Parks Associates Blog

Wednesday, April 30, 2008

Broadband Value-added Service Provider Acquired

The proliferation of digital pictures has engendered numerous business opportunities and created renowned photo storage, editing and sharing services such as Flickr.com and Photobucket.com. Simple Star is a company that dedicates itself to turning consumers’ digital photos into musical slideshows on multiple screens including computer, TV, DVD, and portable devices. A few months ago, I interviewed Simple Star’s CEO Chad Richard while I was writing our newly published Enabling Solutions for a Rich Broadband Experience industry report, which featured its PhotoShow and PhotoShow TV services as a successful cross-platform broadband value-added service. The news broke out today that Sonic Solutions, a digital media software vendor, has bought Simple Star for an undisclosed amount in a bid to expand its Web and multiple-platform presence.

The press release on this acquisition stressed Simple Star’s online success with 13 million copies of its software and flash-based online application installed since 2002. In the report, however, we mainly focused on Simple Star’s success in winning business from the two largest cable MSOs in the country – Time Warner Cable and Comcast, both of which have “deployed Simple Star’s PhotoShow application on PC and TV, by which subscribers can upload photos and short videos via PC and make them available for public viewing on digital cable Video-on-Demand channels… this convergence service, which is offered free to those who subscribe to both cable broadband and digital cable video services, has become the third-most popular channel on VoD platforms right after HBO and Showtime.” Actually, Time Warner Cable decided to take PhotoShow TV to a national level because of its popularity. Simple Star’s success recipe on this front is to help broadband service providers, all of which are trying hard to retain and attract bundle customers, to provide an easy-to-understand application that can make broadband service providers’ double-play or triple-play services more meaningful and interesting. In addition to using PhotoShow as a customer retention tool, cable MSOs have tied other revenue models such as advertising and local user communities to their photo sharing services.

Sonic has a much more comprehensive product portfolio including music, photo, video, and storage software. If it has a strategy to emulate Simple Star’s success path in the cross-platform area and leverage its existing relationship with cable MSOs, I have reason to believe that it is likely to become a strong broadband value-added service solution provider in the future.

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