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27 May 2021

Amino flips hardware addiction to its advantage in Japan with Optage

It is no secret that Amino Technologies is a company desperate to wean itself off relying on hardware as its bread and butter, but a string of recent announcements suggest that it is not kicking the habit any time soon. News this week that Amino has launched a new Android TV service with regional Japanese cableco Optage demonstrates that hardware could be a vital tool in driving growth for the group’s software offerings.

In the case of Optage, it was the hardware that was demanded first. Speaking to Faultline this week, Amino’s SVP of Global Sales and Marketing, James Mackinlay, explained that Optage already had some vendors offering a video platform, so initially approached Amino for its hardware – the 7X range of set tops.

But, it was the group’s two software offerings that clinched the deal as it was able to pitch for the importance of deploying a supportive Android TV environment. “Our Android propositions are class-leading because of the OS software,” Mackinlay argued.

Optage got two software pieces. AminoOS integrates Android capabilities, offering features such as multicast channels, integrations into the interface, emergency messaging and network PVR, to name a few. Meanwhile, Amino Engage is a device management service and support platform to help operators manage the installation and maintenance of CPE carrying Amino’s software.

One of the main pros of Engage is its service and support module, which allows operators to have their customer service agents remotely install, monitor, and troubleshoot devices, reducing the need for costly truck rolls. Mackinlay noted that often when an operator updates their OS, they can get bombarded with callouts for the most trivial of issues. “Often users are just a bit disorientated. They might think they have lost a bunch of channels simply by clicking the favorites menu,” he told us. Another KPI that Engage has achieved is reducing support call durations.

Engage can also deliver updates to CPE, segmenting the device footprint if a staggered approach is more effective when updating the entire base. The platform’s rollback capabilities also allow operators to turn back the clock on updates if they prove buggy.

For the most part, Amino only offers Engage to customers that purchase its hardware, although Mackinlay did note that there is another channel available. Some OEMs license Amino’s OS, and any operator using this white label software are also granted access to Engage. “We don’t market to an operator with any box, we have to be involved somehow. But if an OEM can deploy our software, we can pick up those models and add them to the mix,” he told us.

There are certainly cheaper alternatives to Amino’s hardware on the market, but Mackinlay made a convincing case that investing early in the deployment of hybrid TV platforms could save money in the long run. Rolling out Android environments can often have hidden costs. For one, Android hardware tends to have a shorter lifespan, while updates and the required certification – a.k.a. an opportunity for things to go wrong – is much more frequent than on Linux-based devices.

Mackinlay felt this reasoning was highly applicable to a high ARPU market such as Japan. “The advantage of the Japanese market is that it respects the added value of a vendor. There are other markets where the price pressure is so intense that they cannot look at optimal ways of doing something. They just need it to be as cheap as possible,” he explained.

Faultline has always regarded Japan as rather unique in the video world, as it is a technologically advanced market where OTT video uptake has taken a different and much slower trajectory compared to most other developed nations.

If we look at the three Japanese operators in Rethink TV’s Operator Profiles, it seems Android TV has yet to make a huge dent. KDDI offers an Android TV service via it’s Panasonic-manufactured IPTV set top, which started shipping in 2016, supported by TiVo’s G-Guide HTML content recommendation and contextual metadata software. The only relevant offering from NTT Docomo is the Huawei-made TV Terminal, powered by iWedia middleware, a HiSilicon SoC, and ARM CPUs and GPUs.

Japan’s other large operator, SoftBank, does not appear to offer an Android TV set top in the traditional sense, although we did come across a 2015 press release announcing that the operator would be exclusively releasing an Android TV-enabled Nexus Player, allowing users to cast internet-based media to a TV. J:Com is another Japanese operator with an Android-based TV platform, running on hardware from Humax and Sumitomo.

Optage’s stomping ground, the Kansai region, has a total population of nearly 23 million, which equates to roughly 10 million households. Optage served 1.6 million of these households in 2016, a number which we would imagine to be somewhere around 1.8 million around now. Amino worked with Itochu, a Japanese systems integrator that has previously partnered with Amino on projects in North America.

This is not Amino’s first outing in Japan. The vendor has previously worked with Japan Digital Service (JDS) on implementing its own Android TV environment. The 200-strong cooperative of small to medium sized operators buys and productizes systems to sell to its customers, and Amino’s environment is currently being trialed with a few of them.

Expanding into new markets is a must for Amino, which has set itself the bold target of reaching $250 million in annual revenues by 2025, 70% of which should be recurring. This is a long way to go from the $82.7 million recorded in 2020, even if last year saw a solid 7% growth.

Even with the acquisition of 24i Media in Q3 2019, Amino Technologies still faces the existential crisis of the vast majority of its revenues still residing outside of higher margin software. While Amino will not be going cold turkey on hardware any time soon, it seems that ramping down the critical value that it brings to the business is high on the to do list.

Mackinlay disclosed that 24i was not part of the deployment with Optage, although he reminded us that the joint vendors have worked together building a joint Android implementation for Dutch MNO Youfone.

Mackinlay argued that Amino’s mission statement is helping operators move forward and modernize their pay TV services, noting that this often means involving Android TV. “Streaming users like pay TV functionality, and vice versa. It is the virtuous connection between those two worlds is what we are focused on as a business, and Android TV provides that,” he explained.