Market Watch

Pace Acquires Conditional Access and DRM


Display Driver IC Forecast


British set-top box (STB) vendor Pace has bought Belfast-based TV technology company Latens. Pace will pay £28.75m for the company specialising in software conditional access (CA), DRM and middleware.

Analysis
Pace's most recent acquisitions, Bewan and 2wire, have been aimed at developing high end residential gateway and connected home products. Adding gateways to its portfolio has brought Pace's product offering closer to those of its major STB competitors such as Cisco, Motorola and Technicolor.

Latens stands out from previous acquisitions because it could potentially see Pace competing in the CA market. However, given Pace's dependence on partnerships with major CA vendors, such as NDS and Nagravision, for STB volumes, it's difficult to see Pace competing directly, especially with Latens having less than one per cent of the CA market. More likely, is the bundling of Latens' technologies into "solutions".

Pace could utilise Latens' technologies to augment its connected home offerings, as it has with other recent acquisitions. Supplying the DRM for connected home deployments along with hardware could aid the persistence of Pace's deals. Although Pace would find itself competing with key CA partners, who will also be trying to extend broadcast CA deals through connected home.

Pace could bundle Latens' CA and middleware with its Multidweller compact headend. The Multidweller product is aimed at tier 3 cable operators looking to digitise. Bundling CA and middleware with its distribution technology could mitigate some of the costs for operators, which have so far impeded digitisation of small cable networks.

Having had success with high volume low cost DTA STBs in the US, Indian cable's aggressive analogue switch off plans could present the next similar opportunity for Pace. Latens already supplies software CA and MHEG-5 middleware to Indian cable operator Digicable and could be a key asset if Pace were to enter Indian cable. The $30 target price for these boxes is not far from the $35 DTAs which Pace supplies to Comcast and having CA and middleware in house could allow Pace to compete for volume with a reasonable margin in India.