SeaChange International has paid $8 million in cash to acquire DCC Labs, a Warsaw, Poland-based software developer and integrator for set-tops and multiscreen devices that, SeaChange said, will also strengthen its Reference Design Kit (RDK) product strategy.
SeaChange said it closed the deal on May 6 and expects DCC Labs to contribute “an additional several million dollars of revenue annually,” with an anticipated one-year payback through synergies and cost savings that SeaChange will begin to realize immediately. The transaction also includes a lock-up provision for the SeaChange stock that unwinds over a three-year period, the company said.
It said the deal will also help SeaChange to optimize the operations of its In Home business, which includes the SeaChange Nucleus home video gateway. DCC Labs has also developed a software stack for Europe’s DVB (Digital Video Broadcasting) community and an HTML5 framework for user interfaces.
In conjunction with the acquisition, SeaChange said it has also started a workforce reduction within its In Home engineering and services organization that aims to achieve $8 million in annualized cost savings. DCC Labs CEO Marek Kielczewski, meanwhile, has joined SeaCahnge as SVP of consumer premises equipment software and will lead the SeaChange In Home division.
SeaChange said DCC Labs has more than 70 engineers and has won projects supporting millions of set-tops, mobile devices and smart TVs, and has development expertise that includes Android and Linux operating systems as well as the Reference Design Kit (RDK), the preintegrated software stack for set-tops and broadband devices that’s managed by Comcast, Time Warner Cable and Liberty Global.
SeaChange and DCC Labs have a business history, as SeaChange engaged with the Warsaw-based company last year to support a major set-top development project for a “large European cable operator” that resulted in deployment of a user interface and an RDK 2.1-based home video gateway for field trial tests within four months of the initial engagement. SeaChange said it also tapped DCC Labs to assist with improving quality and providing enhancements for another European cable operator’s deployed home video gateway.
“Through our successful collaboration in the field, SeaChange determined that DCC Labs’ experience and strengths are exceptionally well-aligned with our strategy to operate more efficiently and rapidly roll out high-value, front-end product innovations,” Ed Terino, the company’s recently named CEO, said in a statement. “SeaChange is now better positioned to serve the global RDK licensee community, as well as fulfilling service providers’ growing desire to focus on a select set of vendors to support their video infrastructure from the back-end all the way through to set-tops, mobile devices and the subscriber experience.”