Home Analysis Inside Secure to acquire Verimatrix in $150m deal, with data analytics viewed...

Inside Secure to acquire Verimatrix in $150m deal, with data analytics viewed as one of the growth drivers

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Inside Secure has entered into a definitive agreement to acquire Verimatrix in a near $150 million deal that brings together two companies with a heritage in content security and which significantly expands their total solutions portfolio. The deal is expected to close in Q1 2019.

The companies say the acquisition will create a software-based security powerhouse in the entertainment market and provide new growth opportunities, especially through big data and analytics. In particular, Inside Secure will be able to harness cloud-based analytics capabilities currently within Verimatrix and apply them to new markets, since it targets the mobile payments, mobile apps and IoT and connected car sectors, as well as premium video. “Inside Secure will provide its customers with real-time visibility over security performance – like threat and attack detection and analysis – and user behaviour,” a press release states.

Verimatrix is well known for its VCAS-branded content protection solutions (covering all network types), and its anti-piracy and watermarking solutions for Pay TV operators. The company has hundreds of customers and annual revenues of $79 million.

In recent years Verimatrix has been aggressively developing its data collection and data analytics capabilities under the product brand name Verspective. This enables real-time QoE optimisation and helps service providers improve user engagement and content monetisation. Because Verimatrix can monitor data from across multiple customers, Verspective spots ‘global’ security trends early and uses this information to enhance security for every Pay TV customer using the service.

Inside Secure, which is headquartered near Aix-en-Provence, 20km from Marseille in France, also serves the subscription TV marketplace with its Content Protection Client and has solutions for ‘open’ (i.e. retailed, bring-your-own, multiscreen) devices, covering major DRM schemes. Content Protection Client HD for Desktop protects browser viewing and Content Protection Client Premium HD is used to protect early-release movies, as examples. MovieLabs requirements are met for 4K content on set-top boxes, Smart TVs and mobile devices.

A recent Inside Secure television customer is Kiwisat, the DTH satellite service in the Caribbean. This deployment includes secure provisioning of set-top boxes using a root-of-trust in the silicon. The company has its own existing watermarking partnerships. At IBC last year, Inside Secure announced that it was integrating NAGRA’s NexGuard QuickMark client-side watermarking product with its Content Protection Client. The company is also working with ContentArmor, which provides forensic watermarking – with their combined solution available via a pre-integrated SDK.

Inside Secure also has solutions to protect advertising revenues on digital streaming services. It offers a way to prevent advertising fraud and counter the blocking of advertising insertion, the removal of advertisements and interference with the tracking and reporting that verifies ad exposure for advertisers. The company provides mobile payment security solutions (including for Mastercard and Visa payments) and secures other mobile applications (including non-video apps), guarding personal or corporate data and other forms of content. Inside Secure uses whitebox technology to hide the way apps work from hackers.

Inside Secure is targeting the IoT and connected car markets, using its ability to secure mobile devices and apps. The protection is enabled partly by harnessing a programmable root-of-trust engine to protect SoCs and the ability to manage a device’s root-of-trust through its whole lifecycle. Inside Secure’s Silicon IP Programmable Root-of-Trust Engine is said to be the industry’s first RISC-V -based platform security solution. IoT is considered an obvious growth market with the combined solutions set.

“Beyond the entertainment market, the combination [of Inside Secure and Verimatrix] provides firm foundations to accelerate penetration of other growth verticals that face a critical security challenge, notably IoT and connected cars, by leveraging a high-integrity device credential management platform and enabling comprehensive, end-to-end security technology and services offerings,” a statement says.

The two companies reckon their combined product set will help them capitalise on a number of industry trends. These include a major shift towards software and cloud-based security solutions, and rapidly growing demand for big data analytics solutions in a landscape of multi-device and multi-format video consumption. Media owners are also increasingly concerned about revenue losses caused by piracy.

Naturally, the deal generates more scale for the combined company. Total combined revenues for 2017 would have been $119. Economies of scale are expected to save $10 million a year. The complementary customer base provides ample opportunity for cross-selling and up-selling. The revenue target for the enlarged Inside Secure is $150 million by 2021.

Amedeo D’Angelo, Chairman and CEO of Inside Secure, says: “We are looking forward to combining both businesses to offer our clients the best value proposition in security, starting with entertainment and moving towards Internet of Things and connected cars.

“We have established a unique position, putting security at the heart of connected devices and apps, with a leading position in the OTT video services market. Verimatrix has become a key player in software-based security for entertainment content management through its scalable and comprehensive platform and deep expertise in cloud-based data analytics, and intelligence on security performance and video user behaviours.

“Verimatrix is the perfect fit to increase the scale and reach of our value proposition in markets that are shifting quickly towards software and cloud-based security solutions while video content consumption is becoming multi-device and multi-format.”

Tom Munro, CEO of Verimatrix, declares: “This transaction allows a great combination of technologies and expertise, bringing two well-respected market players together. It is exciting to create a company with such a clear focus, a global presence, and a depth of expertise in the applications of security and analytics across critical market segments.”

The proposed acquisition of Verimatrix by Inside Secure will result in a new ‘cornerstone’ investor in the combined entity: One Equity Partners (OEP). OEP is a middle-market private equity firm focused on the industrial, healthcare and technology sectors in North America and Europe. This company will participate in the equity financing with a view to supporting future development and strategy.

Editor’s Comment

Inside Secure is about to acquire a genuine technology innovator, and one with bold vision. Verimatrix did more than anyone to turn cardless content security into the norm, disrupting the market with its solutions for IPTV providers, and it also pioneered multi-DRM solutions for multiscreen TV. That has helped the company acquire around 950 customers.

Verimatrix recognised the growing importance of data analytics across both networks and the backoffice and its own strengths as a potential data collector, given that its software is embedded in every client device used to watch TV (at its customers). The launch of Verspective was timely and demonstrated a desire to offer more to the TV market, built around core strengths.

Verimatrix’s ambition was demonstrated again at IBC with an attempt to lead the creation of a completely reimagined, cloud-based content workflow architecture that looks to remove many of the expensive duplications and complexities associated with the multiplatform TV universe.

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