Market Insight

British set-top box vendor Amino to acquire US competitor Entone

July 30, 2015


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British set-top box (STB) vendor Amino has conditionally offered to purchase US-based STB vendor Entone for $73 million. Entone generated $43.4 million in revenue for 2014 and claims to have approximately 150 customers worldwide, while Amino posted $56.5 million meaning the combined business’s revenue may reach in excess of $100 million. The deal is subject to regulatory approval and is expected to be completed in the third quarter of 2015. 

Our Analysis:

This is Amino’s second acquisition in 2015, following Booxmedia in May 2015, amidst substantial consolidation in the STB Industry. Whilst Amino’s acquisitions are small compared to the recent ARRIS acquisition of Pace and Technicolor acquisition of Cisco’s connected devices division, they are indicative of the same trend: increasing core-product-scale and increasing the range of products offered in the wake of a contracting STB market.

Amino and Entone share several similarities; having originally begun as pure play IP STB vendors, contesting for tier 2 and 3 service providers, in fact, their product line-up and ambitions are strikingly familiar with expansions into cloud TV products as well as home monitoring solutions. Entone’s other focus however, leans more on hybrid cable TV solutions while Amino’s, prior to the Booxmedia acquisition, remained on IPTV and OTT hardware. With this in mind, Entone can be considered as highly complementary to Amino’s future strategy and growth. It is likely that this acquisition will improve Amino’s market positioning, which based on 2014 results is tenth place for both shipments and revenue in the IPTV STB market, it will enable Amino to move further from being strictly an IPTV hardware provider and diversify its addressable market.

The acquisition will most immediately enable Amino to consolidate its position in the US telco IPTV space, making it the leading provider to tier 2 and 3 telcos there. In the early days of telco IPTV deployments in the US, Amino was head and shoulders above its competitors. The company was early to market with low-cost, MPEG-2 STBs that could be paired with middleware from Myrio Interactive, Minerva Networks, and others that catered to the rural ILECs and IOCs that were the first to begin rolling out IPTV services. Amino’s partnerships with Myrio and Minerva helped it to expand globally with contracts at Belgacom and TeliaSonera. Amino did falter, however, when IPTV operators transitioned to MPEG-4 and the company was late to market with a more robust product  that could provide the advanced DVR features North American operators required in order to compete with cable and satellite providers. As a result, Amino lost share in the US market to Entone, whose Hydra gateway provided the whole-home DVR capabilities and gateway-client architecture US operators needed to differentiate their service. Entone was also one of the early leaders in integrating OTT video services on the STB via a partnership with TiVo. The TiVo integration again provided Entone with a differentiated feature that appealed to smaller, North American IPTV providers.

Entone also provides Amino with much-needed cable MSO footprint, both in North America and Europe. Entone had successfully targeted cable operators with FTTH deployments for residential broadband and video services. Though the installed base for these boxes remains small, it is certainly growing, especially in Greenfield deployments. As new housing starts continue to increase in North America, more MSOs are likely to opt for FTTH, giving Amino an opportunity to compete against incumbent STB suppliers.

Amino will double its size in revenue terms as a result of this and the Booxmedia acquisition, and whilst it is set to improve its position by five places and enter the list of top 20 global STB manufacturers, it will still be a small scale company compared with the rest of the STB industry. A bolstered Amino, with a cable STB and multiscreen video offering, could itself be an attractive acquisition target for companies without strong product offerings in these and the IPTV sectors.

Geography
North America UK
Organization
Amino Entone
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