Ustream, which counts NASA, Samsung Electronics, Facebook, Nike and Discovery Channel among its customers, offers both live and on-demand video to about 80 million viewers per month.
IBM did not disclose the financial terms of the deal. However, Fortune magazine reported on Wednesday, citing sources familiar with the deal, that the transaction could be valued at $130 million.
IBM has been shifting away from hardware by selling low-margin businesses such as low-end servers and semiconductors to focus on high-margin products such as cloud-based services, mobile security and big data.
The new businesses have so far failed to make up for revenue lost to divestitures.The company reported on Thursday that revenue dropped to $22.06 billion in the quarter ended 31 December from $24.11 billion a year earlier.
However, revenue from the cloud business jumped 57% to $10.2 billion.
Ustream, which is headquartered in San Francisco, will be part of IBM's newly-formed IBM cloud video services unit, currently led by general manager Braxton Jarratt.
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