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SeaChange Shows VOD Valor in Q2

SeaChange International Inc. (Nasdaq: SEAC) posted second quarter revenues of $50.7 million, 15 percent higher than year-ago totals, clobbering Wall Street's expectation of $47.6 million. The VOD vendor's results were boosted by revenues from Verizon and cable operators alike. (See SeaChange Posts Q2.)

SeaChange also posted a profit of $1.5 million, or 5 cents a share, compared to a net loss of $7.9 million, or 27 cents a share, a year earlier. That year-ago number included $6 million in severance charges linked to a layoff and impairment charges. (See SeaChange Slims Down.)

Looking ahead, SeaChange maintained a conservative route, reiterating top line growth of 10 percent for fiscal 2009, as it expects video-on-demand (VOD) server and software spending among North American cable MSOs and telcos to remain strong. As in recent periods, Virgin Media Inc. (Nasdaq: VMED) of the U.K. and Comcast Corp. (Nasdaq: CMCSA, CMCSK) were SeaChange's 10 percent or greater customers for the second quarter. Of those two, Comcast is in the process of boosting storage and streaming capacity for "Project Infinity," an initiative aiming for 1,000 high-definition "choices" (including VOD titles) by year's end. (See Comcast Launches 'Project Infinity'.)

Although Cox Communications Inc. has yet to join SeaChange's 10 percent club, it's among the MSOs that looks positioned to get there. Last year, the Atlanta-based MSO opted to standardize its VOD system on SeaChange's "Axiom" software/backoffice platform. (See Cox VOD Effort Matches Vendor Rivals .) Cox has converted six sites to Axiom over the last three quarters, and more conversions are slated for the second half of SeaChange's fiscal year, said SeaChange president, chairman and CEO Bill Styslinger during the company's earnings call Thursday afternoon.

The company was also asked to address a recent court ruling that gave the green light to Cablevision Systems Corp. (NYSE: CVC)'s RS-DVR. (See Court Resurrects Cablevision's Network DVR .)

Predictably, SeaChange said the ruling is good for the vendor across the board. The RS-DVR model means "a lot more streams, a lot more simultaneous usage, a lot more software licenses, [and] hardware sales," said SeaChange chief strategy officer Yvette Kanouff. "And everything being done over the network means it is being done with all the equipment and software that we provide."

SeaChange is Cablevision's primary VOD vendor partner, but the MSO tapped servers from Arroyo Video Solutions (now part of Cisco Systems Inc. (Nasdaq: CSCO)) for its early tech trials. (See Inside Cablevision's 'RS-DVR' .)

Aside from opportunities directly tied to the RS-DVR, SeaChange already has work underway for "ReStart TV," an application that's similar to the "Start Over" service pioneered by Time Warner Cable Inc. (NYSE: TWC). (See SeaChange to Restart & Personalize VOD .)

— Jeff Baumgartner, Site Editor, Cable Digital News

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