Netgem buys VoxTok in stubborn bid to shake off hardware label  

French multiscreen technology vendor Netgem has deployed millions of set tops across Europe, but the company, like many others today, is putting a lot effort into ridding its marketing campaigns of hardware associations and instead exploring new avenues. Faultline Online Reporter discussed this business transition to a serious software supplier with Netgem’s UK Managing Director, Sylvain Thevenot, including its acquisition of audio platform provider VoxTok last week, and even the possibility of Netgem itself getting snapped up, should the right offer come along.

VokTok, a 20-person French start-up, caught the attention of Netgem when it created an aggregation service for bringing different sources of content onto one platform, combining streaming playlists, CDs and files. VokTok’s software has now been fully integrated into Netgem’s cloud-based Diamond platform, which is being licensed by set top makers including Huawei and Technicolor, with the aim of pushing Diamond to tier 1 and 2 operators across Europe. Netgem has made good on its acquisition promise from a few months ago, although at the time suggested it would be making a purchase in Latin America – but in true French style, it decided to keep it home grown.

On the surface, Diamond sounds like an updated version of Netgem’s TelcoTV which came out in 2015, providing operators, such as EE in the UK, with a platform for offering free and pay as you go entertainment content, including more than 400 channels and thousands of on-demand assets via contracts with Netflix, YouTube, NowTV and more.

The Diamond difference, explained Thevenot, is about creating a connected home experience and extending the life of legacy set tops, whereas TelcoTV was purely a TVaaS (TV-as-a-service) platform. Diamond is really TelcoTV growing of age, and bringing in VokTok’s audio software expertise brings a little something extra to the party for tempting in customers. Although Thevenot said there is no support yet for the larger mainstream music services such as Spotify or Apple Music.

Using Microsoft’s Azure cloud infrastructure, Diamond is offering a flexible cloud-based entertainment platform which claims to offer service providers a simplified CMS thanks to new and personalized editorial tools.

That said, TelcoTV was missing recommendation software when it first launched but this has now been added, and Diamond is apparently taking this to the next step, continuing to enhance algorithms to promote most watched content, using data from its own audience measurement platform. Netgem is debating sourcing outside recommendation software to bulk up its efforts, for which it is currently in discussions with ContentWise in Italy.

In a nut shell, Netgem is now saying to customers, “No problem, take our software and put it on your hardware.” Prior to just a few months ago, that was uncharted territory for the French multiscreen vendor, but is now key to its roadmap going forward.

The first instance of Netgem licensing its software on third party set tops came back in May though a deal with China’s ZTE, to supply set top middleware to Mexican ISP TotalPlay as part of its fiber to the home (FTTH) IPTV expansion plans.

At the time, Faultline Online Reporter suggested that ZTE should consider acquiring Netgem if the TotalPlay deployment was a success, considering ZTE’s track record of failing to replicate its fortunes outside of Asia Pacific. “Of course we would be happy with the right price,” said Thevenot, but added that progress with ZTE in Latin America has been slower than expected, due to the fragmented commercial nature of working with a Chinese equipment giant.

Despite that, Netgem is attempting to knock down doors and win some major contracts through ZTE, hoping to impress by rolling out new software features to customers such as controlling set top functions remotely, and making sure that all customers have the same version of software within 3 to 4 months.

Many vendors tell us that breaking the US is the ultimate end goal but this is not the case for Netgem. Thevenot said the company is careful about the US market and is more interested in completing its work on HbbTV in Germany, a market it officially entered in June to summon a direct threat to Swiss internet TV provider Zattoo. For this, Netgem teamed up with small German B2B platform provider Purtel to build a white-label IPTV product for operators called PurTV, powered by Netgem’s Cloud TV software.

Netgem is experiencing good momentum in its new battle with Zattoo, according to Thevenot, planning to target more small cable operators and ISPs across Europe for similar projects. He highlighted Elisa in Finland as another big expansion project, with the Elisa TV service experiencing a 34% subscriber growth last year.

It has all gone quiet concerning VideoFutur, the Netgem-owned French VoD service, and there were suggestions Netgem was distancing itself from VideoFutur (again) after it formed a joint venture with financial institutions Océinde Group and Caisse des Dépôts (CDC) to provide its TelcoTV platform and bring the VideoFutur brand and business to the venture. This clearly looks as if Netgem is giving away VideoFutur to be run separately and Netgem will retain a share – valuing the new company at €21 million ($23.4 million).

Thevenot denied that Netgem is selling off part of VideoFutur, instead saying that it is creating a joint organization with investors. Thevenot could not provide any subscriber figures for VideoFutur, but claimed numbers are healthy. Most recent figures put it at 100,000 subscribers, as of September 2015.

On the technology side, we discovered in conversation that VideoFutur is no longer using Anevia for packaging, with Netgem choosing to handle this technology itself, while orchestration and storage is still handled by Arkena.

The top line for Netgem in 2018 is to aggressively expand its software-as-a-service business, adding more features such as recommendations, as well as developing its back-end capabilities – ultimately to create more recurring revenues. Market wise, the UK and Germany remain Netgem’s two primary focus areas, with Latin America still a work in progress.