Cox Adds on SeaChange

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Cox Communications Inc. has added SeaChange International Inc. as a second video-on-demand server vendor, saying it will deploy the supplier's servers and VODLink technology in "select" systems early next year.

The deal is significant because it signals Cox's plans to jump-start its VOD launches, which have been dormant for more than a year. The MSO launched VOD in the 2001-2002 time frame, at the same time as Time Warner Cable, Comcast Corp. and others.

But while the leading MSOs continued with deployments in most of their systems, Cox remained on the sidelines, with launches confined to San Diego, Oklahoma City, Las Vegas and Hampton Roads, Va.

Cox now plans to launch VOD in five more markets by the end of first-quarter 2004, bringing its homes-passed count to 50% of all Cox subscribers.

The SeaChange gear is headed for Cox's Motorola Inc.-equipped markets. The vendor said in a release that its equipment will work with Motorola's DCT 1000, 1200, 2000, 2500 and 5100 series set-tops.

Cox did not release the names of the markets, but its major Motorola territories include Northern Virginia; Omaha, Neb.; Orange County, Calif., and Tulsa, Okla.

At the same time, Concurrent Computer Corp. said it has added a fifth Cox market. Concurrent is Cox's server vendor in the four markets where it has already launched service.

Three of those markets are Scientific-Atlanta Inc.-geared markets: San Diego, Oklahoma City and Las Vegas. Hampton Roads, Va., is a Motorola market.

Cox's largest remaining S-A system that hasn't launched VOD is Phoenix.

The deal also follows the pattern of the larger MSOs, who've divided their server business between multiple vendors.

Comcast uses SeaChange and Concurrent, while Time Warner uses SeaChange, Concurrent and nCUBE Corp. equipment.

And most MSOs are evaluating hardware from the new batch of server vendors vying to get into this space.

The deal gave SeaChange a boost, as Cox was the largest MSO with which it didn't have a VOD deal.

SeaChange's stock price rose 98 cents, to close at $15.40 on Oct. 15, the day the Cox relationship was announced.

"Cox has a vast base of Motorola homes and, now, significant opportunity to propel VOD services into additional markets," SeaChange CEO Bill Styslinger said in a statement. "Our VODLink software supports Cox's VOD strategy by seamlessly preserving its successful 'Entertainment on Demand' look and feel for the Motorola digital environment."

Among other things, VODLink allows operators to carry DVD-type content within the VOD platform.

"For Cox, VODLink technology provides us with the ability to quickly deploy multiple types of on-demand content, including movies, subscription on demand services and more," said Cox vice president of multimedia technology John Hildebrand.

Erik Zamkoff, an analyst with Independent Research Group, estimated SeaChange could see $15 million to $20 million in revenue from Cox over the next 12 months.

Zamkoff raised his 2004 revenue estimates for SeaChange only slightly, from $143.9 million to $144.5 million, after the announcement.

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