We have long said that the early, heady days of IPTV are over and that consolidation is likely to be the order of the day. Apparently that logic is about to hit the Video on Demand server specialists in the market and both Kasenna and Bitband are likely to change hands this year.
To speculate about it is one thing, to hear that the CEOs are attending meetings encouraging likely targets is another, and both companies offer both a mature VoD architecture and a bundle of existing customers that are in the process, albeit quite slowly sometimes, of scaling their installations.
Bitband is perhaps best known for providing the world’s first distributed VoD environment at Fastweb, while and Kasenna has survived the transition from centralized VoD to distributed appliances and has recently entered the market for both middleware and set tops in IPTV, and has a critical co-marketing agreement with Ericsson.
Both have dealings with Cisco, BitBand and Cisco worked on one of the world’s first IPTV installations at Fastweb in Italy and as a result has invested in Cisco through its own investment in a seed fund in Israel, so despite already owning Arroyo, Cisco could swoop for either one.
Kasenna and Ericsson might seem a logical mix but more than six months since they cut their deal, it has resulted in no announced deals together.
Both BitBand and Kasenna have almost certainly had to scale back in an attempt to turn profitable this past year, when few new IPTV deals have been announced, except among the smaller IOCs in the US.
BitBand would make a nice roll-up with other Israeli based operations and we could imagine that Bitband, Orca, Optibase and ECI Telecom, all Israeli companies that operate in IPTV, in VoD servers, middleware, encoders and DSLAMS, would collectively provide an end to end IPTV system, with the addition of a set to maker and a DRM supplier and an integration partner. We would suggest that NDS buys all of them except that NDS has its own MediaHighway IPTV middleware.
If Kasenna cannot interest its European partner in Ericsson, then it has plenty of friends in its native US and it will fetch a pretty penny.
This really is about investors getting jumpy. Some of these companies are VC funded, others like Orca, Optibase and ECO are public companies. They are all looking for scale and a big brand to hide behind to give comfort to operators on IPTV. Ironically it has been the majors in Alcatel and Microsoft, that have undermined the market, first by convincing operators that they were the only ones that could build a ‘scalable’ architecture and then by completely failing to do so in time. Now operators are even more nervous of committing to IPTV, and especially so with an untried new supplier. Hence consolidation.
We have said in the past that the market will fall to the major telecommunications equipment suppliers, Alcatel Lucent, Nokia-Siemens, Nortel, and of course Cisco, and this week, elsewhere in our issue, there is more evidence of that.
In the far east we have the natural paring of Huawei and UTStarcom and perhaps in Israel there needs to be another roll-up, but fronted exactly by who? ECI doesn’t have a broad enough telecommunications product portfolio, nor enough influence around the world, NDS is a loner, so there are some that suggest an outsider, in messaging systems vendor Comverse
Back in September a new research consortium was created in Israel called the NeGeV Consortium (Next Generation Video) funded by $20 million of Israeli government money and including Comverse, Scopus Video Networks, Optibase, SintecMedia, Orca Interactive, Mobixell Networks and BitBand. Who’s to say the subject of acquisition never comes up at any of their meetings.