Vantiva CEO on life after the Technicolor separation and spin-out

Technicolor is a name that's long been associated with Hollywood, and a brand that some might think is as old as Hollywood itself. Vantiva? Well, that's something new … and old.

As part of a transaction executed last month involving a separation and spin-out, Technicolor officially changed its corporate name to Vantiva, a company that now contains what used to be known as the Connected Home unit of Technicolor. Meanwhile, the Technicolor brand will carry on at a completely separate company called Technicolor Creative Studios.

Light Reading recently caught up with Luis Martinez-Amago, Vantiva's CEO, to get a better understanding of the transaction, what's next for the company and what all this means for service providers that use or want to buy Vantiva's range of broadband and video customer premises equipment (CPE) and supply chain management capabilities.

Figure 1: Prior to being named CEO of Vantiva early this year, Luis Martinez-Amago was president of Technicolor's Connected Home division.
(Source: Vantiva)

Regarding the reasoning behind the move, Martinez-Amago said that prior to the transaction, Technicolor suffered from a "conglomerate discount" with different businesses that worked in different industries. This caused the combination to be less valuable than the individual pieces.

Vantiva effectively spun out 65% of the "new" Technicolor (now Technicolor Creative Studios), which is fully focused on Hollywood opportunities like visual effects for games, movies and advertising. Both Technicolor and Vantiva are now trading as independent companies, though Vantiva retained 35% of Technicolor Creative Studios.

However, Vantiva intends to sell its stake to help repay about $375 million in debt and effectively deleverage the company moving forward. That sale will commence "as soon as the market conditions are appropriate," Martinez-Amago said, noting that there's no "urgency" to rush a transaction.

What does remain at Vantiva – whether it sells the Technicolor Creative Studios stake next week or next year – includes the former Technicolor Connected Home business. That unit develops software for customer premises equipment (CPE) and the devices themselves, including products such as DOCSIS modems and gateways, set-top boxes, streaming players, Wi-Fi equipment and even some IoT products and technologies. Vantiva also has a supply chain solutions business and a unit that produces DVDs and vinyl records.

CPE plays critical role

Martinez-Amago, a former Alcatel-Lucent exec who joined Technicolor about seven years ago, acknowledges that CPE is a high-volume/low-margin business. But it also represents "quite a strategic asset" for Vantiva's customers, he added.

"It is extremely attached to the customer experience and very important for the net promotor score that most of our customers are tracking," Martinez-Amago explained. "That's because you are exposed to the quality of the broadband, the Wi-Fi in the home and the quality of the experience on the TV. It has a lot of influence on the key KPIs [key performance indicators] that our customers, the service providers, are tracking."

Supply chain issues improving, but still a 'mixed bag'

CPE costs – and keeping them in check – are also important as operators look for ways to keep their capital expenditures under control. Martinez-Amago believes that Vantiva's work in the supply chain management and logistics world gives the company an advantage in terms of procuring components at relatively lower costs that can be carried over to final products.

Supply chain management "is a very critical competence that we need to have," he said.

Martinez-Amago notes that constraints on the supply chain are loosening up but still remain a "mixed bag." While Vantiva and others are starting to see some pricing relief in areas such as memory, there are still "significant shortages" with systems-on-a-chip (SoC), he said, adding that he expects the SoC situation to remain strained until at least the first half of 2023.

"The jury's still out," Martinez-Amago said. "We are observing and keeping our partnerships. We're doing quite well in terms of terms of supply because of those partnerships and the level of control we have on our supply chain. There have been significant improvements in recent weeks, but not back to original level."

CPE shifts to broadband and more complex devices

Martinez-Amago estimates that the CPE breakdown at Vantiva is now 60% broadband and 40% video, figures that were flipped in years past. In some quarters, the difference has been even more stark, with about 70% of the sales focused on broadband CPE, he said.

But Martinez-Amago points out that the devices that deliver those services are becoming more complex as operators seek out gateways that can not only manage the broadband connection to the house, but also the home network, particularly as new technologies such as Wi-Fi 6E and Wi-Fi 7 become more prominent.

Shifting to cable, Martinez-Amago said he expects Vantiva to participate in the emerging market for DOCSIS 4.0 CPE, citing the company's long-standing partnership with Broadcom. But Vantiva isn't ready to discuss specifics about D4.0 products or production timelines.

"We are a leader in DOCSIS, and we plan to keep this leadership moving forward," he said.

Vantiva is also exploring additional product areas, including a relatively new "Soundscape" soundbar that integrates the functions of a set-top box. Some of that early work has been focused on an Android TV-powered product for the South Korean market. Vantiva also showed off that handiwork at the recent SCTE Cable-Tec Expo in Philadelphia.

Although there has been momentum among service providers such as Comcast with integrated smart TVs, that won't be a focus for Vantiva's business.

"The soundbar, in our opinion, is a bit less disruptive than changing [the consumer's] TV," Martinez-Amago said, noting that Vantiva won't be getting into a smart TV market that would require the company to build multiple models and operate a wider range of inventories.

On the set-top side, Vantiva is also experimenting with services aimed at extending the life of those devices with games and a Peloton-like fitness app that was recently demonstrated at the IBC show in Amsterdam. Vantiva is also exploring other concepts and ideas through a "Hero" certification to help third-party developers create new apps and services for platforms such as the Reference Design Kit (RDK).

Emerging focus on 'IoT for verticals'

Martinez-Amago said Vantiva intends to "double-up" its focus on broadband and video but noted that he's also seeking to further diversify the company's business. One example is an "IoT for verticals" – Vantiva is building IoT gateways that collect data from sensors and pump that information back to cloud-based management platforms.

That activity fits in with IoT use cases for warehouses, factories and hotels, Martinez-Amago said, adding that Vantiva has trials underway and has already established a partnership with AWS to help flesh out the offering.

"We are developing the pipeline in 2023. We expect this to get some growth in 2024," Martinez-Amago said.

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— Jeff Baumgartner, Senior Editor, Light Reading