Cisco is paying $5bn for NDS, a UK company which specialises in securing subscription TV services.
NDS, which is privately owned by the Permira Funds and News Corporation, provides middleware and security software built into set-top boxes. Its customers include BSkyB in the UK and DirectTV in the US.
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NDS jointly developed Sky+ with BSkyB, providing the personal video recorder functionality inside the set-top box as well as the user interface. Its middleware platform, Media Highway, acts like an operating system for set-top boxes, delivering the user interface, digital rights management and conditional access, plus personal video recorder functionality.
In the IPTV space, NDS also provides the technology behind the Sky Go Service for iOS (iPhone/iPad) and Android devices.
Cisco said the acquisition of NDS will complement and accelerate the delivery of Videoscape, platform that enables service providers and media companies to deliver next-generation entertainment experiences.
The acquisition is part of Cisco’s increased strategic focus on video, one of its five foundational priorities, and its investment in software and services revenue streams and competencies.
"Our strategy has always been driven by customer need and on capturing market transitions," said John Chambers, chairman and CEO at Cisco. "Our acquisition of NDS fits squarely into this strategy, enabling content and service providers to deliver new video solutions that leverage the cloud and drive new monetisation opportunities and service differentiation."
In 2011, Cisco dropped its consumer tech business to focus on its core enterprise business.