Tale of Two VOD Vendors

Cable World,  March 24, 2003  

• E-mail
• Print
• Link

Byline: ANTHONY CRUPI

Both SeaChange International and Concurrent Computer Corp. talked dollars and sense this month, although only one of the video-on-demand vendors had good news for its investors.

SeaChange posted a slender quarterly net loss of $918,000 for the period ending Jan. 31, compared with net income of $2.1 million in the same period last year. The company's VOD numbers, however, were impressively strong.

Total VOD revenue for fiscal 2003 were $62.8 million, the highest in the industry. VOD system revenue for Q4 were $16.3 million, up 58% from the Q4 2002 tally of $10.3 million. (SeaChange's fiscal year ended Jan. 31.)

"Most analysts were reasonably pleased with the company's outlook," said Lawrence Harris, SVP and telecommunications analyst for HC Wainright. "SeaChange's revenues for VOD have been fairly consistent with their guidance."

SeaChange also used its earnings call as an opportunity to announce a future deployment. President and CEO Bill Styslinger confirmed that the vendor is shipping VOD servers to Comcast for use in its Boston system.

"I'm very proud to report that we have more than exceeded my stated goals and extended our leadership position substantially," Styslinger said.

Harris reasoned that the dip in total revenue was likely a result of a "significant change in broadcast sales" (that figure dropped $3.6 million dollars). Still, the drop-off didn't really come as a great surprise. "Even before the war with Iraq, we've seen fluctuations in shipments from companies that provide equipment to the broadcast industry," Harris said. "Broadcasters feared that coverage of the war would be expensive and spent accordingly."

Meanwhile, rival vendor Concurrent revised its Q3 expectations last week, lowering its VOD revenue forecast to between $7.5 million and $9.5 million. Concurrent had anticipated VOD revenue of between $12 million and $14 million.

Concurrent cited "order timing issues," a relatively small cable customer base and tight operator purse strings as contributing factors to its revision.

Harris agreed with the assessment. "Operators have gotten more cautious. They're keeping an eye on their capital," he said. "And though they haven't lost any contracts, there have been deferrals."

In any event, Jack Bryant, Concurrent's president and CEO, wasn't making any excuses. "I'm very disappointed in our inability to deliver profitable revenue growth on a consistent basis," Bryant said. "I can't blame it on the pending war, price of oil or the snow in the Northeast, but the financial markets are certainly impacting our cable customers' willingness to spend money."

Bryant went on to characterize the long-term prospects of VOD as "solid as ever."

THE NEXT QUESTION:

*Given the vicissitudes of the market, can vendors expect to see any further significant VOD deployments in the remainder of 2003?

COPYRIGHT 2003 Access Intelligence, LLC
COPYRIGHT 2008 Gale, Cengage Learning