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Cox VOD Effort Matches Vendor Rivals

Concurrent Computer Corp. (Nasdaq: CCUR) and SeaChange International Inc. (Nasdaq: SEAC), once sworn enemies in the video-on-demand (VOD) space, seem to be playing nice now, thanks to a major upgrade deal they've secured with Cox Communications Inc. (See Concurrent, Cox Ink VOD Deal.)

Cox, the third largest MSO in the U.S., will standardize all of its VOD systems on Concurrent's MediaHawk 4500 server and content delivery platform and SeaChange's Axiom backoffice platform. Concurrent and SeaChange each used to sell their hardware and software combined, but, spurred on by MSO demands, they decoupled those components and began to integrate their equipment and software with those of traditional rivals. (See Concurrent Opens Its Back Office .)

Cox has not said how quickly it expects to complete the across-the-board upgrade, but what's installed from this point is expected to mirror the VOD vendor structure Cox recently fused together in Phoenix, Ariz. (See Cox Closes VOD Gap .)

SeaChange declined to comment on Tuesday's announcement, but SeaChange CEO Bill Styslinger, in an earnings call last month, confirmed SeaChange's involvement in Phoenix, also mentioning that another three Cox sites signed up for similar integrations using the Axiom platform during the fourth quarter of 2007. "We expect Phoenix will be the model for Cox going forward," he said. (See SeaChange Profits in Q4 .)

Several MSOs are in the midst of VOD system upgrades to ensure they can handle heavier stream counts, broader content libraries, and bandwidth-eaters like HD-VOD. (See RCN Upgrades VOD Systems.) In addition to HD-VOD, Cox has started to offer "My Primetime," an ad-supported service that offers some of the top broadcast network shows via VOD, including ABC's Lost and Grey's Anatomy.

Concurrent's MediaHawk 4500 can handle 2,300 simultaneous standard-def streams (which run at 3.75 Mbit/s apiece using MPEG-2). If the server was dedicated to hi-def, it would be capable of handling 575 on-demand streams, based on the CableLabs "safe harbor" bit rate for MPEG-2-encoded HD-VOD.

Concurrent did not disclose the financial terms of the new master purchase agreement, but the deal also includes a license for Concurrent's targeted advertising patent portfolio, which includes some intellectual property of Everstream Holdings Inc. Concurrent purchased Everstream in August 2005 for about $15 million. (See Concurrent Acquires Everstream.)

That could be significant as the nation's major MSOs row ahead on "Project Canoe," an advanced advertising initiative that will attempt to stem the amount of ad dollars leaking to the Internet. Earlier this year, Concurrent president and CEO Gary Trimm said his company had made the project's shortlist. (See Who's Rowing 'Project Canoe'? , Up the River Without a Paddle , Cable's 'Canoe' RFI Paddles Toward Deadline, and Oar in the Water? )

Concurrent EVP Kirk Somers said Project Canoe and the advanced advertising licensing deal with Cox are independent of one another.

Prior to the new deal, Concurrent already had a 77 percent share of Cox's VOD footprint, based on MSO subscriber counts. Although Concurrent won't be supplying the back-office component as Cox makes its upgrades, the vendor says the deal will have a positive effect on its bottom line.

"It will certainly be a gain," Somers says, noting that revenues from earlier backoffice deployments have already been captured by Concurrent, which reports its fiscal third-quarter results on Friday, April 25.

Concurrent and SeaChange got a boost from the Cox deal. Concurrent's stock, in need of some help, closed Tuesday at 80 cents per share, up 10 cents, or 14.45 percent. SeaChange shares rose 42 cents, closing at $7.45 each.

— Jeff Baumgartner, Site Editor, Cable Digital News

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