaterial for Comcast, the people said.
Comcast's interest in Xumo stems from the company's partnerships with smart TV manufacturers such as LG, Panasonic and Vizio. Comcast can use Xumo's prime placement on smart TVs to market or showcase Xfinity and other Comcast services and can use its technology to build future streaming products. Xumo's leadership also impressed the company, according to people familiar with the matter, led by CEO Colin Petrie-Norris.
Comcast is looking to enhance its profitable broadband service by appealing to cord cutters who are eliminating video service. An ad-supported free video service could appeal to a younger audience that may also sign up for NBCUniversal's free Peacock service, which will be available later this year.
The deal is part of a small run on free ad-supported streaming services. ViacomCBS acquired PlutoTV for $340 million last year. Fox is also in talks to acquire Tubi for more than $500 million, The Wall Street Journal reported last week.
Xumo was formed in 2011 as a joint venture by Panasonic and Viant Technology LLC, the owner of MySpace, which later sold to Time Inc. and was subsequently bought by Meredith Corp.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC and CNBC.com.