At IBC, an Investment in IP Begins to Take Hold for Imagine

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If Imagine Communications feels like a company under pressure that’s probably because its customers are under huge financial constraint, too.

In a candid presentation of the company’s position in the market, CEO Tom Cotney said that while internet protocol delivery (IP) continued to gain traction, the firm needed to do more to assist broadcasters in migrating.

“We are under the same squeeze as our customers. They are losing viewership, we are losing baseband revenue,” he said. “We need to be ready for those customers able to make a deal this quarter and those who aren’t ready, some of whom are spending major chunks of money on content—money which tends to come out of the technology budget. 

“We have done a great job of inventing product, but not enough for customers to migrate to it. We need to do more for customers that have other business priorities.”

To balance this, Imagine will beta test three service offerings that address the needs of customers that may be too risk-averse to jump into IP straightaway.

“How do we become a full-service partner that extends beyond just the new widgets we are making?” Cotney asked. “We fully realize this is an area where we need to step up our game.”

Imagine will formalize and launch these service-oriented products in Q1 next year.

One of them is to provide “vendor agnostic” advice about how to extend the life of an operator’s current products. Cotney acknowledged that it sounded like a conundrum for a company in the business of selling new kit. 

“We have convinced ourselves that this is the right thing to do even for our new product because we know that we will close those deals in the end.”

He admitted that Imagine’s investors—the private investment group Gores—are nervous about how the company is going to continue to make its own return on the massive amount of cash which has gone into turning the once devoutly hardware-based box shifter into a software-based service company. 

“It was easy to demonstrate [to them] the returns on a very profitable software business, but not so easy in hardware. We explained that we are going to focus on the total cost of ownership with our customer base as a moral high ground. We think we can be the industry’s IP playout vendor of choice.”

One stat seems to back this up: the 100 channels launched worldwide in the last 3 months using Imagine’s software-defined kit.

Imagine’s investors like this approach, Cotney revealed, since for every dollar spent on its playout product it drags another $1.30 in revenue from other parts of Imagine’s business.

“[Several years ago] we made a bit bet on IP-based tech and that bet is starting to feel a little bit more like return on investment,” he said. “Speculation feels like headwind turning into tailwind.”

In what felt like a refocusing of the company from the tenure of previous chief exec Charlie Vogt, Steve Reynolds, Imagine's president of playout and networking solutions, said, “We are not going to be the radio shack of the broadcast industry.”

The company will renew its emphasis on the ad-tech business and focus on its acclaimed leadership in microservices in particular with Zenium, its microservices-based workflow engine.

“Zenium is not just an interesting piece of technology,” Reynolds said. “This is the fundamental toolkit we use to build all our products [such as the EPIC multiviewer, Versio its flagship playout system, and the network processor Selenio]. It is key for us. Broadcasters are starting to see why a micro-services model is so important because the scale and pace it brings for them to launch new features and bring products to market radically changes their business model.”

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