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Comcast Pulls SeaChange VOD Servers: Sources

Comcast has removed SeaChange International's video-on-demand servers from its production environment, with Cisco Systems now representing the MSO's primary VOD server vendor, according to industry sources.

The operator took out the SeaChange servers because they did not fit well into the hierarchical Comcast Content Delivery Network (CCDN) architecture, the sources said. Comcast still uses SeaChange's back-end management software, according to the sources.

Comcast declined to comment.

In a statement, SeaChange said, "While SeaChange doesn't comment on speculation about business agreements with its customers, it continues to have a very strong relationship with Comcast, particularly for software and the associated hardware."

For the fiscal year ended Jan. 31, 2011, Comcast comprised 22% of SeaChange's total sales, or about $48 million, according to SeaChange's most recent 10-K filing.

Cisco, in comments filed with the Federal Communications Commission in June 2010 supporting the operator's deal to gain a controlling interest in NBCUniversal, disclosed that it was working with Comcast on the CCDN project.

"Comcast, with Cisco's assistance, is implementing a national content delivery network infrastructure and second-generation VOD services that will allow Comcast to expand its VOD content dramatically," Cisco said in the filing. "[Comcast] also is exploring ways to use Cisco's content delivery network solutions to increase its digital video recorder storage and management capabilities, thereby providing customers with additional flexibility and enhancing their content viewing experiences."

Comcast's CCDN -- similar to Internet-based CDNs such as those operated by Akamai Technologies and Limelight Networks -- distributes video-on-demand assets to about 90 "edge" server locations, which are fed by large-scale library servers in four regional locations. In the middle are about 100 mezzanine gateways that cache VOD assets and manage the content that is distributed to the edge servers.

Comcast now offers 30,000 VOD choices in markets served by the CCDN, representing approximately 80% of the operator's footprint. In May, the MSO announced that it had surpassed 20 billion VOD sessions since first launching video-on-demand in 2003.

Last fall, one of SeaChange International's largest shareholders, investment advisory firm Ramius, sent a letter to the company's board of directors expressing "disappointment and concern regarding the poor margin performance" in the core software business and called on the board to re-evaluate the decision to not sell the Servers and Storage business. Ramius owns approximately 8.9% of SeaChange's outstanding shares.

Subsequently, Arris Group has been rumored to be investigating an acquisition of SeaChange. SeaChange has said it is "continuing to evaluate a range of strategic options."