Monday, August 21, 2006

Harmonic to Acquire Entone's Video Networking Software Business

Harmonic agreed to acquire the video networking software business of Entone Technologies, a privately-held software developer specializing in IPTV VOD and other digital video solutions for commercial broadcasters. The agreed upon purchase price of $45 million is comprised of $26 million in cash and the value of approximately 3.54 million shares of Harmonic common stock. In addition, Harmonic will assume certain liabilities of $1.5 million and invest $2.5 million in the form of a convertible note in Entone's consumer premise equipment (CPE) business, which will be spun out to Entone's existing stockholders immediately prior to the closing of the acquisition.

Entone's software solutions are designed to handle content ingest, distributed content management and video streaming -- facilitate the provisioning of personalized video services including video-on-demand (VOD), network personal video recording (nPVR), time-shifted television and targeted advertisement insertion. By combining Harmonic's industry-leading video headend, edge and access network solutions with Entone's on-demand software, Harmonic will be able to provide cable, satellite and telco/IPTV service providers an advanced and uniquely integrated delivery system for the next generation of both broadcast and personalized IP-delivered video services.

Entone claims over 35 deployments of its IPTV VOD solution, with over including PCCW, the largest IPTV operator.

Entone is based in San Mateo, California, with research and development facilities in Hong Kong.

"Our industry is in the midst of an exciting and fundamental transformation to an increasingly on-demand video experience," said Patrick Harshman, President and CEO of Harmonic Inc. "By bringing together Harmonic's market-leading encoding and stream processing products and Entone's innovative software suite for managing and streaming personalized video content, we will create a powerful and integrated solution for the emerging on-demand network. In the cable and satellite markets, where Harmonic enjoys strong customer relationships and a large installed base, this comprehensive solution will be a great benefit to our customers as they expand and extend their offerings with new on-demand services. In IPTV, where both Harmonic and Entone have established early leadership positions in our respective solution areas, the combination of our businesses creates a clear industry leader."http://www.harmonicinc.com

  • In September 2005, Entone Technologies introduced its "Armada" asset allocation solution for managing libraries of VOD titles. The system goes beyond static VOD content distribution systems by dynamically and cost-optimally placing video assets in the appropriate location and storage media based on their real-time popularity.

    Entone's Armada asset allocation system anticipates that RAM will be the most appropriate storage medium for the most popular, but few video assets in a library. However, the cost of RAM storage is hundreds of times more expensive than other storage options (such as SATA) that are more appropriate for less popular "long tail" content.

    Armada distributes assets in real-time to the most optimal storage, server, or network based on real-time usage data. This compares to other video server solutions that typically rely on a static, “best guess�? approach to asset placement. Since viewer behavior can't always be predicted, Armada continuously makes adjustments to storage assignments so that every storage device is fully utilized with the right balance of streaming capacity to storage space.

  • In October 2003, Entone secured $16 million in an oversubscribed Series B financing round. The round was co-led by Menlo Ventures, Palomar Ventures, and BA Venture Partners.

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