US DRM specialist Widevine has gone back to the well for another $15 million of venture funding, which begs the question, just what does it have to do to become cash positive. Rivals have asked this not only of Widevine, but many of the smaller DRM players, including Verimatrix and Secure Media, which began life aiming at software only based IPTV content protection.
Since then they have found that unlike the old, established profitable conditional access firms such as Nagravision, Irdeto and NDS, it is tough to turn a dollar in the current downturn and all IPTV companies were hit when the market suddenly shrank in opportunity once Microsoft Mediaroom took out 20 of the top tier one Telco accounts, between 2004 and 2006, including the supplying of its own hardware assisted DRM system.
Since then all of these businesses have chased a variety of slightly different systems from watermarking to three screen strategies, to mobile TV and wholesaled IPTV models, each time looking for the point where they will no longer burn cash. We are constantly reminded of this every time we speak to Andy Mathieson, one of the directors at Irish rival Latens, who says that his company is focussed on profitability and remains profitable. The others would argue that Latens also remains insignificantly small, but we see his point.
DRM is a grudge spend. If you turn up, like NDS, with an entire infrastructure ‘ the middleware, the EPG server, the smart cards, the set top designs AND conditional access, it is a more palatable spend. If you simply come around after the content owners have been visiting, and going on about protecting their assets, and you promise them more secure content, and nothing else, then it does very little directly for the operator.
Which is why they have all been looking to find ways to add to their appeal, and to ship DRM in by the back door, on the wings of another important component in the pay TV offering.
But the investors in Widevine this time around, give the game away, including Liberty Global, Samsung’s VC arm and one unnamed player, and this looks like a clear cut trade investment.
Widevine makes it clear that it has had some of the ‘TV Everywhere pie’ from similar US companies and a day after this investment also announced a strategic deal with the on demand online film service of Blockbuster. One of Widevine’s claims to fame is that it was one of three DRMs used in the CinemaNow deployment under its new owner, Sonic Solutions (which also underpins the Blockbuster system), and that it could cope with domain level authentication for multiple devices in the home, and could work with an online rights locker. It also offered those capabilities, on a PC, way ahead of Microsoft, which had the embarrassment of introducing some of its broadcasting clients to Widevine before it got its new PlayReady DRM working with Silverlight. Widevine can also offer its DRM with multiple formats of internet video on the same system.
The TV Everywhere strategies of companies like Comcast are likely to require the same type of features and make DRM more or less disappear except for people who are trying to get around it.
Given that Liberty Global, not Liberty Media, is in this round of investment, it looks like Widevine would be a good bet to win some business at the European cable installations of Liberty’s which are spread throughout about nine countries there, but which is particularly strong in the Netherlands and in its recent German acquisition of Unity Media. It doesn’t take a genius to suggest that these operations will soon be implementing a TV Everywhere service.
According to Widevine it is also natively supported in nearly all major brands of connected consumer electronics equipment including TVs, Blu-ray players, mobile devices and gaming systems, so where these are the outlets for TV Everywhere strategies, it might have an edge. Having said that, we’ve heard scant announcements from Widevine of that nature, so we shall just have to take its word on that.
‘Widevine will use the additional capital to support and grow our customer base, broaden our product portfolio and defend our intellectual property,’ said Widevine CEO Brian Baker.
Widevine employs about 50 people and has raised $51.8 million in the past 6 years with investors including Cisco, Charter Ventures, Constellation Ventures, Dai Nippon and VantagePoint Venture Partners.