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SeaChange Rating Marks a Milestone

Traditionally, the occasion of a tenth anniversary calls for gifts made out of aluminum. Someone must have forgotten to tell the Independent Research Group about the custom, because they showed up to the SeaChange International party with a first-year present: Paper.

IRG's buy rating documents CEO and cofounder Bill Styslinger's overriding business philosophy, which is to save MSOs money by keeping operating costs down.

"The first time we experimented with VOD, back when I was with DEC [Digital Equipment Corp.], the cost of a single stream worked out to be about $10,000," Styslinger says. Today that figure is down to an astonishing $170 to $180 per stream.

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"The costs are constantly going down," Styslinger adds, invoking Moore's Law. "As they're able to put more circuitry on the real estate of silicon, that shrinks everything: hard drives, costs, you name it."

Before technology allowed SeaChange to concentrate on the VOD space, the company took a long hard look at ad insertion. It's first foray into that end of the cable business came in July 1994, in Time Warner's Manhattan division. According to IRG, SeaChange today has approximately an 80% share of the $40 million worldwide digital ad insertion systems market. Its primary competitor in this arena is nCube, which controls a mere 10% of the market.

As the ad sales market begins to stabilize after a tumultuous two-year decline, SeaChange should begin to make even greater strides in the digital ad insertion space, the IRG concludes.

VOD will be the application that could really put the company over the top. The IRG report forecasts that VOD penetration rates will increase from "about 30% in 2003 to 95% by 2007," making on-demand SeaChange's primary growth driver.

Presently, SeaChange has deployments in 86 of the 171 active North American VOD markets. The next closest competitor is Concurrent Computer Corp., with 52.

Did Styslinger ever imagine personalized television taking off the way it has today? You bet.

"I never really had a sense that we've had false starts," he says. "I just watch the costs."

THE NEXT QUESTION:

*Are cable's digital networks truly robust enough to handle the predicted surge in VOD usage?

Technology Industry

SeaChange Rating Marks a Milestone

Cable World, July 14, 2003

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