Harmonic provides next-generation video delivery solutions to pay-TV operators, and the company is seeing its business jump as customers make the move to high-definition (HD) content and on-demand services. Harmonic CEO Patrick Harshman spoke with IBC e-daily about the changing TV landscape and what opportunities this landscape offers a video delivery technology vendor such as Harmonic.
 

IBC e-Daily: What are the main growth drivers of your business?

Harshman: The growth driver for the satellite business as well as in general is this transition to HD. We see certainly see this in the United States, but we see could take-up in Asia as well as Europe. I think just the scale of that is really starting to get going. This is the primary top-line driver. I would also say a smaller revenue contribution, but something that is beginning to grow and something are customers are beginning to focus more on, is this trend of hitting multiple screens. There is an increasing focus of taking video content from the screen to living room and taking it to the PC and taking it to multiple devices. Mobile TV is increasingly interesting, such as for automobiles, for example. We are seeing an increasing focus on this from all of our customers, but not least of which, our satellite customers. They are increasingly taking advantage of broadband connections as well as DTH connections.
 

IBC e-Daily: What of Harmonic’s market sectors do you see growing the fastest?

Harshman: DTH, and that is the part of the satellite market we participate in, generates around 20 percent of our overall revenues. I expect that to be constant. It is growing for us but not significantly faster or slower than wireline. One trend to watch is that it is getting harder and harder to cleanly define these segments. We just issued a press release with Portugal Telecom, which in densely populated areas is using DSL technology to offer an IPTV service in Portugal. Now they are getting into the video delivery business. The question was, “Why not reach customers in outlying areas who don’t have access to the DSL service?” So they have launched a DTH service. This is increasingly the trend. Operators don’t want position themselves as satellite operators but as a communications and video services providers, and if they can use satellite for economic and geographical reasons to complement other infrastructures they will.
 

IBC e-Daily: Do you think there will be opportunities for deals with telecoms operators looking to use satellite?

Harshman: I think that there will be. Another innovative operator in this area is Yes TV, who have a close relationship with Bezeq in Israel. They are offering video-on-demand services but also using broadband connections. Certain content will be pushed to the DVR box over satellite, but other content will be unicast over the DSL network using a hybrid set-top box which has a satellite receive component and Ethernet. As I walk around the floor at IBC, I think one of the stories we are seeing an increasing focus on hybrid set-top boxes. You are seeing more unicast functionality, and it is creating a lot of technical possibilities. I think we will see a lot of commercial deployments and plans that leverage this technology.
 

IBC e-Daily: How does the shift in infrastructures impact a company like Harmonic?

Harshman: We think there are more opportunities for growth. We are a leader in video processing and video encoding, but we have been working for several years to expand the basis of our business from a technological perspective. One of the key things we have focused on is this transition to on-demand video, in addition to our internal development about stream processing. We have acquired Entone and Rhozet. Rhozet is a player in the Internet space. Amazon has an unboxed video-on-demand service over a broadband connection, kind of like NetFlix, powered by Rhozet. We have kind of anticipated some of these trends, and even satellite DTH operators would need to avail themselves to on-demand technologies to participate in this more interactive future. We have been building up this technology base for a while, and we are really excited to see these trends and market developments take hold. It creates opportunities for these new technologies we have been developing and talking about over the last two years.
 

IBC e-Daily: This mantra of content anywhere, any time and on any device has been around for a long time. How close is it to becoming a commercial reality?

Harshman: You are not going to see a quantum step up, but we are seeing a lot of important steps forward. I can tell you a story about my family and the way we viewed the Olympics. We were quite excited about it, but after the third night of watching synchronized diving I got the laptop out, and we had NBC.com on there. This was literally an anytime, different screen type of experience. Another big phenomena we are seeing is the adaption of Internet content to the big screen. You also have interesting trends with things like the iPhone. The industry has been talking about it for a long time, and the danger is that it remains a mantra rather than a reality, but I think we are starting to see it and operators are really starting to exploit it.
 

IBC e-Daily: Has the take-up of HD been disappointing in major markets in Europe and Asia?

Harshman: Three years ago in New York, I was told by a number of people that HD did not have a play in Europe. I think that game has changed. It has been a driver of our business. We announced a deal two months ago for HD encoding with Sky Italia. Although the channel count is not significant, we have established the foundation position for the HD launch. We have similar deals with players such as Canal Digital. In Asia, and markets like Japan, it is not quite where the United States is, but it is a couple of steps beyond where Europe is. We have spoken about a very significant deployment with SkyPerfect in Japan.
 

IBC e-Daily: What is the mobile TV opportunity for Harmonic?

Harshman: I think the market is still somewhat of an enigma, particularly the broadcast DVB-H market. When we look at our crystal ball we are more excited about the momentum on video streaming for data over 3G and 4G technologies. I think there are more questions than answers here. We think it will be a slow evolution here.