Consolidation Is the Talk of IBC: Will Imagine, Harmonic Be Next?
Conversations at this year's IBC inevitably veer toward the major acquisitions that have just taken place—and those soon to come.
Considering that recent days have seen Accenture acquire S3, Ericsson buy Envivio, Amazon Web Services grab Elemental Technologies, and Turner nab iStreamPlanet, that's hardly a surprise. The consensus is that more big deals are in the works.
"We're going to continue to see that and we're going to see massive consolidation in the industry with relatively few players able to supply end-to-end services," says Dr. Shay David, chief revenue officer and co-founder at Kaltura. Next year's IBC will have more customers, but fewer vendors, he adds.
Who's the next to be bought? Imagine Communications and Harmonic, David guesses. He sees Harmonic as an especially attractive target right now, trading at one-and-a-half times earnings.
Several factors contribute to the consolidation trend, David says. Smaller players are having a difficult time providing profitable services. Building one function into a sustainable business is hard nowadays; there's strength in numbers. Buyers, meanwhile, are looking for providers that can deliver comprehensive offerings. The market is moving too quickly for multi-year OTT projects that require eight different vendors, he says.
The Kaltura booth is bustling, and Shay says content owners are coming to buy. "OTT is happening now; it's not some future prospect," he says. The companies he's talking to have either already selected their partners or are in the process of selecting.
Industry consolidation plays to Kaltura's strengths, David says, as it's one of the larger vendors and can supply and end-to-end solution. His company's mission is to remain independent, he says, since there's a strong demand for an independent company that can offer full-service carrier-grade solutions. Ericsson and Cisco are Kaltura's chief competitors, he notes.
When not entertaining prospective or current customers, Kaltura is talking up its two big IBC announcements. Days ago it launched MediaX, a group of components that help content owners add value while creating revenue opportunities. MediaX includes cloud DVR, metadata enrichment, and big data predictive analysis components. Kaltura saw a need for business logic to connect these services to revenue opportunities.
"Working with cable carries, satellite providers, and mobile providers that are entering into OTT we realized that there is a need for a business layer and business logic that allows carriers to maximize revenue from a cloud DVR," David says. "That sort of product is a commodity. The business layer is what makes the cloud DVR a great experience for the customer and good business solution for the operator."
Kaltura also recently launched OTT Now, a lower-cost option for content owners that want to go to market quickly. While the customer-facing elements are all completely customizable, the backend is template-driven and fixed. Kaltura says customers could be up and running with OTT services in two months, but David says it could take as little as three days if a company only wants to add logos and do a minimum of customization.
"OTT Now is an OTT solution out-of the-box that allows a content rights holder, a broadcaster, and operator to launch an OTT service in a matter of weeks and not months," Davis says.
OTT Now allows for subscription, transactional, and ad-supported offerings, and creates storefronts for the web, iOS, and Android platforms. Pricing runs from $250,000 to $500,000.
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