The Kudelski Group has released its 2014 annual report, with total annual revenues hitting $893 million, up 7.1% from 2013, the reported net income from continuing operations improved from $39.3 million to $50.3 million.
While a significant chunk of its business is still tied up in public access systems (that allow the correct people into protected sites or installations), the bulk of Kudelski remains focused on its digital TV portfolio. The Integrated Digital TV (iDTV) division reported revenues of $646.8 million, up 9.8%, which is still the vast majority of total business.
Key for the year was the April acquisition of Conax, a Norwegian conditional access firm that focused on entry-level markets across cable, satellite, IP, mobile and OTA. Kudelski says the Conax integration is on track, and that the buy has markedly improved its market footprint – as it tries to enter new regions as its home territories become saturated and less profitable. The deal saw Kudelski pay a little over two times revenue for Conax, in a $226 million deal.
Kudelski said Conax signed 22 new contracts in 2014, primarily in emerging markets. It saw strong growth in Latin America, with America Movil, Cablemas, Claro, Columbus, Nuevo Siglo, and Montecable. In Asia, the group reports significant orders from Vietnam and K-Vision in Indonesia, and Star Times China has used Conax for ten years – now in a fast growing pan-African DTH and DTT operation.
Another highlight for the company was a cross-licensing agreement signed with Cisco, back in January. Kudelski reports that this has provided a positive contribution to its income. In other patent news, Kudelski announced the dismissal of all outstanding patent litigation with Netflix, after a “comprehensive product relationship” was signed between the two, to pre-integrate Nagra anyCAST content protection and OpenTV connectware with the Netflix service.
We never quite understood the suit’s claim, and saw it as a nuisance filing most likely brought to court on behalf of a Nagra customer – most likely Dish and its rival SVoD platform Sling TV (alongside the remnants of Blockbuster).
The suit was ostensibly an attempt to prevent other OpenTV customers jumping ship, including TWC, Comcast, Charter, NBC Universal and Suddenlink – but again, we’re not really sure why Kudelski felt the need for it. Netflix uses pretty standard delivery methods, mostly from Microsoft, and if Netflix were to breach the OpenTV patents, pretty much every major player in the OTT industry would too. We think the real fear here is that current OpenTV customers follow Netflix’s lead and move away from OpenTV on their set tops.
We felt the Netflix suit was an attempt to ensure Netflix can be integrated with anyCAST and OpenTV. anyCAST is a range of products that cover conditional access from downloadable DRM with SoC-based support, all the way up to full smartcard systems. Given Netflix’s OTT dominance, Nagra needs to ensure that any current or future customers looking to integrate Netflix will be able to do so while retaining Kudelski services.
In similar patent news, May saw Kudelski’s OpenTV and Nagravision file three patent suits against Apple in Germany, following a Californian suit filed in April concerning five patents across nearly all Apple devices. The simultaneous EU and US approach was adopted by Kudelski against Netflix.
Offloading the NagraID Security interest to Oberthur Technologies in August saw the company get out of the more financial-transaction focused game, for an undisclosed amount. Also of note was the sale of OpenTV’s advanced advertising product line to Imagine Communications, in a further attempt to streamline the Kudelski portfolio.
Kudelski adds that its OpenTV5 middleware has won deployments with Telefonica, NET Servicos do Brasil, StarHub, Vodafone and Unotel in 2014. It adds that 2015 will see Cable and Wireless Panama, TBC in Taiwan, and VTV Cab in Vietnam launch services powered by OpenTV5.
Nagra also said that anyCAST Command, the latest offering in the security service (designed to meet the content protection requirements for 4K video), will be deployed on the Dish Network in 2015 – with no word on whether that’s just the US market, or if it includes Dish’s Latin American assets too. Other anyCAST customers for the year will include Guangdong Cable (China), AzamTV (East Africa), and several cablecos in India, including DEN Networks, who use other products in the Nagra anyCAST portfolio (like Enable and Protect cardless solutions) specifically tailored for lower-ARPU markets.
The updated deployment list for Kudelski’s MediaLive multiscreen system now includes upwards of twenty names, including PrisaTV’s Yomvi (Canal+), Numericable-SFR, Canal+, Belgium’s BeTV, Australia’s Foxtel, and Russian telco Beeline (Vimpelcom) for mobile devices.