Netgem's Videofutur Purchase Offers Limited Upside
Netgem has offer ed to acquire 100% of Videofutur Entertainment Group . Adding Videofutur ' s cloud-based video distribution platfo rm will help Netgem extend the relationships it has with telecoms operators in the IPTV space, but with device and platform-agnostic streaming services such as Netflix set to seriously wound traditional pay-TV monetisation strategies, BMI believes the expanded business will still struggle to make headway.
Netgem reported a 27 % fall in revenues from its activities in France in 2012, from EUR38.3 mn to EUR28.1 mn. This largely relates to the decisions of key customers to switch to other STB providers in pursuit of cost savings and better connectivity capabilities. The development of hybrid pay-TV/OTT hardware, backed up by a more comprehensive software and connected services portfolio, gives Netgem products the multiscreen capabilities that small and mid-tier operators are looking for to defend their fledgling IPTV offerings from low-cost streamed video services. Netgem ' s June 2012 purchase of Plugnsurf resulted in the addition of mobile data to Wi-Fi offloading capabilities to its products, and this is a step in the right direction in light of growing demand for Connected Home solutions .
Videofutur has also recognised the changing video consumption trends and has adapted its strategy accordingly. Like Netflix, the company has moved away from video and DVD rental to online content di stribution, but lacks international reach and access to content from major studios and production companies; this has conspired to limit its availability to France. Nevertheless, this is a useful acquisition for Netgem, which has lost traction in its home market and is seeing stronger revenue growth from its overseas businesses.
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