VitalStream acquires PlayStream to expand streaming platform for the SMB, SOHO and reseller markets.

VitalStream Holdings Inc. (OTCBB:VSTH), the parent company of VitalStream, Inc., a streaming media solutions and global content delivery network (CDN) provider, has announced that it has acquired the business of PlayStream, LLC, a leading provider of small business streaming media services, headquartered in Seattle, Washington. The combination of PlayStream's small business streaming platform with VitalStream's enterprise streaming solutions will provide customers with a comprehensive, scalable solution for delivering their digital media content on the Internet.

Together, VitalStream and PlayStream will offer an affordable, self-service platform perfectly suited for small and medium-size businesses (SMB), small and home office (SOHO) customers and resellers. This service will be offered under the PlayStream brand. The automation and self-provisioning elements of the PlayStream platform expand VitalStream's reach, making streaming solutions available to a wider range of users. Combining PlayStream's six-year track record in the SMB/SOHO market, with VitalStream's engineering and financial strength, uniquely positions VitalStream to capture the opportunity in this emerging market, and in turn, achieves several key objectives in its growth strategy.

"The addition of the PlayStream product line fits perfectly with our strategy of investment and innovation in streaming technologies within our key target markets. Our goal is to leverage acquisitions to bolster our current product offering and customer base," said Philip N. Kaplan, president and COO of VitalStream. "Combining our technical expertise will provide customers with an affordable, automated streaming platform that makes it simple for any business to manage its digital content."

"VitalStream's acquisition of PlayStream opens up new account categories and sources of revenue for the company," said Paul Palumbo, research director at AccuStream iMedia Research. "Account and customer diversification is crucial for CDNs as the market for digital transport and related applications expands to include not only large corporate entities, but also smaller accounts with specific support needs."

George Grubb, founder of PlayStream, will take on the role of vice president and general manager of the PlayStream division at VitalStream. As a standalone entity during 2004, PlayStream generated positive net income from approximately $1.6 million in revenue, of which more than 90 percent was recurring revenue. Although the acquisition agreement was closed today, the PlayStream-branded SMB/SOHO service continues without interruption from www.playstream.com.

"We're very excited about the emerging opportunities and synergies that are forthcoming as a result of this acquisition," said George Grubb, president and founder of PlayStream. "With the combined entities now serving nearly 3,000 customers, this opportunity will enable us to bring forth many new and exciting enhancements to our services as we work to bring out the best of both organizations. From sharing software development expertise to expanding the CDN footprint, VitalStream emerges as the clear champion for providing the best streaming media services for the SMB and SOHO market."