IBM Bets on Video Streaming with $130 Million Ustream Buy

In a bid to expand its portfolio of cloud-based computing services, International Business Machines Corp. has acquired Ustream Inc., a seller of video streaming services, in a deal valued at $130 million.

Ustream adds to IBM's growing portfolio of video services and gives the company a stronger position in a market that could be worth $105 billion by 2019 as businesses increasingly use video as way of reaching customers, according to Steve Canepa, the general manager of telecommunications media and entertainment at IBM.

"Video is finding its way into the core of how you provide value to customers," he said.

IBM is looking to bolster its portfolio of "cloud" computing services delivered over the Internet as revenues decline in its traditional hardware, software and services businesses. In 2013, the company paid $2 billion for SoftLayer Technologies Inc., another provider of cloud computing services.

The deal will help IBM compete with Amazon.com Inc., which last year acquired a video streaming company of its own, Elemental Technologies Inc.

IBM will combine the Ustream assets into a new video services business unit, led by Braxton Jarratt, formerly the CEO of Clearleap Inc., another video company that IBM acquired in December.

News of the deal was first reported Wednesday by Fortune Magazine.

Based in San Francisco, Ustream has about 300 employees.

Write to Robert McMillan at Robert.Mcmillan@wsj.com