Irdeto operations

Our operating performance

Our Irdeto business services the MultiChoice Group's video entertainment subsidiaries and 382 external clients. Revenue from the MultiChoice Group accounted for 57% of Irdeto's total revenue in FY23 (FY22: 52%), which was eliminated on group consolidation. Despite continued top-line headwinds due to macro-economic, geopolitical and market-specific factors, Irdeto added new customers in FY23, made targeted investments towards its future in promising growth verticals and delivered solid trading profit margins of 45% in FY23, up from 33% in FY22.

Our first strategic pillar is to increase market share by winning Tier-1 customers in video entertainment. We have been making progress over the last two years, and Irdeto has become the second-largest content protection vendor in the market by volume.

We expect traditional video entertainment broadcasting to come under some secular pressure in coming years, but that provides us with opportunities to support our customers in their transition towards streaming. Providing our anti-piracy solutions to protect valuable content remains critical as streaming continues to gain market share. Finally, by leveraging our core technology, offerings and expertise we are able to help customers achieve cost efficiencies through managed services.

Many of the macro-economic challenges we experienced in FY22 persisted into FY23. In addition, some new headwinds and market trends affected our business in the current year:

• Continued intermittent lock downs in China, as a result of their pursuit of a zero-COVID policy, directly impacted sales and supply chains. The effect is slowly resolving after having lifted much of the restrictions towards the end of the year.
• Global silicon shortages negatively impacted the availability of components in both the Video and the Connected Transport markets, albeit the overall challenges in the market have started to ease.
• Conditional Access Module (CAM) sales were negatively impacted by 'cord cutting' trends in our developed market footprint, the impact of reduced disposable income on consumer demand more broadly, and the growing availability of OTT-driven second screen options.
• Despite strategic customer wins in recent years, growth in our Indian business was hampered by less promotional activity from operators seeking market share gains and increased competition from streaming solutions.
• The war in the Ukraine led to a decision to exit the Russian market with a negative impact on revenues and trading profits.

In addition, the business helps MultiChoice monitor and combat piracy across sub-Saharan Africa, as well as contributing to the group's solutions for video on demand and targeted advertising. Externally, we are well positioned to maintain and grow our position in the cybersecurity market, given our differentiated offering, established brand name, long-standing market reputation and partnerships, and consistent focus on innovation. Some of our most recent innovations include:

• Video Entertainment: Irdeto Super Aggregator Solution. This includes offering the most effective solution to deploy OTT and hybrid video platforms by leveraging on a reusable Irdeto reference broadcast stack and integrating with Android TV or RDK-V OTT stacks. This solution reduces the total cost of ownership, speeds up time to market, removes fragmentation, and enables business growth.
• Gaming: Nintendo Switch Emulation Protection, protecting Nintendo Switch games and valuable customer income against PC emulation. This offers a 'hassle-free' integration into the game build toolchain, efficient detection of different behaviour between the emulator and hardware while not impacting the gaming experience.
• Gaming: Downloadable Content (DLC) Protection, protecting gaming platforms against bypassing of existing protection of downloadable content. This is the industry's first solution addressing this problem. The Denuvo Secure DLC API mechanism revalidates the platform API, preventing pirate attacks and blocking access when it should not be granted.
• Connected Transport: Irdeto CrossCharge, is a complete set of managed services that create, distributes, discovers, validates and revokes vehicle identities and charging contracts. It enables smooth charging and roaming across borders, networks, vehicle models, security providers and e-mobility service providers.