By Steven Scheer
JERUSALEM (Reuters) – Pay-TV software maker Synamedia, supplier to Comcast’s <CMCSA.O> Sky and AT&T’s <T.N> Direct TV, believes the pay-TV market will continue to grow despite the rise of streaming services such as Netflix <NFLX.O> and Amazon <AMZN.O> Prime Video.
Chairman Abe Peled said he believed cable operators would increasingly be forced to offer packages that included access to those and other streaming providers, meaning they would need software to manage it.
Synamedia, which was created from Cisco’s <CSCO.O> video-software unit, makes software that controls access to content, manages digital rights and guards against piracy.
“Bundles will come back. Consumers simply won’t be able to pay for buying all these channels,” Peled told Reuters in an interview.
“Players that own infrastructure will prevail because either they will incorporate streaming services and unify them and provide a better viewing experience, or have to continue to offer some of their own in combination,” he added.
Peled was chief executive of the pay-TV security firm, then known as NDS, between 1995 and 2012 before selling it to Cisco for $5 billion. He said he did not expect its latest owner, Permira, to exit the business for at least three years.
“From my point of view, get the company to be a great company that makes money and has growth prospects and then the exit will present itself. The time horizon is not less than three or four years,” Peled said at the firm’s research and development office in Jerusalem.
Such a time horizon would be realistic for Permira, which bought Synamedia last October for $1 billion.
Permira declined to comment.
The global pay-TV market is expected to decline in the coming years from around $200 billion in 2017 to as low as $183 billion by 2023, according to German database company Statista.
But Peled believes Synamedia can capitalise on growth areas such as helping customers switch their distribution to the internet, targeting advertising and fighting piracy – a rapidly growing phenomenon as video is distributed on the internet.
Season 8 of HBO’s Game of Thrones, the world’s most popular show, was pirated 66 million times globally, according to anti-piracy and market analytics firm Muso, compared with 19 million who watched the finale legally.
Media research firm Magid has found that 26% of millennials share passwords for video streaming services, while Parks Associates predicts that in 2021, $9.9 billion of pay-TV revenues and $1.2 billion of OTT revenues will be lost to credentials sharing.
“We are starting from quite a good base,” said Peled. “But that base has to transform of course.”
Peled said Synamedia – which is making money – was focusing on piracy protection, which will be done in Israel.
The company will work with customers including Vodafone <VOD.L> and Astro Malaysia Holdings <ASTR.KL>, on protecting $100 billion worth of content from credential-sharing and pirate websites.
(Additional reporting by Pamela Barbagliera; Editing by Georgina Prodhan)