Wherever we look this week there are bland statements, something akin to the key marketing messages of Widevine, which tell us that what once was an IPTV conditional access company, has been acquired by Google. No-one seems to have a clue why the deal was really done.
The overall spin of the deal is that Google needs Widevine’s experience in order to convince the big content businesses, that it will handle responsibly any content that is placed on Google TV set tops. It is seen by some as a desperate ploy to convince Hollywood that Google is a good guy after all.
If that was the case, why didn’t it just license the Widevine content protection technologies like any one of its 100 plus existing customers. None of those, and they include quite a lot of important companies, from the major broadcasters using Widevine to protect content delivered from their web site, to TV manufacturers streaming content to their internet connected devices. Initially its customers would have been IPTV operators, and given that many of the larger ones have been pledged to the Microsoft DRM by dint of using Mediaroom, that market has been somewhat shrunken.
Also why buy Widevine when there are other tasty morsels around like Verimatrix, which to our mind has a better track record in the pure IPTV DRM market.
Perhaps the reason is in the recent deals that Widevine has been working on, trying to both protect streamed content for the pay TV operators with their TV Everywhere strategies and also offer the adaptive streaming technology that is needed to deliver this vision? It has also been helping out true OTT services such as Boxee.
But none of this makes traditional commercial sense. If pay TV operators are wary of Google and it buys Widevine, are we meant to believe that they are so deeply involved with Widevine that they cannot extricate themselves and give their TV Everywhere contracts to someone else? And if Google taints that relationship, either because it is supporting a free to air streaming TV vision of its own through Google TV, or simply because it has a poor track record in looking after content, then the pay TV operators might not be confortable, then surely the weight and experience that it is buying Widevine for, may evaporate.
Is it because Widevine has lots of content deals up its sleeve that none of us know about, a bit like MobiTV does in the mobile space, not just a technology company, but an aggregator. We don’t think it has any such secrets.
DRM is not so tough to write that Google needs to go looking for a company to buy in order to get one working. A handful of MIT PhDs who specialize in encryption and a few months hard graft should see to that. Apple has built a huge consumer electronics business around its Fairplay DRM (and then virtually abandoned it for music) which was never very tough to crack, but which was replenishable online. Apple also has the technical might to take on adaptive streaming and anyway there are now standards for the format (html 5) and many, many implementations on the market (such as bankrupt Move Networks which invented it) which would come ahead of Widevine in the steaming market. But perhaps Google needs these technologies fast, and doesn’t have time to go away and build them.
But let’s not forget that Google Video has its own DRM. It bought one from DiVX a few years back when it set up Google Video, and DiVX wrote it purely because Hollywood would not give it its blessing to carry major motion pictures. It was built to Hollywood specifications, but perhaps it’s out of date by now, who knows? It never did very much for DiVX in that it never cleared the air between it and Hollywood, although we understand it works quite well.
So the whole thing has become something of a mystery, although one cynical voice (we won’t embarrass him by naming him) suggested that Google was the only company, where what appeared to be small change, was enough to get the Widevine VCs all their money back. But its last funding round was for $15 million just a year ago from Liberty Global and Samsung Ventures, so it should have plenty of money left right now and while it is true that VCs have plowed a lot of money into Widevine over the years, they have no need to cash it in right now and Google is no mug when it comes to buying companies.
Perhaps the answer lies instead in the very recent areas of work which Widevine just started, as we said pushing towards putting some form of protection onto consumer electronics devices for OTT services.
It has patents for virtual set tops, a secure software implementation of a set top on a consumer electronic device. While there are at least five other companies that can claim to have invented something similar, Widevine is perhaps one of the companies that can help Google take deals to TV manufacturing companies. And given that whatever it is paying for Widevine, it IS small change for Google (however much it paid) couldn’t Google offer the software for free to companies like Panasonic and Sony, just to hook them into Google TV?
The other recent area of work for Widevine are patents for transcoding broadcast content for internet delivery, as well as protecting those video streams. Now while protecting streams is very important and it is a growing area of concern for Hollywood, surely the DLNA streaming protection afforded by DTCP-IP is all that anyone will ever want within a home. But Widevine can perhaps offer some form of protection over the internet on the way to a home.
We think this is where Google is coming from, providing a core set of security patents for free, as part of Google TV, Wherever Google is coming from, it is quite clear that their technical teams were destined to meet somewhere and we know they will have rubbed shoulders in the implementation of the internet conditional access provided by Widevine for Dish Networks, while putting Google TV to work there, slotted in side by side with the existing Nagra conditional access, for the cable delivered content. Widevine is used there to protect placeshifted content sent over the internet.
Widevine CEO Brian Baker said of the deal, “By working with Google, we are even further committed to the consumer Internet video experience and to the needs of content owners. Widevine will continue to supply the industry with leading video optimization and content protection solutions. We are excited to have access to Google’s vast resources as we continue to improve our products, support our customers, and meet the future needs of consumers, content owners, service providers and device manufacturers everywhere.”
So think in terms of Google bringing together the technology for a Netflix style experience on a global scale, which is pretty much in opposition to everything that Pay TV operators and broadcasters would want to see. If we were selecting Comcast’s TV Everywhere technology, we’d drop Widevine off the list and go to someone else, and we think this deal is not about making money in the conventional Widevine sense.
It’s about a ready-made set of technologies which overnight put Google in the driving seat to build a platform, perhaps even an open source platform, for consumer streaming of commercial content, perhaps in the light of studio comments about the strength of its current protection technologies. This is Google saying, ‘OK film-makers what streaming technology DO you trust? Because we’ll buy the company and put it to work over the free internet, how’s that for commitment?’
There is huge mistrust out there towards Google in the content industries, and this deal alone will make no difference. What will make a difference is the tide of global consumer opinion which says that content should be delivered to consumers over the internet to any device ‘ and over time we see that working towards Google TV’s advantage, especially if it solves all the problems ahead of time about content security.