Cisco Completes $5 Billion Deal for NDS, Bolsters Video Efforts

Company officials expect NDS' technology to boost Cisco's Videoscape TV service delivery platform, which delivers content not only to TVs but also PCs and mobile devices.

Cisco Systems has closed its $5 billion acquisition of NDS Group, a week after getting final approval for the deal from European antitrust regulators.

The networking giant is looking to NDS to help bolster its ambitions in the booming video space, with the company€™s technology expected to help drive the delivering and adoption of Cisco€™s Videoscape service, which enables consumers to find and watch pay TV content, not only on their televisions but also PCs and mobile devices.

Cisco announced the completion of the acquisition July 31.

Company executives are looking to become a dominant presence in the video delivery market, which they have said will grow fourfold in the next three years.

€œSimply put, almost everyone loves video,€ Jesper Andersen, senior vice president and general manager of Cisco€™s Service Provider Video Technology Group, said in a July 31 post on the Cisco Blog site. €œThe video entertainment industry is in the midst of a major market transition, with consumers demanding high quality video experiences that are inherently more immersive, engaging, mobile, and social. €¦ This creates great opportunities for Cisco and our service provider customers, as we partner together to deliver next-generation video experiences to subscribers worldwide.€

Cisco officials announced the bid for NDS Group in March. The British company, partially owned by News Corp., develops video software and security solutions that enable service providers and media companies to bring video to a host of devices, from traditional televisions and PCs to smartphones and tablets. NDS counts many major service providers and media companies€”including Cablevision and DirectTV€”as customers, both in the United States and overseas.

In a March 16 research note, analysts with Jefferies & Co. applauded the deal, saying it not only gave Cisco even more video capabilities, but that NDS' presence in markets outside the United States made it even more attractive.

€œWhile there are a number of benefits to this deal, we believe the deal was really done to expand Cisco's worldwide footprint in video delivery,€ the analysts wrote. €œCisco is largely a North American player, and NDS has a valuable footprint in fast-growing emerging markets. We think acquiring NDS is the most efficient way for Cisco to penetrate these markets.€

Video is one of the cornerstones for Cisco€™s growth strategy. Studies done by Cisco have indicated that within the next few years, video will account for 90 percent of all Internet traffic, and that by 2015, there will be 3 billion Internet-connected connected devices, from laptops to smartphones to tablets. NDS€™ technology will help Cisco create products and services that address the space where video and connected devices merge, officials have said.

€œVideo will be the new voice,€ Cisco CEO John Chambers said during a March 15 Webcast discussing the NDS deal. €œIt will be pervasive, on any device €¦ any time.€

Cisco€™s Andersen said NDS will only help his company further its video ambitions.

€œThe NDS product suite and delivery model dovetails nicely with our Videoscape platform; together we will reinvent the TV experience for consumers,€ he wrote. €œOur shared vision focuses on an open architecture, multi-vendor partnerships and customized solutions, protecting customers€™ investments today and paving the way for future growth.€

Abe Peled, former NDS chairman and CEO, is now senior vice president and chief strategist for Cisco€™s Video and Collaboration Group, which includes Andersen€™s unit.

The deal for NDS was Cisco€™s largest since it bought telepresence rival Tandberg in 2010 for $3.3 billion.