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Video software

SeaChange Softens Up, Cuts Staff

SeaChange International Inc. (Nasdaq: SEAC) announced a string of significant changes as it reported fourth-quarter numbers Thursday, including new presidential appointments and some layoffs linked to a decision to spawn a software-focused business unit. (See SeaChange Posts Q4, Names New Prez.)

Among the personnel changes, SeaChange president and COO Ed Dunbar has swung out of the exit door, while Yvette Kanouff, most recently the company's chief strategy officer, has been promoted to president. She'll run SeaChange's overall product strategy, business development, product, management, and communications and investor relations functions.

SeaChange also promoted Erwin van Dommelen to president of software. He joined SeaChange last year by way of its $36.5 million acquisition of Dutch video software company eventIS Group B.V., where he had served as president. (See SeaChange Goes Dutch for VoD Smarts.)

"The future of our company is software-centric," SeaChange chairman and CEO Bill Styslinger declared on Thursday afternoon's earnings call.

SeaChange has been slowly evolving in that direction, starting with a decision about five years ago to separate its video-on-demand (VoD) backoffice systems from the video servers. It later expanded into set-top and mobile device software through subsequent purchases of Liberate Technologies' European business and Mobix Interactive. (See SeaChange Software Strategy Surges , SeaChange Buys Liberate European Unit , and SeaChange Reports Q3, Buys Mobix.)

SeaChange's software strategy went even deeper into the device domain in January via its acquisition of VividLogic Inc., a maker of set-top and consumer electronics gear software. VividLogic, which markets its own tru2way middleware stack, counts Pace plc , Funai Electric Co. Ltd. (OTC: FUAIY), Panasonic Corp. (NYSE: PC), Cisco Systems Inc. (Nasdaq: CSCO), and Mitsubishi Corp. as customers. (See SeaChange Snags VividLogic for $12M.)

Kanouff said SeaChange's more centralized software service and product strategy is coming into focus as its operator customers rapidly pursue ways to complement their traditional video-on-demand (VoD) offerings and advertising services with various cross-platform, "TV Everywhere," and over-the-top content distribution strategies.

"We need the same platform to support all of the new things that are coming up," she told Light Reading Cable. "It's the cable operators... that have the best opportunity to benefit from that growth."

SeaChange anticipates that this "realignment" and creation of a discrete software business unit will cut R&D costs, but the elimination of duplications and overlaps will result in layoffs that will account for $1.5 million to $1.8 million in severance charges during SeaChange's first quarter.

SeaChange CFO Kevin Bisson noted on the earnings call that 60 percent of the job cuts are hitting SeaChange's software business, with the remainder split between its service and storage business and corporate general and administration functions. Kanouff confirmed Friday the layoffs will affect about 3 percent to 4 percent of the company's employee base (around 35 to 50 staff, according to Light Reading Cable's calculations).

Although the software group will be a big focus for SeaChange, it still runs a servers and storage unit (for content distribution networks, dense storage, and flash streamers), and a media services group led by On Demand Group (ODG), a content aggregation subsidiary based in London.

Earnings update
SeaChange posted fourth-quarter revenues of $53 million, down $1 million year-on-year, and broke even after notching net income of $4.8 million (15 cents per diluted share) in the year-ago quarter.

Its software unit brought in $34.9 million, up 9 percent, thanks in part to gains from Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Cox Communications Inc. , as well as the inclusion of revenues from eventIS. Its servers and storage segment generated revenues of $12.3 million, down from $17.7 million due to slower shipments to smaller North American cable MSOs.

SeaChange also noted that it won a "large" content distribution network (CDN) order from one of its major US customers. SeaChange didn't name the customer, but a possible candidate is Comcast, which is in the process of building out a CDN to support its "Project Infinity" initiative. (See SeaChange Unveils Cable CDN Lineup, SCTE Expo: MSOs Prep IPTV Push , Comcast Launches 'Project Infinity'.)

Comcast, Cox, and Virgin Media Inc. (Nasdaq: VMED) were SeaChange's 10 percent or greater customers in the period.

— Jeff Baumgartner, Site Editor, Light Reading Cable



Startup Junkie 12/5/2012 | 4:41:20 PM
re: SeaChange Softens Up, Cuts Staff

Does anyone think Seachange, Concurrent, Arris will survive? Not unless they stop being pure VOD players!


Over the top is coming, whether or not the cable guys like it. See what TiVo is doing. See what TellyTopia is doing. Boxee. You name it, these are the guys making VOD obsolete.


Have you seen the VOD interfaces? Once you're used to Netflix - there's no way you will watch stuff on VOD - unless they adopt something like the Rovi or TellyTopia interfaces...


Rest in peace, Seachange, Concurrent and ilk!

Jeff Baumgartner 12/5/2012 | 4:41:20 PM
re: SeaChange Softens Up, Cuts Staff

I certainly see what TiVo is doing, but I also see that they lost 730K subscribers in 2009, so I'm still not completely convinced that their future success is cemented. But all those companies -- seac, ccur, and arris -- are all moving beyond old vod, which they simply have to do for the reasons you state.


 But harder to say if they'll be able to go it alone for the long-haul. There's already a rumor circulating that Microsoft's eyeing Concurrent, so that may be the first you can cross off the list. Also, those companies (and maybe TellyTopia too) are going to be the ones that will be helping cable embrace (albeit cautiously) OTT.


The cable vod interfaces are bad, though... but i think they'll be moving some of that online soon so customers can search and navigate for content on the PC and allow them to create playlists for that can be accessed on  their old, crusty set-tops akin to the way Netflix does it now with its Web-to-TV streaming play. JB

canadian 12/5/2012 | 4:41:20 PM
re: SeaChange Softens Up, Cuts Staff

Jeff, true. But Junkie has a point. Look at all the public company statements - the number of subscribers for each of the cable tv companies are going down. I attended the talk by one of the companies mentioned at OttCon last month, where the speaker showed how the IPTV companies (public) are increasing and cable companies are going down - may be not as fast as TiVo.


VOD will have to evolve - I don't see it evolving as fast as you're saying - have you seen anything truly interesting coming out of the VOD vendors recently?


Over-the-top is a simple way of avoiding the VOD server architecture - why does an IPTV/CATV operator need to spend resources on a VOD server if it can provide the same thing over the top?


Watch out for Walmart vs Cableco!

Jeff Baumgartner 12/5/2012 | 4:41:19 PM
re: SeaChange Softens Up, Cuts Staff

That's true, of course. Other than Insight and Cablevision (on occasion) there aren't many Msos out there that are actually gaining basic video subs... most are going the other direction.


But they do have HSD, digital video, and voice helping to take up the slack, but even those growth trends are slowing. So they're all looking for where to find that next big growth engine. Biz services is one place to look, but offering their own OTT services off CDNs and outside thier traditional HFC footprints is another...and that one will be super explosive, putting some major strain on the general chumminess of the cable indsutry. JB

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