Yahoo has dived into the mobile video space with the acquisition of Ptch, a mobile video app that was funded by DreamWorks Animation.

The iPhone app, Ptch, was launched just over a year ago and it seems that the app will go for further development, albeit under Yahoo, as Ptch announced that it will shut down on January 2, 2014. The app lets users remix their videos with effects and music.

"Today, we're excited to announce that Ptch will be joining Yahoo! As part of the Yahoo team, we'll be able to focus our efforts and leverage our technology to make Yahoo's photo and video platforms the best in the world," per Ptch's press release. The terms of the acquisition were not disclosed.

Ptch allows users to take pictures or video clips from other people's videos and then embed them into their own video. Users are also allowed to bring photos and videos from an array of other commonly used apps such as Facebook, Twitter, Instagram, Viddy and Tumblr.

Once a user has created a desired video, they have the option to email it, post it on various social networking websites or share it within the Ptch network.

Ptch was born inside DreamWorks Animation as part of the company's ambition to enter the mobile video arena. The project was the brainchild of CTO Ed Leonard who later became the CEO of the company after separating from DreamWorks. The company had only 20 employees, including co-founder Hans Ku, and the major chunk of the employees came from DreamWorks.

The company announced that until January 2, 2014, users can download their ptches on ptch.com or save them to their smartphone using the Ptch app.

The technology market has seen a shift from PCs to tablets and smartphones in the last decade. Reports also suggest that mobile devices such as tablets will surpass PC shipments soon.

YouTube, which is one of the most popular video streaming services worldwide, recently reported that mobile users accounted for 40 percent of its traffic. In 2012, only 25 percent of the website's traffic was generated from mobile devices and in 2011, only 6 percent of YouTube's customers used mobile handsets to access the website.    

With the acquisition of Ptch, Yahoo will hope to put its mark in the mobile video space.