Grass Valley President and CEO Alain Andreoli updated Broadcast Engineering on progress since the company was bought by Francisco Partners 18 months ago.
Andreoli reports that "we have made the company profitable, we have a roadmap, and now with the financial vehicle of Francisco Partners behind us, we are watching the (merger and acquisition) space with a lot of interest. We see room for consolidation. The overall (broadcast) market is not growing with the shift from TV to Internet. We see the market too fragmented.”
Meanwhile, changes continue in-house.
“There are opportunities for some of us to consolidate,” Andreoli said. “We have just hired Graham Sharp as the new Senior Vice President of Corporate Development.”
Sharp will be responsible for the overarching corporate strategy, M&A activity, strategic alliances and various strategic projects. A recent purchase, playout systems provider Publitronic, has proved a success. Rebranded as K2 Edge, the company reports a doubling of revenues in 12 months in that product area.
Grass Valley recently held a series of customer meetings, and the issues around consolidation were one of the hot topics. Broadcasters are looking for end-to-end architecture in order to build content factories, but they don't necessarily want to be in the hands of one vendor. They have to share budgets between best-in-class live tools and IT infrastructures.
Many of the new entrants to the content delivery markets, especially OTT operators, are starting with new build systems to manage content.
“Legacy is a huge problem in this market,” Andreoli said. “Products have a 10-year life cycle, so broadcasters may have a large range of products in same shop.”
This potentially puts them at a disadvantage against the new operators.
“We see them moving forcefully to an SAP- like architecture,” Andreoli said. “The ecosystem is going to change dramatically in next five years.”
The content creation side is different, but Andreoli sees changes in the live production area as well, even though top-quality live video remains the domain of broadcasters.
“Cameras will become more flexible and IT heavy,” and in control rooms, “we see more touch screens and more optical networking. The essential part for broadcasters is to create a private cloud of content. Metadata will allow them to monetize this cloud of content.”
His perspective and experience has left him to ponder the relationship’s dynamics.
“Is all becoming IT with broadcast edge, or broadcast with an IT edge?” asked Andreoli.
Grass Valley is developing the IT side with the Stratus Media Workflow Application Framework. Andreoli said that some sales of Stratus to big names are to be announced shortly. As Stratus evolves, it is looking to add functionality but, “We are looking at acquisitions around that, because there is no point in trying to do everything ourselves. There are a lot of small companies with point technologies, and also bigger actors.”
So, watch for developments in that area.
Andreoli cautions that as the market consolidates, it will become attractive for some of the big IT guys to move into the broadcast sector. “We see that with Francisco Partners behind us, we will be agile, being able to make deals,” he said.
With Grass Valley exhibiting at BroadcastAsia, June 19 through 22, global issues are topical. The content market is globalizing, and centralizing media technology into creation hubs like Los Angeles, London, Dubai and Singapore. Companies need tools to move files around easily.
“I am discovering that the technology is driven by the U.S. and Europe, where commercial channels dominate,” Andreoli said. “It has been a one size fits all approach to the equipment development. In emerging markets, the political system is different.”
Television broadcasters are frequently government owned or controlled. Television is a vehicle for propaganda, so it is important for the states to spend on broadcast systems, and the commercial considerations of the West are not so important. This can lead to very different requirements for equipment and systems. This also presents opportunities at a time when markets like Western Europe are flat.
Rounding up, Andreoli promises exciting announcements from Grass Valley at IBC in September. The broadcast equipment supply sector is certainly entering interesting times, as the customers change and as other sectors converge with broadcast.