Video software player SeaChange claims to have signed its first over-the-top agreement with a US provider of prepaid mobile services, and says it is witnessing growing interest in its offerings from mobile operators keen to launch premium video services.
SeaChange International Inc. (Nasdaq: SEAC) has not disclosed the identity of the mobile operator but indicated, during an earnings call with analysts, that the operator would launch services early next year.
The new customer appears to be making use of Rave, an OTT platform that SeaChange launched in December last year in response to the growing demand for OTT video services.
SeaChange also indicated that it is carrying out trials of Rave with another four potential customers.
Analysts appeared to welcome the update after expressing concern that Rave had failed to secure customers despite SeaChange's best efforts and that it was not attracting interest from the likes of Home Box Office Inc. (HBO) , the cable TV network that has made its OTT rollout a strategic priority.
"That is exactly the type of customer that we're having conversations with," said Jay Samit, according to a Seeking Alpha transcript of the earnings call.
Even so, Samit gave a strong hint that mobile operators are showing the most interest in SeaChange's range of products as they look to offset a decline in traditional business areas.
"What was interesting to us is the speed at which the mobile industry has seen voice, data and text drive down where there's not a differentiator," he said. "So voice, data, text and video suddenly becomes a core competency that mobile providers need to provide."
Asked to provide an update on SeaChange's work with the British Broadcasting Corp. (BBC) , Samit also told analysts that a service launch by the UK broadcaster was "imminent."
Last September, the BBC announced plans to launch an online content store in 2015 based on SeaChange's Cloud Adrenalin technology, which has been designed to support content delivery over a variety of device types.
Tony Dias, SeaChange's senior vice president and chief financial officer, said the company would begin to recognize revenues from the BBC deal in the third quarter "when BBC launches."
SeaChange claims to have about 50 Adrenalin customers serving a total of 50 million subscribers but admits that many companies are waiting to see what happens with the BBC service before making similar moves.
The executives' comments came as SeaChange reported a 6.6% drop in revenues for the second quarter, to $27.9 million, compared with the same period in 2014.
Sales were up by 20% on a sequential basis, however, thanks to the take-up of new products by SeaChange customers.
SeaChange is trying to persuade customers to quit its older Axiom technology and upgrade to Adrenalin or Rave. It claims that all of its big customers have now made the transition to Adrenalin but says there are still about 40 Axiom customers in the "Tier 3 and Tier 4" range that are holding out.
Commenting on specific deals, Samit revealed that cable operator Liberty Global Inc. (Nasdaq: LBTY) had started using SeaChange's Nucleus video gateway software in the Austrian market in the second quarter, and that SeaChange had also been awarded a new contract for its AssetFlow content management system by a major satellite TV operator in North America.
SeaChange's loss narrowed to about $5 million from around $5.7 million in the year-earlier quarter, beating the expectations of analysts polled by Zacks Investment Research, according to a report from the Associated Press.
The company expects to generate revenues of between $27 million and $29 million in the third quarter.
— Iain Morris, , News Editor, Light Reading