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Financial Times is reporting that Blinkx, a video search service is been swallowed (well not really) by Autonomy, a Cambridge UK based search software company.

This might sound strange at first, but as it turns out that the technology being used by Blinkx to search videos is actually developed by Autonomy. Autonomy, however, did not tried to make a consumer service out of this technology on their own. Suranga Chandratillake, the U.S. based CTO of Autonomy decided to have a go at the video search service for the masses and created what we today know as Blinkx. Autonomy licensed its technology to blinkx, without taking any equity in return, but retained an option to buy Blinkx for cheap if and when desired.

Autonomy is exercising the option now and is merging with Blinkx. After the merger they will de-merge Blinkx, rename it to Blinkx plc, retain 10% stocks in the newly formed company, and float it on London’s AIM Exchange for Growth Stocks. Autonomy will likely issue new shares at the time of IPO in order to provide funding for Blinkx. In return for all this Blinkx will get exclusive rights to use the search technology around the world, except China. Rights for Chinese consumer search market have been granted to OpenV, a joint venture between Autonomy and China Netcom.

Autonomy entered the consumer search market in 2000, but its market share was soon eaten up by the rivals like Yahoo and Google. Autonomy decided to pursue the licensing track and its technology is now being used by hundreds of large companies to track and organize corporate data.

The search technology used by Blinkx is unique and one of its kind, while Truveo and CastTV just search the videos and the meta data around those videos, Blinkx actually gleans inside the videos and uses mathematical formulae to detect patterns in any type of information, including pictures and sounds. The technology is currently being used by BBC, to search and organize its archives.

Blinkx was recently on a partnership spree. It just struck a deal with National Geographic to make their content searchable via Blinkx. They have also recently launched Blinkx remote, a tool to quickly find full-length TV programs on the web. The feature uses Blinkx’ speech-to-text transcription to search for episodes and get aid in its search from information available on Wikipedia, IMDB and other such sites. The remote searches more than 7 million hours of online video. The remote however only allows you to search not view the entire programs, for the second part you need to either buy the serial on iTunes or go to Youtube for the free stuff. Blinkx has also partnered with Qunitura, a Russian visual search engine, to allow users to search for videos visually. Blinkx claims to have the largest video and audio indexes on the web and is aiming to create an advertising funded business on the lines of Google.

Summary: The people who developed the search technology behind Blinkx, are taking 10% stocks in return for their technology, and Blinkx is going to have an IPO. I never thought financial deals could be this complicated. In fact the details were so complicated that Mashable decided to host a contest offering 20 bucks to the first person who explains all this in plain English.