Market Watch

Verimatrix to Acquire Smartcard Conditional Access Vendor


Display Driver IC Forecast

IPTV conditional access (CA) vendor Verimatrix is to acquire Comvenient, a German company specialising in smartcard-based CA for the traditional broadcast pay TV market. This acquisition will allow Verimatrix to augment its software-based CA products with a hardware offering aimed at digital broadcast pay TV using DVB modulation standards. Both parties are privately held and as such financial details of the deal have not been disclosed.

Analysis
After Google's , Motorola's, and Pace's respective acquisitions of software conditional access and DRM companies Widevine, Securemedia, and Latens, Verimatrix's Comvenient purchase is of note as it sees one of the software CA specialists strengthening its position as a pure play CA vendor.

Comvenient CA product was first deployed in 1996 and has the smallest market share of all the smartcard based CA vendors at just 0.02 per cent of the global CA market in 2010. On the surface, this acquisition will yield little immediate market share growth for Verimatrix which currently has a share of 1.8 per cent of the global CA market and 17.2 per cent of IPTV.

IPTV growth was flat in 2010 with STB shipments growing just 1 per cent year-on-year to 16.6m units contrasting heavily with 12 per cent growth for broadcast-based pay TV STBs. Verimatrix has made efforts to branch out from its core IPTV customers to broadcast pay TV players with some, but limited, success. This acquisition is no doubt designed to bolster these efforts and should be read as an indication the continuing critical role which smartcard CA plays in the mass digitisation of pay TV.

It's not just mass digitisation where Verimatrix will be looking to prosper - smartcard CA is highly standardised through the DVB project whereas software CA and DRM is anything but. In an environment where established pay TV operators are looking to deliver OTT video content to hybrid-IP STBs and other connected devices, Verimatrix's proven experience in this field, combined with its acquired smartcard offering could prove stiff competition for established broadcast CA vendors yet to develop or deploy software CA and DRM solutions.

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