Espial Agrees to Acquire Kasenna

Espial agreed to acquire Kasenna. Espial is based in Ottawa, Canada and provides IPTV middleware and applications software. Kasenna is California based and provides video on demand systems as well as its own middleware software. The transaction is expected to close about July 9, 2008.

Espial has been working to move up the chain and become a prominent IPTV systems provider. Kasenna was an SGI spin off that has been providing video on demand systems for many years. While this acquisition will increase Espial's presence in the IPTV market, it still has a lot of work to do. Kasenna does have good market presence, other companies have more momentum now.

IBM and Cisco Partner for IPTV

IBM and Cisco have formed a partnership to address the Tier 2 and Tier 3 carriers implementing TelcoTV services in Europe. While the Tier 1 carriers in Europe have already set their strategy, the company sees significant opportunities with the smaller carriers, especially in Eastern Europe and the Middle East as we as some carriers in Scandinavia. Their first joint deal is with Dansk Bredband in Denmark.

Cisco sill provide networking products, Scientific Atlanta headend systems, Arroyo video on demand servers, as well as home gateways and set-top boxes from Linksys and Kiss.

IBM will provide business and technical consulting services plus a vendor finance package.
The two companies will also include middleware from Kasenna and content protection from Verimatrix as part of their TelcoTV offering.

IBM and Cisco have complementary roles, so this combination makes sense for both companies. However, while the Tier 2/Tier 3 market is quite active, the Tier 1 carriers will have most of the subscribers and will account for most of the spending in most product categories.

Kasenna Tested at 1 Million Subscribers

HP and Intel ran IPTV scaling tests using Kasenna's LivingRoom middleware and Kasenna's PortalTV video on demand systems. These test showed that this software set can support 1 million subscribers using 9 servers. Five of the servers were used to support the middleware, 3 servers to support video on demand, and one server to support the backend database.

This simulation was run at HPs IPTV lab in Grenoble, France. It assumes that 60 percent of the set-top boxes were active and 40 percent inactive. The 60 percent active set-top boxes break down into:

• 18% watching or channel surfing broadcast TVs (180 thousand)
• 34% watching VOD and NPVR services (350 thousand)
• 1% browsing video on demand content (10 thousand)
• 4% browsing the electronic program guide (40 thousand)
• 3% viewing other applications (30 thousand)

Kasenna and HP are planning to release a white paper that gives the details of this test next week. You can download a summary of this test and register for the white paper at:

http://www1.kasenna.com/1m/

Kasenna promised to give me an early release of the white paper along with an interview with one of their technical people who worked on this project. I will post a summary after that.

This result is impressive. Kasenna uses a thin client approach, so it is quite dependent on the servers. Earlier middleware systems such as Nokia Siemens Myrio is set-top box based and puts a much lighter load on the network. Two years ago Myrio told me that their software could support 1 million subscribers with 4 servers. The primary function of these servers is to download software into the set-top boxes.

At that same time, Microsoft told me that their software would require 600 servers to support 1 million subscribers.