ON TARGET... with all the latest IBC 2017 show information and product coverage, by the editors of The Broadcast Bridge - filtered by category.
Click here

Harmonic Bets On OTT SaaS Market To Stem Losses

Harmonic’s financial woes continue with a loss of $31.5 million under GAAP (Generally accepted accounting principles) rules for its second quarter on revenues of $82.3 million. Even so, there are signs of a return to profitability in the longer term.

This follows a year of losses while the company struggles to make the transition from being a provider of infrastructure for traditional pay TV to Software as a Service (SaaS) aiming increasingly at OTT service providers. The company has also been digesting Thomson Video Networks (TVN), the leading player in advanced video compression acquired for $75 million in February 2016 around the time when losses started to mount.

That move was necessary to keep up with leading larger players such as Arris, Cisco, Ericsson and Nokia, which had forged ahead through various acquisitions themselves. Of those only Arris is, like Harmonic, dedicated to pay TV and is also making losses, although the total GAAP deficit of about $87 million for its full year ending March 2017 is less proportionately given its much larger annual revenue of $1.6 billion.

All these vendors are in a transitional phase assimilating acquisitions and plotting their strategies for the IP era where core pay TV customers will account for a dwindling percentage of total revenues. They are therefore seeking to reach out into adjacent areas in various sectors of the IoT (Internet of things), some of which such as the connected car in any case have a significant entertainment component. Many of the skills and technologies required to deliver competitive pay TV services, such as security and analytics, will also play well in the IoT, but the challenge for operators, as well as vendors like Harmonic with limited resources, lies in picking off more accessible sectors rather than spreading themselves too thin.

Harmonic is on the right track with SaaS, but as its president and CEO, Patrick Harshman pointed out it will be some time before this can take up the revenue slack left by decline among some of its traditional customers. “Market demand for video infrastructure delivered through SaaS is accelerating,” said Harshman. “During Q2 2017, with respect to our OTT SaaS business, total contract value grew 90% sequentially to 8% of total bookings, reducing near-term revenue and profitability but establishing a trajectory for stronger financial performance mid- to long-term.” The point is this is replacing direct capital revenue with longer term recurring sales which will take time to really kick in.

Alongside SaaS, Harmonic has focused on helping its cable TV customers migrate to an all IP world at the premises level with CableOS, its software-based Converged Cable Access Platform (CCAP). This runs on off-the-shelf, 1-RU Intel servers incorporating one of the first end-to-end Remote PHY systems, designed to extend higher bit rate services to the end devices, as well as providing a platform for home based IoT services. 

Let us know what you think…

Log-in or Register for free to post comments…

You might also like...

Understanding IP Networks - Audio Integration

In the previous articles, we investigated IP from a broadcast engineers point of view as it helps us understand IP. In this article, we start to look at audio integration, and how we make IP work with audio signals, and…

Understanding IP Networks - Why Do We Need Interoperability?

Point to point connections with well-designed standards have given broadcaster engineers piece of mind for many years, knowing when they connect one AES-3 audio output to an AES-3 audio input, the two will connect seamlessly and audio will pass without…

Production Engineers - Understanding Your CEO’s Business Needs

As broadcasting moves to highly efficient production lines of the future, understanding business needs is key for engineers, and recognizing the commercial motivations of CEOs and business owners is crucial to building a successful media platform.

Cloud Broadcasting - Integration

Broadcast engineers have a whole plethora of tools available in their kit-bag to integrate systems. The common denominators are SDI, AES and MADI for media exchange, serial and ethernet protocols for control, and the trusted GPI should everything else fail.

Cloud Broadcasting - The Hidden Costs

Unless you are a greenfield site, have one vendor to meet all your operational and creative needs, or are incredibly lucky, you will at some point need to integrate your Cloud Software-as-a-Service into the broadcast workflows. This is much easier…