Barco acquired the software assets and engineering personnel of XDC, including intellectual property for the CineStore digital cinema server, and XDC’s theatre management system (TMS). XDC, now relieved of operating a money-losing server operation and TMS, still needs a TMS for its digital cinema installations, and is reported to be out shopping. Not necessarily to buy, but to lease.
XDC was spun out of EVS, a Belgian-based world-class manufacturer of broadcast technology, and remains part of the EVS-Group of companies. This only makes it more stunning that XDC would sell off its technology. It’s not Barco’s first entry into software, as Barco also operates an air traffic control division. But as a hardware-oriented display company, it is stunning news that Barco bought into a software operation, minus the hardware. XDC did not develop its own media block, using instead the Berlin-based MikroM media block in its servers. (It is MikroM’s in-projector 4K media block that Dolby announced at CinemaCon.)
Coupling its new software with a 3rd party media block, the purchase will place Barco in direct competition with the server vendors that it’s worked closely with over the years. This will make it a watershed event when Barco introduces its own server.
The motivation for this move is simple. Projector companies need to gain control of system pricing. Most cinema sales are closed by projector companies, since they have the highest price item. Server companies often find themselves squeezed in the sale, as the projector company takes the margin, and leaves little on the table for the server company. This has led to visible shifts in partnerships. Barco brought financing to Cinedigm’s Phase 2 program, for example, which gives it clout to bring VPF financing to its sales. It’s choice of server company in the US has been GDC, whose price point is lower than Doremi, elevating GDC’s US market position above that of Dolby. No doubt Barco intends to reduce those margins even further in every corner of the world.
But Barco doesn’t have full control of its destiny. It’s still reliant on MikroM for media blocks, and MikroM isn’t known for producing low priced products. In fact, it was MikroM’s high price for its 2K media block that turned XDC into a Doremi customer, shunning its own servers. One of two things will happen. MikroM could lower prices, thanks to anticipated volume from customers Dolby and Barco, or Barco could go elsewhere. It’s California operations, based in Sacramento, are just an hour away from AJA, the only other 3rd party media block company that has media blocks in use today. Then there’s USL, who still intends to introduce a 3rd party media block to the market. Dolby passed over AJA, and may be passing over USL. Time will tell what Barco will do.
Another area that will be watched is the DCOSI media block interface. XDC was the second server company in DCOSI, but a recent comment from Dolby is that the sale of XDC’s software group brought the group’s membership in DCOSI into question.