Why Apple Paid Millions For A Small Internet Video Startup

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Apple doesn’t buy other companies very often, so when it does, there’s usually a very strategic reason. When it was reported that Apple had acquired Matcha a couple days ago, the reason seemed obvious.

Matcha was a small startup that specialized in aggregating programming guides from sources like Netflix and Hulu into a nice interface. Apple has been getting more serious about maturing the Apple TV, so the two seemed to fit like a glove.

But according to a recent report, Apple wanted Matcha for something else.

TechCrunch’s sources say that Matcha had nailed video recommendations with a new algorithm, and that’s what Apple mainly wanted. It wasn’t an ‘acqui-hire’ decision, but a product-driven one. And according to TechCrunch, Apple paid more than the originally reported $1-$1.5 million. The real figure was between $10 and $15 million.

It was Matcha’s user acquisition and user engagement strategy that Apple was interested in, according to one of our sources, since the acquisition happened just after Matcha had completed a round of vigorous A/B testing and had “found the answer” to rapid user growth and time spent in app. Matcha’s pairing algorithms that drove the right content to the right users simply worked best of any other apps competing in that space, the source affirms.

This buyout sounds a lot like Chomp, the app discovery company that Apple bought awhile back and integrated into the App Store. Netflix-like video recommendations are an important part of having a compelling marketplace to browse content. The Matcha iOS app had been rising on the App Store’s charts leading up to the buyout.

While Matcha’s algorithm could very well just be assimilated into the iTunes Store, here’s to seeing the startup’s work show up more on the Apple TV.

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About the author

Alex HeathAlex Heath has been a staff writer at Cult of Mac for three years. He is also a co-host of the CultCast. He has been quoted by places like the BBC, KRON 4 News, and books like "ICONIC: A Photographic Tribute to Apple Innovation." If you want to pitch a story, share a tip, or just get in touch, additional contact information is available on his personal site. Twitter always works too. All DMs excepted.

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