Cisco has announced plans to acquire UK-based video software firm NDS for $5bn to give its Videoscape platform a boost.
NDS, which was founded in Israel, provides video software and content security services to the service provider and media industries, which is where Cisco’s Videoscape operates. The company said the deal will help its customers improve their video delivery capabilities.
The security element of NDS’s business protects TV operators from people attempting to hack into their service and receive TV channels they haven’t paid for.
The acquisition will help Cisco move into emerging markets such as India and China, where NDS is already well established.
NDS’s 5,000 workers will transfer over to Cisco once the deal closes, which Cisco believes will happen during the second half of the year. The $5bn price includes he assumption of debt and retention-based incentives, Cisco said.
Cisco believes video will be one of the key drivers of internet traffic over the next few years, with the company saying that by 2013, video will make up 90% of consumer IP traffic and 64% of mobile. This acquisition will help the company provide the tools needed by media companies to provide video services over the internet, said CEO John Chambers.
"Our strategy has always been driven by customer need and on capturing market transitions," he said in a statement. "Our acquisition of NDS fits squarely into this strategy, enabling content and service providers to deliver new video solutions that leverage the cloud and drive new monetisation opportunities and service differentiation."
"NDS’s open software video platform and services are highly complementary to Cisco technology, and together we are uniquely positioned to enable service providers to deliver fresh and exciting multi-screen video services to their customers," added Dr. Abe Peled, executive chairman, NDS.
"A key component of NDS’s success has been our open software and services model, working with a wide range of set-top box manufacturers to enable greater choice for our customers; following this acquisition this strategy will continue and expand the choice of hardware solutions available to service providers worldwide," he said.
Customers of NDS include BSkyB in the UK, SFR in France, CanalSat in France and Comcast in the US. It was part-owned by media giant News Corp and private equity fund Permira. The $5bn price is about 35% higher than NDS’ value when it delisted from the stock exchange in 2009, according to Reuters.
Cisco’s much-publicised yet unsuccessful push into the consumer space and away from its switches and routers history has caused the company a number of problems and has led to a $1bn cost cutting exercise, which included laying off around 10% of its workers.
