SES has sold part of MX1 – the satellite fleet operator’s prodigal OTT-centric spin off – in a bizarre series of events reflective of a company which doesn’t know whether it’s coming or going. Why on earth would SES cut off part of a business it only just finished reintegrating into the core SES Video segment?
Faultline’s first thought was how the sale reeked of a series of serious mismanagement choices which have ultimately resulted in SES exiting a highly lucrative video streaming market. But there is some method in the madness. MX1 UK is expert in content preparation, which by SES’s own admission is not an integral part of its roadmap going forwards. For once, we have to agree with SES’s reasoning here.
The declining value of content production and workflow chains, and subsequent consolidation of this market, is no well-kept secret and for a company serving the satellite sector and bringing core OTT video technologies in-house, you have to question the long-term value of a content production outfit to SES.
So, a virtually unknown company called Visual Data Media Services, a digital supply chain services supplier, has acquired MX1 UK for an undisclosed fee.
SES said in an emailed statement to Faultline, “Our video business has been undergoing a transformation for the last few months, and part of this includes bringing the former MX1 and SES teams together into one market-facing team where we will be providing a whole range of end-to-end managed services to our customers. However, given our strategic priorities at SES, we see content preparation services as part of the value chain where we would be working with partners as opposed to having a team in-house.”
“Given the focus of SES Video on core services going forward, selling MX1 UK to Visual Data is the best outcome for both customers and employees. Visual Data is a renowned player in this specific market. This divestiture is just part of the process as we continue to transform our business,” SES continued.
Only a month ago, Faultline ran the headline ‘Rushed re-merger of MX1 into SES Video risks customer confusion’. Despite us agreeing that the sale of MX1 UK is a sensible move, such a sentiment about confused customers has been exacerbated by the move, although SES did tell us that Visual Data Media Services has an “excellent record of smooth transition in the context of acquisitions, and is best suited to enable the growth of those services.”
SES says its focus remains on hybrid content distribution, content management and monetization services, while reiterating its commitment to the core satellite delivery business to customers in the UK. Visual Data Media Services, meanwhile, offers preparation technologies centered around a CMS, including localization services like dubbing and subtitles, plus media services such as quality control and remastering, as well as offering distribution services.
SES is faced with video revenues dropping under €300 million a quarter at the current curve, after reporting a year on year decline of €16.7 million in Q3 2019. This includes a drop in total MX1 revenue, due to the discontinuation of certain low-margin legacy services in the third quarter holding back the positive contribution from other, more value-added products and services (such as sports). We can now only assume that this was mainly in the UK market.
Visual Data Media Services (which confusingly operates under the acronym VDMS associated mostly with Verizon Digital Media Services) promises to invest substantially in 4K, HDR and IMF (Interoperable Mastering Format). The latter is a standard aimed at removing production costs for studios, which we have never heard MX1 nor SES mention in the past – so a new lease of life for the UK part of the company under Visual Data.
IMF dates back at least a decade but has been actively promoted by the SMPTE since around 2016 as a type of mezzanine format containing all the data required for studios to prepare the file just once. The aim is to avoid having to create 500 different versions for different encoding densities, different color combinations, or screen brightness, or a variety of “director’s cut” endings, or those with different subtitles. An evolution of the Digital Cinema Package (DCP), IMF also incorporates the Material Exchange Format (MXF) container format.
Visual Data Media Services’ MD Symon Roue said, “We are active consolidators in the global media services and content preparation market. This transaction continues our current UK expansion program, and we were particularly attracted to the talented operational and management teams at MX1 UK. This acquisition continues our growth in the media services, localization and content preparation market.”