Cisco Fertilizes Widevine

Digital rights management (DRM) specialist Widevine Technologies Inc. scored a triple whammy today -- it raised $16 million, and in doing so received a vote of confidence from a major infrastructure firm, Cisco Systems Inc. (Nasdaq: CSCO), and from a telecom operator with IPTV aspirations, Telus Corp. (NYSE: TU; Toronto: T), both of which contributed to the investment round. (See Widevine Scores $16M and Telus Selects Alcatel.)

Cisco and Telus Ventures were just two of the investors in Widevine's C round, with previous investors VantagePoint Venture Partners , Constellation Ventures , Pacesetter Capital , and Phoenix Partners , also contributing.

The company has now raised $62 million in total, and claims to be breaking even on a quarterly basis, though it doesn't release any revenue details. It says it will use the funds to expand further its sales and marketing capabilities in Europe, Asia/Pacific, and Latin America, and invest further in its core technology and intellectual property. Widevine has emerged as one of the key independent suppliers of DRM technology to telecom and cable operators, which need to ensure their content partners that content delivered over their networks is secure, traceable and billable. (See IPTV Security: Content Is King.)

The company, which was recently awarded a significant patent, currently claims to have more than 90 customers for its hardware and software-based Cypher content security system, including IPTV service providers such as Chunghwa Telecom Co. Ltd. (NYSE: CHT) and Telefónica SA (NYSE: TEF). (See Widevine Awarded DRM Patent and Widevine Simplifies Content Protection.)

So why is Cisco investing in Widevine? Is it planning to make the DRM firm its latest IPTV acquisition? (See Cisco to Acquire Scientific-Atlanta.)

Cisco spokesman Ron Piovesan says he can't comment on whether there are any ongoing talks or plans for an acquisition, but adds that Cisco "doesn't generally acquire the companies it invests in."

He says the leading rationale behind the investment -- which neither party is giving details about -- is that Widevine's technology is "open." It can be integrated into any equipment from any vendor, and that makes it interesting."

According to Piovesan, Widevine's Cypher will be integrated into Scientific Atlanta set-top boxes, but that Widevine is not a preferred vendor. "Similar technology from other companies will also be integrated into our set-top boxes," says Piovesan.

Those other DRM players -- which also face competition from the likes of Microsoft Corp. (Nasdaq: MSFT), which has developed its own content protection technology as part of its IPTV suite -- include Verimatrix Inc. , Irdeto Access B.V. , Kasenna Inc. , Latens Systems Ltd. , Nagravision SA , NDS Ltd. , and SafeNet Inc. (Nasdaq: SFNT). (See Will Video Kill the DRM Stars?, Verimatrix Wins Consolidated, 3 Italia Uses Nagravision, SafeNet Wins BT Deal, and NDS Secures Softbank's IPTV.)

— Ray Le Maistre, International News Editor, Light Reading

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