SeaChange International, one of the most significant contributors to VoD technology over the years, is cutting more jobs in North America to offset net losses amounting to $22.3 million last quarter alone. It is slightly perplexing as to what is causing the SeaChange ship to sink, considering it has a client list with some giant names, but perhaps some customers are de-emphasizing their reliance on SeaChange in favor of a new wave of OTT rivals in VoD.
The company’s extended period of financial dismay makes it easy to jump to the conclusion that SeaChange is drifting dangerously towards its last goodbye, but it is being kept afloat by a customer list that boasts players which include Verizon, Comcast, Cablevision and Cox in the US, plus Liberty Global, Vodafone, Virgin Media and the BBC in Europe.
If any of these larger firms decide to switch out their existing SeaChange products, which include video servers, content management systems and addressable advertising software, instead of upgrading to its newer suite of services, it would be calamitous for SeaChange. Time Warner Cable is a notable omission from the SeaChange website – a contract it won 20 years ago and at some point it has clearly lost it.
SeaChange has evolved to a multiscreen software vendor but the growing focus on this strategy is one of the company’s core problems, showing how it is not just the pay TV operators that can be bludgeoned by OTT.
The thinning down within SeaChange is nothing new, and back in April the company ousted CEO Jay Samit after only appointing him in October 2014, reportedly resulting in savings of $7 million. One of Samit’s first moves was to boost SeaChange’s multiscreen portfolio with the acquisition of Timeline Labs (TLL) in February 2015. This looked to be a good buy for SeaChange at the time, giving it a firmer foothold among broadcasters expanding rapidly into OTT and multiscreen, but this has evidently not been the saving grace it had hoped for.
Exactly how many additional jobs are set to be cut by SeaChange has been kept under wraps for now, but it already scrapped 200 positions last year to leave it with less than 500 employees and it expects to make additional savings of some $8.1 million from the fresh cuts to total estimated savings of $30 million over the past year. The latest lay-offs will come at a restructuring and severance cost of $1.5 million, but it does not detail how many jobs will go.
New CEO Ed Terino is hopeful that SeaChange can make a miraculous turnaround as 20 customers are expected to upgrade to its Adrenalin software, from its legacy Axiom system. Terino also said SeaChange’s Rave OTT platform and NitroX UI also have potential deployments lined up, but these projects will have to win big at more than just a handful of fledgling operators to offset the 31% decline in revenues SeaChange reported last month.
These alone, along with the job slashes, will not be enough to restore profitability at the current run rate, since the company posted a net loss of $47.7 million for 2016, almost $20 million more than the previous year. Revenue for the last quarter was $27.2 million, down from $28.7 in Q3. Opex rocketed to $37.5 million for Q4, a quarterly rise of $18.8 million.
Recent customer additions over the past year include Panama-based operator Cable Onda, Estonia’s Starman and Canadian cableco Cogeco. A silver lining is that SeaChange has no outstanding debt and cash of approximately $38 million. Do we sense an acquisition on the horizon? Someone buying out SeaChange to capture is existing customers base? We’ll keep you posted.