IPTV World Forum 2008

Viaccess Gains Orca at Bargain Rate, but Timing and Competition Rain on this Basement Sale

| Mar 11, 2008 | Digital Media Infrastructure | Show Update

| Analysts: Ron Westfall, Yoav Schreiber

Current Perspective: Negative/Neutral Vendor Importance: High Market Impact: Low/Moderate

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Event Summary

March 10, 2008 -- Orca Interactive Ltd., a market provider of IPTV middleware and applications, announced that it has signed an agreement with Viaccess, a France Telecom subsidiary. Under the agreement, Viaccess will acquire a 100% stake in Orca for an estimated price of $21.4 million. The completion of the transaction is subject to conditions precedent and notably to the approval of the transaction by the extraordinary general meeting of Orca Interactive.

Analytical Summary

• Current Perspective: Slightly negative on the acquisition of Orca by Viaccess, because the announced deal does not convincingly establish a stronger competitive position for either player in the overall IPTV and IP video markets. The acquisition demonstrates that Orca confronted significant challenges growing revenue and share with middleware deployments among Tier 2 and 3 operators, and thus needed to seek an exit strategy. However, the combined company will not likely penetrate larger accounts with Orca’s middleware, and at best, it may be able to layer some of Orca’s differentiated applications on top of existing rival middleware deployments. Furthermore, given that Orca is to be acquired by Viaccess, and not another major player, the deal signals that Orca’s technology may not have proven as differentiated or competitive to begin with.

• Vendor Importance: High to both Viaccess and Orca, as Viaccess needed to diversify its content security-centric portfolio by adding closely related IPTV middleware technology from a market-proven player, such as Orca, while Orca needed to merge with IPTV/content security vendor Viaccess, expanding its channel opportunities as well as improving its long-term competitive prospects by avoiding long-term competition as an independent within the increasingly competitive and commoditized IPTV middleware segment.

• Market Impact: Low to moderate on the digital media infrastructure (DMI) market, because Orca, despite its early success gaining IPTV subscribers and possession of a differentiated middleware offering, is a small player whose weight shifting into the Viaccess fold will not dramatically alter the industry’s competitive landscape. In addition, since Viaccess itself is not a major industry player, its possession of Orca’s middleware technology will also not materially alter the competitive landscape. However, rival IPTV middleware, content security, and IPTV solution vendors should take note, as Viaccess can now claim to offer a broader solution that is somewhat differentiated in that it can combine both middleware and content security solutions in a distinctly integrated fashion.

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Current Perspective

Competitive Positives and Concerns

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