Seattle-based video-distribution startup GridNetworks is being sold, according to several reports. The buyer wasn’t identified. Last year, GridNetworks launched its GridCast TV service, which allows Internet surfers to watch online videos instantly on their TVs, as long as they have a PlayStation 3 or an Xbox 360 connected to it. When I talked to CEO Anthony Naughtin last fall he said that GridCast TV was a better proposition for consumers than rival services like Netflix (NSDQ: NFLX) and Vudu, which require additional set top boxes for Internet video streaming. He acknowledged that the breadth of videos currently viewable via the service was limited, but said several major content providers had shown interest in adopting it because the service gives them more control over their content.

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So far, there isn’t enough detail about the sale to know whether Naughtin et al are cashing out for a gain or have decided to fold themselves into a new entity because they weren’t going to make it as a standalone company.