Put another nail in the old-school-cable coffin. Nagra has signed a deal with Altice USA to be the cable operator's primary content security provider, finally breaking down the legacy conditional access duopoly maintained in the US by Arris and Cisco.
The agreement with Altice includes deployment of Nagra Connect, Nagra 's converged conditional access and digital rights management solution for broadcast and IP content, and MediaLive, Nagra's multiscreen video platform. The deal will give Altice greater choice in selecting set-top vendors, and, importantly, it will coexist with content protection technology already in place.
It's hard to overstate the importance of this announcement. Previously, cable systems using headend equipment from either Arris Group Inc. (Nasdaq: ARRS) or Cisco Systems Inc. (Nasdaq: CSCO) had to use set-tops with a compatible security system. But, according to Nagra, Arris worked with Altice to make adjustments in the cable headend to enable support for additional security technology supporting a wider range of set-tops.
Altice hasn't made any announcements yet about what new set-tops it may deploy, but it's a good bet the operator is planning to bring one of its European partners (like Sagemcom SAS ) to the American market.
Arris, which has the most to lose from the deal, declined to comment on the news.
The big question about Nagra's big break in the US market is why now? NDS made a dent in the content security duopoly through its work with Cablevision (now part of Altice) and Charter. But ultimately NDS was swallowed up by Cisco. (See FCC Launches Downloadable Security Push.)
And Nagra says smaller operator Cable One Inc. has been using its security technology for a time, but reportedly only by simulcasting content across two different security systems.
So what's with the wholesale shift today, and why is Arris suddenly willing to play ball to give Altice more options?
Nagra's senior director of product marketing, Christopher Schouten, says Altice demanded the change.
"[Altice] said listen, we need to open this ecosystem," explains Schouten, adding that Altice wanted to "take a more traditional European approach," allowing them to "choose best-of-breed solutions across the entire value chain."
There's more to it than Altice being a demanding customer, however. Pressure has been building for years to open up the cable set-top market, and even with the failure of the CableCARD initiative and the demise of the "Unlock the Box" movement, there's still a broad coalition of companies looking for change. (See Obama Signs CableCARD Death Warrant and Pai Opposes Title II, FCC Alums Oppose Pai.)
At the same time, the shift toward IP video is altering the economics of the set-top business. Options for cheaper IP client boxes and even retail IP set-tops are taking power away from traditional cable vendors and forcing them to construct business models around other revenue sources -- namely broadband gateways, network gear and cloud-based software and services.
The deal with Altice USA isn't Nagra's only recent success, or its only attempt to open up the content protection market. The security company introduced TVkey in 2016, which builds a Nagra-designed root of trust into TV chips so that content can be securely decoded on a television set with only a small attached dongle. In partnership with Samsung, Nagra said earlier this year that it's now licensing the TVkey framework to outside chipset, TV hardware and conditional access vendors. (See Nagra, Samsung to License TVkey Video Security Tech.)
Nagra has also confirmed that it's launching the TVkey solution with a satellite provider in Europe, which will offer a six-month free trial of its service when consumers buy a Samsung TV set with bundled TVkey device at retail. No set-top required. (See TVkey Promises TV Service Sans Set-Top.)
Importantly, Nagra also has credibility outside the traditional pay-TV market. Its DRM technology is approved for use with Netflix service, allowing Netflix content to be accessed on Nagra-enabled platforms. This means that over-the-top video can sit side by side with pay-TV video under the same umbrella of content protection. Theoretically, even new retail products -- like certain smart TVs -- could use Nagra's solution to enable access to Netflix over IP on the one hand, and QAM-based pay-TV services offered by Altice USA on the other.
The next part of the story is to see how Altice makes use of its newfound content security freedom in the US. Certainly the company has proven that it wants to do business differently from other US providers. Among other initiatives, Altice USA has said it will extend fiber to the home across its entire service footprint. (See Altice Plans FTTH for Entire US Footprint.)
And it's only been eight months since Altice closed on its acquisition of Cablevision.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading