Motorola buys Modulus Video

By Colleen Taylor, Contributing Editor -- Electronic News, 5/17/2007

In its latest move to gain more ground in the increasingly lucrative premium media services realm, Motorola Inc. has inked a definitive merger agreement to acquire privately held video systems company Modulus Video Inc. Financial terms of the transaction were not disclosed.

Modulus Video makes MPEG-4 advanced video coding (AVC) compression systems designed for delivery of video content in the IPTV, cable, broadcast and satellite marketplace. According to the companies, Modulus Video has partnered with Motorola for more than two years.

Motorola's Modulus buy is just the latest in a string of deals the company has made recently in the video services space, which include acquisitions of Broadbus Technologies Inc., Kreatel Communications AB, Tut Systems Inc. and Netopia Inc.

The company today said that its bevy of recent mergers are part of an effort to create an integrated, end-to-end video delivery system for multiple network architectures -- an effort that could very well pay off in the coming years. According to a recent report from market research firm iSuppli Corp., the premium video services market is expected to rise to $277 billion by 2010, up from less than $200 billion in 2006. The firm also projected that IPTV is set to lead the market's pack; revenues from IPTV alone are expected to increase to $23.5 billion in 2010, the firm said, rising at compound annual growth rate of 103 percent from $681 million in 2005.

"Motorola is committed to offering an integrated, end-to-end video portfolio designed to meet the current and next-generation requirements of operators," Dan Moloney, president of Motorola's home and networks mobility business, said in a statement.

Upon completion of the transaction, Modulus Video will become a wholly owned subsidiary of Motorola and will be integrated into the Motorola home and networks mobility business. Motorola, which is based in Schaumburg, Illinois, said it intends to maintain Modulus Video's operations in Sunnyvale, California.

The transaction is subject to customary closing conditions, including regulatory approvals and the approval of Modulus Video stockholders, and is expected to be completed in Q2 or Q3.