Vubiquity sale to Amdocs looks like a fire-sale if ever we saw one

To be perfectly honest we never saw the acquisition of Vubiquity – largely a content aggregator, but also a tech provider in video processing – as a likely outcome by Amdocs, which is one of the largest billing services business in the world.

But to have it sold to us through a video featuring Vubiquity CEO Darcy Antonellis, all smiles and delight at the deal, has us wondering just why the usually reserved management at Amdocs have done this deal.

For some time now, Amdocs has been looking at neighboring markets to enter and most of them have been software related. It is good to be writing significant pieces of software at a time when you have 1,000s of software gurus employed, and there may well be spill over benefits.

Our guess is that there is some link we cannot see – a shared investor, a partnership on software in the past or someone who once worked for Amdocs calling people who still do, to hawk the company around.

The outcome acquisition valued at $224 million doesn’t even pay back the money that has been invested in Vubiquity – $100 million in 2012 led by the Carlyle Group, $95.2 million with QED Investors in 2009, and $25 million in 2007 from 4 smaller investors and another $17 million in 2007. That lot totals $237.2 million, and those VC investors, while happy always to get something back, will not be over the moon. So this suggests that Amdocs did not go looking for this deal, but the deal came looking for Amdocs.

So to position it as “Amdocs to acquire Vubiquity to further expand into the media and entertainment business,” is to take us for fools and seems wide of the mark.

Amdocs has recently drifted into building software that is outside of its normal remit, and it has an analytics product, but it only built that to support its Intelligent Operations Center which is a monitoring and governance platform, very adjacent to where it sits today in OSS BSS. It has also said that it uses machine learning to automate and drive up efficiency and this relates back to DevOps, the watchword in agile systems development of the pay TV markets right now.

It also has an eye on the IoT market by plugging existing BSS assets into data collected on sensors and such. And it has developments in NFV for its cellular partners and has partnered with AT&T on ECOMP which provides real-time, policy-driven software automation for NFV.

All those moves make perfect sense, and to some extent taking on-board the transactional movie service software, or the pay per view live event software that Vubiquity uses, or the Reel Vu system it uses for electronic sell through, also make sense as a way of taking operators into a more sophisticated transactional environment, which pushes their reliance on Amdocs further and further. So does TV Everywhere authentication, digital storefront, metadata management, and dynamic ad insertion.

But we’re not so sure about the content aggregation business, which is part and parcel of Vubiquity and as we understand it, the largest contributor to its revenue streams by far. A video has been made citing Amdocs executives and the Vubiquity CEO, all saying what a wonderful thing this is, and none of them mention software, they all talk about making the Vubiquity content available to these operators.

Perhaps this is a spin off from the US, where broadcast and pay TV operators alike are knocking out skinny bundles by the week, but the rest of the world doesn’t work like that and most of them have local systems in place for OTT delivery.

It could be that the internal systems at Vubiquity – media asset management and service management systems – are the true gems and will be rolled out to clients – but if they were, surely one of the executives would have mentioned it in those videos.

So as much as we respect both companies, this looks like a deal that has not been thought through. That doesn’t mean that it won’t get thought through once it arrives at Amdocs, and perhaps someone will realize that selling content alongside billing software is a little incongruous. It should keep the software and perhaps throw the content aggregation business away – but then why would it pay $224 million for that?

The release said that the company is now uniquely positioned to deliver a set of comprehensive content offerings, so customers can redirect operations, enable large libraries for global distribution, and efficiently monetize their content offerings.

Vubiquity, based in Los Angeles, says it is working with 600 film studios, television networks, and independent producers and has a footprint in 121 countries and 80 languages and manages a 150,000+ asset library.