Of all the technologies that make up the media and entertainment space, digital security has – ironically – been one of the most vulnerable to the economic impacts of Covid-19. By the same token, it has become cliché to generalize content security and anti-piracy as afterthoughts, but when your industry was on the backburner long before the pandemic, then panic-stricken budget-squeezing and supply chain slowdowns are always going to hit you hardest.
Yet you wouldn’t notice any signs of recent market turbulence from digesting the latest Kudelski Group results. The Swiss firm’s Digital TV sector has pulled off a masterful turn of events in the first six months of 2021, building on momentum seen in the second half of 2020.
Digital TV revenues grew 7.6% to $168.4 million in H1 2021, from total revenue of $340.5 million, up from $320.1 million for H1 2020, while EBITDA for the Digital TV segment increased by 15.5% from the previous first half. The results are reflective of the resilience of the TV marketplace, which cannot be said for other sectors such as public access. Rivals of Nagra are often quick to mock the company’s reliance on hardware, yet hardware sales continue to grow with conditional access modules and set top shipments boosting the company’s Digital TV division into a post-pandemic recovery.
All the while the vendor continues to streamline operations, reducing operating expenses for Digital TV by $3.3 million compared to the first half of 2020.
Vodafone is namedropped as a highlight from the first half of this year, as the operator continues to expand its reliance on Nagra’s Security Services Platform (SSP) technology, generating higher volumes in Germany in particular. The Italian market has also posted strong growth so far this year, with higher shipments of smart cards and conditional access modules.
There are high hopes for Nagra’s emerging sports-focused efforts too. Its sports-as-a-service offering was unleashed last year, quickly picking up the signatures of field hockey franchise FIH and motor racing outfit PMH, where it aggregates all matches for viewing by anyone around the world, and says it added another significant sport in the first half of 2021.
Here, Nagra sees a democratic shift of sports to OTT and D2C channels, allowing fans to watch niche sports anywhere, aiming to lift the numerous little-known sports leagues, while future opportunities might arise at bigger fish if sports leagues decide to follow in the footsteps of the likes of Spain’s La Liga.
Regionally, Nagra’s European Digital TV business accounted for revenue of $82.4 million, a year on year increase of nearly $18 million, while the Americas contributed $51.6 million, a disappointing decline of around $12 million on the same period last year. Digital TV revenue in Asia and Africa experienced growth of almost $6 million, climbing to $32.4 million, with recovery here driven by higher sales of hybrid IPTV/OTT devices at Singaporean telco Starhub.
The revenue erosion experienced in the Americas was mostly due to weak Latin American markets which are still suffering from pandemic headwinds. While its US business was stronger, there were knock-on effects of the pull-forward trend experienced by the TV industry in 2020, as revenues from Nagra’s contract with Altice USA declined slightly over last year, due to the base effect of the US pay TV and broadband operator’s strong 2020.
In Android TV, Nagra achieved a milestone earlier this year with its debut deployment in India using the Google MediaCAS framework for cardless content protection, on a new Operator Tier set top from Indian MSO SITI Networks, part of the giant Essel Group.
A handful of successes in forensic watermarking have also cropped up during recent months, with Nagra’s NexGuard technology winning deals at South Korea’s SK Broadband, as well as a less orthodox cameo at film festival platform provider Eventive. Forensic watermarking is a field that Faultline will be keeping an even closer eye on than we already were, following Synamedia’s recent entrance via the acquisition of ContentArmor.
Elsewhere, away from the core security business, there was a notable win back in March for the Swiss firm’s DVnor Media Asset Management (MAM) system at Telenor Norway. It equips the Nordic operator with extra capacity on its VoD platform through a simplified content preparation and distribution system – enabling fast and efficient onboarding of new content including the entire catalog of originals from NENT’s Viaplay streaming service.
The long-term implications of Covid-19 are still affecting demand in emerging markets for Kudelski Group, with the company pinning some project delays on third-party suppliers’ inability to deliver the required equipment. Disruption has also hampered the cybersecurity business, as the company – like everyone else – was blocked from engaging physically with new clients and therefore slowing sales activities and delaying delivery of services which it says are traditionally delivered in person.
Public access has been the business area most severely wounded by the pandemic, as large customers such as airports, stadiums, and shopping centers postponed new deployments and asset refreshment projects.
Kudelski’s star of the show in pure growth terms for H1 2021 was the group’s fledgling Internet of Things segment. IoT revenues increased by 155.5% to $2.6 million, boosted by the opening of additional distribution channels with some of the world’s most prominent (but unnamed) contract manufacturers for its Kudelski IoT KeyStream product, a device-to-cloud technology for securing assets of any IoT application, from smart energy, wearables, connected cars, smart cities, and asset tracking.