PowerTV said shareholders of Prasara Technologies, an Orlando, Fla.-based provider of software and services for telecommunications firms, will now also be shareholders in PowerTV, and the company will operate as a subsidiary.
Terms of the deal were not disclosed. PowerTV, which currently has about 120 employees, will gain another 25 employees in addition to Prasara's operations.
The deal means PowerTV adds some needed technologies to its portfolio of operating system and interactive TV software as the company prepares to spin off from Scientific-Atlanta and go public later this year.
"It's really a highly complimentary fit," said Steve Necessary, CEO of PowerTV. PowerTV gains new applications to run on its operating system, such as TV banking, online pizza ordering and video-on-demand. More importantly, it gains critical back-end systems for billing and managing customers as they use those services, he said.
PowerTV currently provides the operating software for Scientific-Atlanta's Explorer 2000 set-top box, but the software is capable of running on other boxes, including those from General Instrument. These boxes are being used in Time Warner's cable system to offer services such as video-on-demand, e-commerce, customized advertising and eventually email and Web access.
To date, PowerTV claims it has shipped more than 1.5 million copies of its operating system and associated software to customers. Despite having shipped more copies of its software in the United States than competitors such as Microsoft and Liberate Technologies, cable operators have been slow to add interactive services like email and Web surfing.
PowerTV's Necessary said five cable systems have started email service, and two have begun offering video-on-demand using Prasara's technology, but he did not say how many customers were taking advantage of those services yet.
"We're early in the deployment of digital services, so most cable operators today are focused on the broadcast-oriented applications," Necessary observed. "As they are coping with that, they haven't moved on to more advanced services yet."
The acquisition presumably will help speed the roll-out of those services by providing a one-stop shop for interactive technology, and subsequently help PowerTV gain more customers and more revenue as it looks to rev up for a public offering.
PowerTV's move comes as others in the field have already made a number of fairly expensive acquisitions in preparation for a heated battle to provide cable, satellite and broadcast companies with technology for giving the idiot box a better brain.
Just last month, Liberate acquired closely held MoreCom, a provider of software for interactive video services, for $561 million in stock in an effort to shore up its product offerings in Europe and markets such as satellite and digital television. The day before, OpenTV, bought Web browsing pioneer Spyglass for $2.5 billion in an all-stock deal. That merger, too, was the result of a need to add technologies to its portfolio to stay abreast of Liberate and Microsoft.
Microsoft hasn't been immune from the need to acquire interactive TV technology. Microsoft partnered recently with the United Kingdom's NDS to bolster its products for the European market. The software giant also bought Peach Networks, whose software lets Peach set-top boxes run Windows-based programs.