Who's Winning Cable's Tablet TV Deals?
Small, specialist video vendors, rather than giants like Cisco Systems Inc. (Nasdaq: CSCO) and Motorola Mobility LLC , appear to be winning the bulk of early transcoding deals as major MSOs start to trial and deploy apps that ship live TV signals to tablets and PCs.
Although several large MSOs are still limiting access of linear TV feeds to within reach of a customer's home Wi-Fi signal, vendors such as RGB Networks Inc. , Envivio Inc. (NASDAQ: ENVI) and Harmonic Inc. (Nasdaq: HLIT) are among those that are well-positioned for when MSOs secure the rights to deliver their lineups to customers who are on the go.
According to a recent note from Jefferies & Co. Inc. VP of Communications Infrastructure Equity Research James Kisner, RGB is out in front with trials or deployments with several big operators, including Comcast Corp. (Nasdaq: CMCSA, CMCSK), Charter Communications Inc. , Rogers Communications Inc. (Toronto: RCI) of Canada and Liberty Communications , which runs UPC Broadband in Europe and VTR Globalcom S.A. in Chile. Two industry sources add that Cox Communications Inc. has also picked RGB to handle transcoding for its live TV app. (See Cox to Stream Live TV to Tablets and Comcast Keeps Eye on the iPad Prize.)
Kisner adds that Envivio, which just went public, has won the initial live TV transcoding slots at Time Warner Cable Inc. (NYSE: TWC) and Verizon Communications Inc. (NYSE: VZ), and Harmonic's "key win" in this budding market is Cablevision Systems Corp. (NYSE: CVC). A check with industry sources confirmed all of Kisner's findings. (See Envivio Pulls the IPO Trigger, NEMI Focuses on Splicing and Cablevision Expands Live TV Streaming at Home.)
Kisner's note centered on Harmonic, concerned that its smaller competitors had largely "run the table" on the vendor so far, but this also means that larger vendors such as Motorola, Ericsson AB (Nasdaq: ERIC) and Cisco are notably absent in some of these initial, high-profile deployments.
Among the larger group, Cisco is making a big bet on its multi-screen Videoscape architecture and just spent $95 million to buy Inlet Technologies Inc., a company that's developed a software-based transcoding platform. But Cisco's not exactly sitting still, either. Some early deployments for the Cisco Media Processor (formerly known as the Inlet "Spinnaker") is deployed with Telenor Group (Nasdaq: TELN) and AEG Digital Media. (See Cisco Paints Inlet Into Its Videoscape .)
These initial transcoding deals are important to vendors not just because they represent a massive market (worth perhaps $350 million over the next three years), but also because they are among the first shoes to drop as MSOs build out their TV Everywhere ecosystems. Those early wins could set up the vendors to nab future deals for packaging content on-the-fly for a wider range of devices (e.g. additional types of tablets, Blu-ray players, smart TVs, gaming consoles and Roku Inc. boxes) and to secure the pole position for a more lucrative third wave of spending as MSOs look to insert targeted ads into adaptive bit rate streams delivered in or out of the customer's home.
— Jeff Baumgartner, Site Editor, Light Reading Cable