Market Insight

Accedo merges with Digiflare

December 14, 2016  | Subscribers Only

Cecilia Zhu Cecilia Zhu Research Analyst, Service Provider Technology

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Multiscreen video app providers Accedo and Digiflare, based in Stockholm and Toronto respectively, will merge to create an app specialist with an enhanced position in the video experience market. The merged company will retain the Accedo brand.

Our Analysis:

The second screen video app market is growing rapidly, driven by the proliferation of connected devices. Video applications on connected devices allow consumers to have an intuitive touch screen experience, where they can browse and search content categories and engage with other users via social media. The  global market for second screen apps was valued at $152 million in 2015. It’s served by a broad swathe of specialised players including Accedo and Digiflare with a combined market share of 16.5%, as well as OVP providers such as Ooyala, and traditional incumbents, such as Cisco, who also sell second screen app solutions as part of their end-to-end media technology bundles. The hypercompetitive nature of the market, the maturity of app development for multi-devices and rapidly changing audience preferences is forcing technology vendors to consolidate for the greatest agility and responsiveness.

This acquisition is about scale. Accedo and Digiflare are pure play vendors focused on delivering user experience via multiscreen video apps and services. They lack the content distribution and security technologies to compete with end-to-end solutions directly. The merged company will benefit from a complementary customer portfolio geographically. Digiflare mainly focuses on North America, with customers including CNN, Starz Entertainment and Univision etc., whereas Accedo has established a more a global presence with customer including Netflix, Disney, Telefonica and Foxtel etc. The merged company will also benefit from a larger combined pool of strategic technology partners.

There are still a lot of opportunities to improve and consolidate second screen apps and services. A key success factor in the video app market is to offer a differentiated user experience, because the value creation relies on app usage, i.e. how frequently users open the app. The more stickiness achieved, the more customers acquired, and better offerings can be developed with reduced latency and improved availability. The combined Accedo and Digiflare will need to demonstrate the value of working with a specialist, dedicated app partner over bundled propositions from end-to-end solution providers to achieve success.

The best way to differentiate from other big players in the market is to build agile solutions that fulfil the changing needs of media companies, which could be a daunting task for those largest and most technically proficient service providers. By joining forces with Digiflare, Accedo is planning to evolve towards broader and deeper frameworks for developing native apps. The company is likely to create more value by maximising app usage with a more native experience.  

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