Orca Interactive, a developer of middleware software for Internet TV, has revealed its intention to float on the alternative investment market of the London Stock Exchange. Orca could carve a profitable niche for itself by targeting telecoms providers, which are currently struggling to provide the breadth of services offered by cable firms…
Speaking to ComputerWire, Orca’s chief executive Haggai Barel confirmed that Orca is intending to IPO by the end of 2004 and is looking to raise roughly GBP14 million. This should give the Israel-based company a valuation between GBP30 million and GBP40 million.
The funds will be mainly for sales and marketing efforts, as well as to give the company more presence when dealing with big name partners that currently includes the likes of Samsung Electronics, Nokia, and Hewlett-Packard.
Orca Interactive is a subsidiary of Emblaze, (formerly known as Geo Interactive), a group of companies that offers communication technologies for various sectors including the military and homeland security markets.
Orca itself develops and licenses Internet Protocol based TV (IPTV) middleware that enables broadband IP service providers to deliver interactive television and video services over broadband. Orca’s software addresses the needs of movie-on-demand providers, such as broadcasters, telecom operators, cable operators, and broadband ISP operators.
At the moment, Orca is mainly targeting telecoms operators. According to Mr Barel, telecom operators have been at a disadvantage because unlike cable operators, they have not been unable to offer the holy grail of modern homes, the so called triple play (voice, data, and video) services.
Mr Barel believes the current situation in the United States acts as a window on the likely global landscape in five years time. In the US, telcos are facing a tough task trying to counter the huge inroads made by cable operators with their triple play services.
Orca Interactive could well have found itself a potential lucrative niche in the marketplace. At the moment, most telecoms operators are seeing falling sales their from fixed-line networks and the need for alternative revenue streams has meant that there are being to look at other services.
The decision by the former UK telecoms incumbent BT Group to spend $18 billion on broadband and video services over next five years, reflects the importance to the market. Driving the uptake is the relatively low cost of broadband access, an increase in available broadband speeds, and advances being made with compression technology.
Orca recently signed a licensing agreement with Atlas Interactive India. The vendor’s middleware will allow Atlas to deliver Interactive TV services over IP networks to subscribers of India’s largest telecoms company, Bharat Sanchar Nigam.
Orca sees challenges ahead, however. According to Mr Barel, a possible threat to the video on demand market comes from the content companies: They do not want to cannibalize their revenues streams, as most of their sales stem from the sale of DVDs. Content companies, the major Hollywood studios and TV broadcasters alike will want to look closely at any deal that involves the downloading of their materials.
According to Orca however, the IPTV market is expected to grow to approximately $17.8 billion from 2005-2007, while subscriber numbers are expected to grow to 15.9 million by end of 2007 from 700,000 today.