May 13, 2010 – Harmonic is reaching beyond its moorings in the video headend space with an acquisition aimed at creating a comprehensive approach to content distribution for service providers and programmers.
With its forthcoming purchase of Omneon, a leading supplier of video production and playout systems, Harmonic will be better able to address the multi-screen distribution needs of all parties, says David Price, vice president of business development and marketing communications at Harmonic. "We're seeing the boundaries between content preparation and delivery blurring," Price says. "This acquisition is entirely in line with that major trend."
Omneon was an obvious choice for Harmonic's efforts to capitalize on this trend, Price adds, given the growing relationship between the two companies as they work with the same customers to provide the full scope of solutions essential to eliminating the inefficiencies of trying to serve the multi-screen market from legacy platforms. "We'd begun talking to them about partnering on showing our solutions and what we might do together, given we're working with so many of the major content suppliers, who, for example, are using our Rhozet [transcoding] product," Price says. "We saw they were growing at a very comfortable rate with great products and a great set of people, so it became more than a shall-we-go-in-together sort of thing."
Omneon, with a customer base that includes the BBC, BSkyB, CBS, Comcast, Discovery Communications, Echostar, NBC Universal, Viacom, Turner Broadcasting and many other media companies, provides scalable media server and active storage systems that optimize workflow productivity and on-air reliability for the production, distribution and management of digital media. "Omneon has refined the playout server to achieve exceptional efficiencies in terms of the number of assets going out per second, the number of parallel playouts," Price notes. "Their secret sauce is based on a number of patents."
These are purpose-built servers, he adds. "Their products are far more sophisticated than standard PC-based servers," he says. "Their workflow from ingest to playout makes the process much more manageable, which is very attractive to content owners. It gives them a fundamental technology advantage."
"The combined company will have industry-leading technology and expertise in video compression, processing and delivery, video-optimized storage, production and playout servers, and media management," says Suresh Vasudevan, CEO of Omneon. "Not only are the technologies complementary, but we see unique opportunities to leverage our technology adjacencies and drive market-leading innovation."
Content suppliers and service providers want to be able to manage all the elements enumerated by Vasudevan through a single workflow management system, which has become a kind of mantra among vendors attempting to meet these needs. For example, as reported last month (p. 22), Alcatel-Lucent has introduced such a system, which taps Harmonic to provide the video stream processing capabilities.
Harmonic believes its ability to offer an integrated solution as a single-supplier source will be a strong suit. "We don't have anything concrete with a combined workflow solution coming together yet," Price says. "But now we're in a position where that can come together."
The $274-million deal is expected to close in the third quarter. "We're looking at a half-billion dollar company in 2011," Price says. "Harmonic is getting to be a force to be reckoned with."