As we had reported was in the works two weeks ago, Yahoo has bought Maven Networks for $160 million.

Yahoo explained the deal as a play for the fast-growing video advertising market. Maven has technology for creating interactive and clickable ads, the hot new video formats.

In addition Yahoo will now service Maven’s media customers, for which it also provides video distribution services (that was its main business). Maven clients include Gannett, Hearst, Fox News, Sony BMG, the Financial Times, Univision, and TV Guide.

Maven had some $30 million in funding from Prism Venture Partners, Accel Partners, and General Catalyst Partners. The company will continue to operate in Cambridge as a Yahoo subsidiary. Since word of the deal got out to us, another potential Yahoo acquisition has been dominating headlines — that would be the one of Yahoo itself, with the suitor being Microsoft. Yahoo also acquired small music startup FoxyTunes.

Update: VideoNuze has an interview with Maven CEO Hilmi Ozguc. He says he sold the company because,

“Broadband video is increasingly going to be a game fought between titans because billions of dollars are at stake and the question is how do you get to the top 50 or 100 global media brands and advertisers? We’ve focused on building tools and technologies that these media companies need. The time to sell was excellent as was the return for our investors.”

Also, a somewhat bellicose acknowledgment of the deal on the Brightcove blog (which shared investors with Maven, and whose CEO Jeremy Allaire was formerly an advisor to Maven). The post is titled “Goodbye Maven.” and calls the company a “relatively small player.”

The major question for publishers is can an online media company with Yahoo!’s footprint effectively provide a white-label, on-demand service to other online media companies? We believe there is an inherent conflict of interest in this.