Denver -- Sensing a boom in video-on-demand delivery,
multimedia-server provider nCUBE is buying digital ad-insertion specialist SkyConnect Inc.
to bolster its product arsenal.
The companies said they have worked together since mid-1998
to offer video-delivery systems to cable operators, the hospitality industry and other
But they added that an outright combination of nCUBE's
video-server hardware with SkyConnect's systems integration and software will enable
them to better deliver end-to-end solutions encompassing video-on-demand, interactivity,
digital ad insertion and enhanced pay-per-view services.
"We feel like by getting together on the engineering
and technical front, we'll have a better solution," said Ian Johnstone,
nCUBE's chief operating officer. "By getting together on the corporate front,
we'll be able to take SkyConnect's business into the international market."
Johnstone said marshaling their resources now was crucial
because they foresee an imminent acceleration in the VOD market, fueled by expanded
digital-cable build-outs and the development of set-top boxes that are more capable of
supporting the service.
"We see 1999 as a year for decisions by
operators," he said. "There will be a lot of plant out there that is
VOD-capable. I think that we're seeing more real possibilities than we've seen
In what they said could be a prototype solution, nCUBE and
SkyConnect paired on the design and deployment of a new hotel-video system in Dubai,
United Arab Emirates.
"It's total VOD, with a hospitality component
that will do everything from calling the butler, changing the room temperature, switching
the video or going to the Internet," said Mike Pohl, SkyConnect's president and
The companies did not disclose deal terms. The merger is
expected to close in about two months. Management will include Oracle Corp. chairman Larry
Ellison, who is also nCUBE's chairman, CEO and principal owner.
The combined companies claimed that they will be the world
leaders in both VOD and enhanced PPV services, as measured by video streams delivered.
Through SkyConnect, the pair will also hold the No. 2 spot in digital ad insertion,
trailing SeaChange International Inc.
Yvette Gordon, director of interactive technology for
SeaChange, agreed that cable operators will likely spend 1999 ironing out VOD engineering
and operational issues, with full commercial availability of systems that they have been
testing later this year and early in 2000.
Time Warner Cable and Rogers Cablesystems are testing
SeaChange's "ITV System" server-based software solution for VOD and other
U.S. customers of nCUBE include Ameritech New Media, which
uses nCUBE's "MediaCUBE" to provide enhanced PPV services on its Americast
cable systems in the Midwest.
SkyConnect, based in Louisville, Colo., said it has
installed video servers at nearly 300 cable headends for virtually all major MSOs,
providing digital ad-insertion and video-management solutions for traffic and billing, PPV
management and other functions.
SkyConnect has been trying to develop revenue sources other
than ad-insertion sales. It has been working with ACTV Inc. on "individualized
advertising," which enables operators to offer customized advertising to viewers
based partly on data gathered by their set-tops.
SkyConnect had planned to merge with Internet-service
provider Online System Services Inc. last year, but the merger fell through after
OSS' stock price fell sharply.