RipCode Acquisition - Frequently Asked Questions

Q:   Why did RGB Networks acquire RipCode?
A:   In 2009 RGB set an objective of defining and pursuing an IP video and three screen video delivery strategy and brought Yuval Fisher in as our CTO to lead this effort. As co-founder and former Chief Scientist at Envivio, Yuval knows the IP video market for PCs and mobile very well. He believes that the combination of scalable transcoding with three screen delivery is essential to meet market requirements, and recommended that we acquire RipCode, a leader in mobile transcoding, giving us the quickest time to market with a unique solution that addresses the three screen IP video trials that are getting underway now.

Q:   What technology and value-add does RipCode provide?
A:   RipCode provides transcoding and video delivery solutions to providers of mobile, desktop and IPTV content. The RipCode transcoding platform uniquely supports both live and file-based transcoding applications, with the broadest codec support, most extensive device coverage, and widest range of picture resolutions. With expertise and proven experience in the complex world of delivering video to mobile devices, RipCode’s technology and its employees offer distinct value as viewing of video on mobile devices accelerates.

Q:   How does RipCode’s technology fit into RGB Networks’ current product portfolio?
A:   RipCode’s technology is very complementary to RGB’s—their advances in mobile transcoding will help to fortify RGB’s three screen solution, as both a modular blade for RGB’s Video Multiprocessing Gateway (VMG), as well as stand-alone products. Together, we can offer a cost-effective, one-of-a-kind linear and on-demand solution that reduces network complexity and easily scales as operators expand their service delivery beyond a single type of end user device.

Q:   How is the combined company to be structured?
A:   Almost all of RipCode’s employees will become RGB employees. We will maintain RipCode’s location in Austin, Texas as our mobile development center. RipCode’s executive team and field organization will take on roles in expanding RGB’s presence in the mobile market.

Q:   Why acquire RipCode rather than developing the technology on your own?
A:   We carefully considered and researched both options and concluded that with the pace of mobile video deployments quickening, acquiring a proven mobile solution set that could be rapidly integrated into RGB’s modular VMG chassis would be the most effective answer, giving us an accelerated time to market and the ability to meet our customers’ needs as they develop.

Q:   Why acquire RipCode and not another vendor in the same space?
A:   We did a very thorough vetting of all the players in the mobile video space and concluded that RipCode brought the right mix of technology, expertise, size and cultural fit. Other companies and their solutions were too PC-centric, not Intel-based, too complex to acquire and/or included other elements that we deemed irrelevant to our business.

Q:   Who does RGB now compete with?
A:   Our competitors include both the traditional large screen transcoding vendors, as well as those who provide small screen transcoding solutions. However, through the integration of leading technology in both worlds, the RGB/RipCode combination creates a unique solution without an “apples-to-apples” competitor.

Q:   As a result of the acquisition, will RGB be entering into any new market segments?
A:   Yes—mobile carriers are a new focus for us, as well as existing markets RipCode currently supports, such as government and OTT.

Q:   When will the first product incorporating both solutions be available?
A:   We are working quickly to integrate our product sets and plan to ship before the end of 2010.

Q:   How will the acquisition affect RGB’s existing products, roadmap and support?
A:   RGB is committed to our current products and markets. The addition of the capabilities offered by RipCode is an expansion, complementing our existing solutions, rather than a replacement.

Q:   What will happen to RipCode’s products?
A:   RGB will continue to sell RipCode’s existing products through the current field team.

Q:   How does this acquisition affect RipCode and RGB Networks’ customers?
A:   For both sets of customers, the acquisition provides a broader, more powerful set of solutions. RGB’s cable, telco and satellite customers are already seeing great value in RGB’s integrated video processing approach and with the addition of mobile video delivery to the multi-function chassis, they will have a clear migration path as they transition to three screen delivery. For RipCode’s customers, they will gain the reliability and scalability offered by RGB’s carrier-class chassis platform.

Q:   What will happen with RipCode’s existing resellers and channel partners?
A:   We hope they will become RGB resellers and partners unless they decide otherwise.

Q:   What is the process for RipCode customers to obtain support for their products?
A:   No change—the process is the same as prior to the acquisition.

Q:   Will any facilities be closed as a result of the acquisition?
A:   We will continue to operate a product development center out of RipCode’s office in Austin, Texas. The administrative office in Dallas, Texas will be closed.

Q:   There appears to be an increasing number of acquisitions in the video marketplace—do you see this as a growing trend?
A:   Yes. We anticipate that there will be more consolidation in the video marketplace. We have a clear direction and chose to move now to ensure that we could select the best available technology that would get us out of the gates quickly and ready to solve emerging challenges for our customers.

Q:   Private-to-private acquisitions are rare—why did RGB and RipCode decide to move ahead with this deal?
A:   The reason that private-to-private acquisitions are rare is that it is difficult to satisfy all investors. A deal of this type only works out when it is clearly synergistic and provides a sum greater than the parts. Moving forward with this agreement expands our product capabilities, market opportunities and diversity and is a testament to the strength of our combined technologies and expertise and the vision of our investors.

Q:   Was RipCode looking to be acquired?
A:   No—RipCode was in the process of an additional round of financing as an independent company when RGB approached them. The management team and investors became convinced that joining forces with RGB would yield a combined company capable of a higher return on investment than going it alone. To succeed in three screen delivery you must have high-density, scalable transcoding. RGB had that already and it’s easier to add mobile delivery to that than the other way around. The merged company now has the revenue base and market momentum to propel it to a leadership position in three screen video.

Q:   Does RGB anticipate any further acquisition activity?
A:   As we continue to build our IP video solution portfolio, we will certainly consider acquisitions as an effective way to expand our capabilities and reach.

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