UK set top vendor Pace had a string of announcements around its annual results this week, which reflect, as we have said in an earlier story, that the set top market place is in a state of flux right now.
Pace had strong results for 2009, with revenues up 52% to £1.1 billion ($1.7 billion) and profit before tax of £70 million ($105 million) and it is starting to have a decent amount of cash in the bank at £73.5 million, nearly double a year earlier.
Pace is flourishing at a time when both Technicolor (recently renamed from Thomson) and Motorola, two of the world’s leading set top makers, have fallen on hard times and Pace shipped more devices and took more revenues on those devices than Technicolor for the first time.
Pace said that in 2009 revenues were well balanced across all geographies and that it has a leadership in HD, and began new HD shipments at Comcast, Cablevision (Argentina), Net Brazil, Sky Germany and Astro.
The deal with Astro was one of the other Pace announcements, providing a set top to support Malaysia’s first HD service for direct-to-home (DTH) satellite payTV operator Astro. Astro currently broadcasts 100 payTV channels across Malaysia and Brunei to around 2.8 million subscribers. It will now add five new HD channels.
The other big piece of news for Pace this week was the fact that UK researcher Screen Digest, now rates it as the second largest set top maker in the world. Pace has had big gains this year, partly because of its takeover of the Philips set top division, but also because of this strength in getting early to gaining a widely accepted HD devices across all pay TV technologies.
Not only must Pace have bypassed Technicolor in set top shipments, if this Screen Digest figure is right, it must also have shipped more than Cisco’s Scientific Atlanta acquisition, which does not break out shipments or revenues. We already know that Motorola is at least 20% down on the devices that it has shipped this past year, which means that companies like Pace ‘ talented and nimble independents if you like, are taking much of the new business.
Anecdotally we have also heard that Technicolor and Motorola, especially in Europe, where Technicolor was strong and Motorola relied largely on its Kreatel acquisition and so was weaker, are being panned by independents.
Pace points to a long HD future saying that only a handful of pay TV sites have made the transition to HD and that it will fuel much of its future revenues. HD is just one of the significant changes taking place in TV. There are also DVR, hybrid, over the top on demand content, broadband, whole home TV and then will come 3D.
In this environment it should not just be Pace that’s doing rather well. Instead, wherever a set top maker has not done well from the second half of 2009 through to the completion of the first half of 2010, it shows one of two things ‘ products which are not advanced enough, or the company is not in tune with what the market wants.
Pace said it was the leader in Europe having delivered 6.2 million set-tops in Europe compared to 4.7 million a year before. It shipped 1.3m in its Rest of the World region, but a massive 9.7 million devices in all of the Americas, making 17.2 million in total. South America is now ramping for HD, whereas Pace is also picking up US deals, including its first HD shipments for Comcast. Average selling prices went up from £57 to £66, and in the first half were £62 and the second, £70.
Pace talks as well about the new over-the-top services, and here Pace has felt the need to shore up its product line, by purchasing Bewan Systems, a Paris based IP and cable gateway specialist, paying just €12.5 million. Bewan also has cable expertise in DOCSIS 3, which would be another new departure for Pace, and Bewan has even been known to be working in femtocells, which might make a nice addition to a residential gateway.
This is significant and it shows that Pace remains responsive to what’s happening around it and, unlike Motorola, Cisco’s Scientific Atlanta and Technicolor, it can respond to new market niches, before they grow out of all proportion and swamp the business. Bewan has customers in Europe, North Africa and the Middle East will further widen Pace’s global reach.