Rayburn: Once dominate cable industry player SeaChange acquired for $30M

SeaChange, which once dominated the cable TV operator market and had over $216 million in revenue, will have its assets acquired for $30 million. Under the deal, an unnamed “affiliate” of PartnerOne will acquire SeaChange’s assets minus SeaChange’s cash and cash equivalents at closing.

SeaChange was initially incorporated in 1993 as SeaView Technology and entered the market in 1994 with an ad insertion solution that allowed cable TV providers to send different advertisements to separate geographic areas so they could measure demographics, enabling advertisers to do targeted advertising. Other vendors offered tape-based analog systems at the time, but SeaChange’s digital solution resulted in faster upload times and less cost. In 1994, Time Warner in Manhattan was the first client for their product.

In 1995, SeaChange had $23 million in revenue, up from $5 million the year before. In 1996, it changed its name to SeaChange International as it expanded into European and Middle Eastern markets. In November 1996, SeaChange went public on the NASDAQ, selling 2.3 million shares of stock at $15 each, netting $24 million. Shortly after the IPO, SeaChange partnered with IPC to develop a VOD service for hotels, where I first remember encountering the company’s product. 1996, the company finished the year with $49.3 million in revenue. In 1998, SeaChange formed an alliance with Scientific-Atlanta to provide VOD equipment to cable operators at a lower cost than current systems in the market.

In 2000, SeaChange made a deal with Microsoft to develop a system to simultaneously encode video for television broadcasting over the Internet. Microsoft spent $18 million to acquire a 2% stake in the company. Later that year, Comcast Corp. bought a $10 million stake in the company and signed a long-term agreement to buy its VOD systems and services. By the end of 2000, SeaChange’s revenue grew to $85.2 million on just over $1 million of net income.

In 2001, the company issued nearly 3 million new shares of stock in a secondary offering that netted them more than $80 million and reported sales of $115.8 million in revenue for fiscal year 2002. For fiscal year 2004, the company ended with $146.1 million in revenue. In 2012, SeaChange’s revenue started to fall, with full-year revenue dropping to $197.7 million, and by 2017, it had come in at $83.8 million. By 2021, revenue was down to $22 million for the year. From 2012 to 2021, SeaChange’s revenue growth averaged a 17.2% decline over the ten years.

Within ten years of its founding, SeaChange International became the leader in video-on-demand and advertising insertion equipment for cable providers and broadcasters. The company once owned more than 60% of the market, but poor product choices, multiple management teams, competitors and a lack of discipline in R&D spending sank the company.

Updated: I should point out that while in the long run, SeaChange faulted in the market, Bill Styslinger, Edward Delaney, Jr. and Ed McGrath, who started SeaChange, deserve credit for seeing a problem in the market and inventing a solution. Bill left as CEO in 2011.SeaChange Acquisitions

• 1996: Acquired Horizon Systems
• 1997: Acquired IPC Interactive Pte.
• 1999: Acquired Digital Video Arts
• 2002: Invested $2.3 million in On Demand Group
• 2004: Acquired ZQ Interactive
• 2005: Acquired Liberate Technologies non-US business
• 2005: Acquired full ownership of On Demand Group for $13.4 million
• 2005: Acquired a 19.8% ownership in Casa Systems

Dan Rayburn is an analyst in the streaming media industry, with regular TV appearances on CNBC, Bloomberg TV, and Schwab Network amongst others. He is conference Chairman for the NAB Show Streaming Summit in Las Vegas each year, and his streamingmediablog.com website is one of the most widely read sites for broadcasters, content owners, OTT providers, Wall Street money managers, and industry executives. StreamTV Insider