NDS, a conditional access and middleware vendor, believes the satellite market will present strong revenue generating opportunities for the company going forward, the company’s CEO said.

NDS works with some of the biggest satellite pay-TV operators, including BSkyB, DirecTV, and most recently Germany’s Premiere. NDS is expecting the direct- to-home (DTH) players to take advantage of the opportunities in the Internet Protocol (IP) arena as they bid to stave off competitive threats in the TV market from cable and telecommunications companies.

"We have to help our customers to get to the consumers in any way that is effective and economical," Abe Peled, NSD CEO told Satellite News. "I think it means more business for NDS rather than less. I think our main customers, which are the satellite operators, are extremely well-positioned to take advantage of broadband."

Despite the emergence of IP, which has helped the telecommunication companies looking to break into the TV space, Peled believes IP systems will only have a limited influence. "I don’t foresee IP standalone systems becoming really large-scale delivery systems with numbers comparable to the number on satellite, regardless of what people tell you," he said. "It is taking a long time for IP to take hold, and at the same time, the bar is being raised in terms of HD (high definition) and HD PVR (personal video recorders). Today, it is not people watching television, it is more disk drives watching television. You have your hard disk recording programs. That will consume a fantastic amount of bandwidth. IP will have a hard time being the prime delivery mechanism for popular compelling programs."

NDS also is looking to HD. Peled said, "In terms of new services and solutions, our focus is on HD. Sky and Sky Italia launched services in recent weeks. You have HD PVRs, both here and in the United States. I think you have integrated broadband and broadcast solutions. Later this year, you have Premiere replacing a lot of [set-top boxes]. We will have a lot of middleware for that. We are looking at the whole situation of taking content from your PVR and moving it around to a portable player, a mobile phone, other devices, etc. We expect to see more of these solutions."

Hybrid Solutions

The market dynamics in Europe are changing with the emergence of the telecommunications companies in the TV space, who will be in a position to offer triple-play services. The cable players also have recovered from the financial turmoil that many faced just a few years ago.

In response, satellite operators are becoming more aggressive with new service launches, as well as examining the potential of broadband. "We are seeing satellite operators accelerate the deployment of PVRs, HDTV, HD PVRs," Peled said. "They are very active in embracing broadband, so the consumer can have the best of both worlds and what we call a hybrid broadcast IP solution. We believe from a technology [and] economic viewpoint, the most cost-effective way to provide both popular entertainment that millions of people watch in SD (standard definition), 16:9, and HD, and then augment it with an elongating tail of niche channels available via broadband that appeal to narrower audiences.

"If you have a million niches, you have 10 million people," Peled said. "This hybrid solution, where there are an increasing number of entertainment orientated Web sites and speciality channels, which have traditionally been launched on TV, are now getting launched on the Web. They cater for a small number of people so it is more economical and it gives you a global market."

Can Elbi, a media equity analyst at CAI Cheuvreux, believes these hybrid platforms will be key for NDS. "They are working with Bezeq and Viasat in these areas," he said. "I think the next five years will be great years for the company and they will be reaping the IP investments they made. They are in the sweet spot in the industry. They may have to reposition themselves in terms of technology disruptions, especially the Internet."

Emerging Markets

NDS also is playing a vital role in the launch of a new satellite pay-TV service in India, working with Tata Sky. India is seen as one of the biggest potential markets for satellite services, with Tata Sky’s service set to launch within the next few months.

"India is the country which has the potential to be another DirecTV, because of the size and scale of the Indian middle class and the fact there isn’t really good premium packages and quality services," Peled said. "Most Indian households watch a low quality cable service. I think a good package, like Tata Sky plans to be, and priced very competitively, will be a great opportunity. We are doing our best to support Tata Sky on an ambitious rollout schedule."

NDS also hopes to help more DTH platforms get off the ground in Eastern Europe, introducing its Videoguard Express. The system in essence, is an entry-level conditional access solution which allows operators to offer services with strong security at a lower cost. NDS’s first deal in the region is with cable operator Serbia Broadband, which has launched a DTH service dubbed TotalTV in Serbia.

"In Eastern Europe, we have two systems in Russia," Peled said. "We think there is a lot more happening in Russia in terms of consolidation as well as former Russian republics looking at pay-TV. The standard of living is going up fuelling the demand for more pay-TV. While each of those may not be very large, all together Eastern Europe can be a major market."

–Mark Holmes

Contact: Margot Field, NDS, e:mail: [email protected], Can Elbi, CAI Cheuvreux, e-mail, [email protected]