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19 May 2022

Nagra expresses zero-love for zero-code, as watermarking ticks up

Nagra’s Active Streaming Protection suite is going toe-to-toe with the likes of Synamedia ServiceGuard and Verimatrix Streamkeeper – three relatively nascent products born within the last two years which not only signal the transition of pay TV traditionalists to cloud-based OTT security, but also the broader consolidation happening around content protection services.

Multi-DRM is not a multi-million dollar business. Conditional access still accounts for a sizable slice of security revenues, but is not a futureproof business. Forensic watermarking is breaking free from the shackles of premium studios, in turn leading to actual anti-piracy actions, such as takedowns, although forensic watermarking is still not what we’d call a cash cow.

So, where does that leave the market?

As a result, video security vendors are rolling up what they call holistic anti-piracy services, mostly available on a SaaS basis. While impressive in comprehension, the individual technologies and services within these toolkits are fundamentally worth less to a business.

A striking example is Nagra’s annual revenue in the digital TV segment, which has fallen from $535.5 million in 2017, to $363.4 million in 2021. Nearly $200 million wiped off the books in just four years would be enough to cripple some organizations, but the Kudelski Group isn’t any old company.

In our first catch-up with Nagra in perhaps two years, we tried to clear the air this week with Tim Pearson, Senior Director of Product Marketing at the Swiss firm. As any experienced marketing professional would, Pearson pussyfooted around the financials, instead guiding us into how Nagra is deftly bringing together capabilities of the group into a single battle-hardened product.

Putting cybersecurity together with anti-piracy services is a focal point for the company heading into events like the recent NAB and this week’s CabSat in Dubai.

Pearson identifies credential sharing, CDN theft, and app hardening as three more specific areas that Nagra is homing in on, as well as the cybersecurity segment via the new standalone Nagra Scout product.

The diversity in Nagra’s product portfolio is something that has flown under the radar, dwarfed by the hundreds of $millions made from pay TV and supplemented by the Kudelski Group’s enterprise cybersecurity business. As the traditional business erodes, emerging areas are being forced to the fore.

We are glad Pearson brings up app hardening, as Verimatrix’s proprietary zero-code injection technology has drawn mixed responses from the industry. Customers love the idea of real-time threat intelligence, not only for OTT but also for pay TV customers, by injecting zero-code into set tops where it protects CDN access without costly and laborious integration efforts, while meeting stringent studio requirements.

Nagra counters that while a zero-code approach is easier to implement, it provides a lower level of security than a code-based application protection approach. Nagra favors the code-based approach used in its Active Streaming Protection framework, which the company feels is better suited to its big-spending content customers.

Reading between the lines, this is Nagra saying it has bigger and wealthier customers than the competition, who have little interest in paying less for a zero-code injection approach to app hardening.

On the other hand, some rivals are intrigued by zero-code injection to the extent they are exploring copycat approaches to zero-code app protection, while other competitors are dubious about the value in zero-code injection technology – viewing it as a basic market demand.

Nagra of course is active in app hardening around the obfuscation of code, while the zero-code approach allows non-coders to develop custom software without the timely and costly process of going back and forth between customer and programmer. Verimatrix’s proprietary approach to zero-code claims to sniff out previously obscured piracy attacks, which again is something Nagra’s toolbox claims to match.

With CDN theft, Nagra’s Active Streaming team has been busy monitoring access credentials and anomalies, working with providers like Akamai rather than competing with in-house security offerings, according to Pearson.

We mention this seems strange, given that Akamai’s cybersecurity business is flourishing, but Pearson ensures us Nagra’s media-related skills help create a holistic level security view on the CDN front.

As for the not-so-new phenomenon of credential sharing, which has only blown up because Netflix has made a song and dance about it, Nagra’s Active Streaming is more on the side of pattern-spotting in illicit password sharing, rather than charging gung-ho at casual password sharers. This is a sensible move, while companies like Netflix might live to regret such crackdowns.

Forensic watermarking was mentioned in Nagra’s latest financial report as one new business initiative that will help stabilize tumbling revenues by 2026, by protecting premium OTT content.

As we alluded to earlier, forensic watermarking is finding business outside of premium Hollywood studio content, with the gaming sector taking notice. Nagra has recently landed a large gaming studio customer for forensic watermarking, and Pearson also mentions that a public service broadcaster is recruiting its forensic watermarking expertise.

The reason forensic watermarking is finding favor in gaming is due to games studios sending out pre-release content to reviewers and influencers.

For example, a studio might want a prominent Twitch streamer or YouTuber to stream their content to millions of subs, without it being stolen and used by other content providers before the title is officially released.

Other services on Nagra’s stabilization roadmap include Insight, its viewership behavioral analytics system, and Sporfie, a mobile app for recording and clipping sports content. Nagra Scout, the home network protection service launched around CES 2021, still doesn’t have any customers, although we learn that discussions are ongoing for trials.

Employing multiple DRMs protects content from leaks and theft, while forensic watermarking can track down pirated content and distribution channels to the source if (or when) a breach has been made, so that anti-piracy measures like takedowns can be taken.

Vodafone TV is the largest public customer of Active Streaming right now, and they don’t come much bigger than that.