INTERVIEW: Saffron Digital on plans to go global

Video firm's Shashi Fernando tells ME why he'll use HTC's backing to build a network on local teams in EMEA and elsewhere.

Saffron Digital began life as a company that put DVD rental kiosks in underground stations. It seemed like a good idea until the founders realised that most people want a film on a weekend, yet commute on a weekday.

So that didn't work.

But the business did introduce Saffron (or FilmNight as it was then) to the movie business, and the emerging opportunity in new media such as mobile.

After a few years riding the wave of personalisation content, Saffron finally emerged as a platform company – the go-to guys when you needed your film content compressed, transcoded, distributed and billed for. Many high profile deals followed, as did the inevitable move into 'triple play' content management.

But in a VC-backed world, this dependable British company was going to need investment to last the course. That arrived last week in the form of a £48.3m buy-out from HTC.

We asked Saffron CEO Shashi Fernando for more...

There have been rumours of a purchase for a while. Why was a buy-out necessary?

We've been self-funded other than a £2m investment in 2008, and we've done OK. But you get to a point where you need scale to take it to the next level. It's been frustrating to compete with firms that have deep pockets and longer lines of bullshit, who can actually get their guys on a plane – companies that haven't had our need to actually make money.

So you have been courted...

There were six or seven companies that made approaches, a mix of operators, vendors and some companies from the film and TV world. We only started to talking to HTC in October, so it's been pretty quick.

It's interesting that HTC has been perceived as 'operator friendly' and happy to make handsets without ever 'threatening' the carriers with its own services. Is that changing now?
 
Well, the fact is that HTC is not really in the content space, and needs to be because that's the way the market is moving. But they're not in the business of overlaying their stuff on top of operator services. That's not how they work at all.

Remind us who Saffron already works with.

LG, Samsung, T-Mobile, Deutsche Telecom, Acer, Sony Ericsson, Paramount and a few more. There's also another big entertainment brand deal coming, but I can say who yet. I reckon we address 100m devices across mobile, PC and tablet.

How will these clients react to your purchase by a competitor?

HTC didn't buy the company to change it. Saffron will continue as an independent operators, and we plan to retain all our existing clients and more. And anyway the Asian way of business is different from what we're used to in the west. Asian companies have this concept of friendly competitors. HTC is a buyer of Samsung components, for example, so it's too simplistic to regard everything as about pure competition.

So you're saying your other customers are completely fine...

There was a small wobble from come customers in the first few days, but honestly it's not changed anything. HTC is an existing customer, of course, so one change I'm hoping for is that we won't have to push as hard to get paid.

What are your immediate plans now that you're under new ownership?

To scale internationally. Saffron is an international company in that we have accounts and account managers all over the world. But what you really need is genuinely local presence, especially in non-English speaking countries where you really have to know local content and local culture. Now, though, we can actually put proper teams into place in Europe, Middle East and Asia. I'd hope we can double from 65 employees by the end of the year.

And will Shashi Fernando remain as outspoken as ever?

I'm still going to be the one banging the drum for DRM! I still believe this business will be wrong to go down the route of the music industry and assume that DRM is bad and that's it will inevitably disappear. There are loads of companies now starting to get content on the cloud, so we must be able to get that content to devices in a way that's seamless and easy – without losing protection.