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Irdeto operations

We remain 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.

Our operating performance

Our Irdeto business services the MultiChoice Group’s video entertainment subsidiaries and more than 400 external clients. Revenue from the MultiChoice Group accounted for 47% of Irdeto’s total revenue in FY21 (FY20: 50%), which is eliminated on consolidation. FY21 was a challenging year, during which our Irdeto team had to navigate various supply chain disruptions from the COVID-19 pandemic and associated lockdowns, and the global silicon chip supply shortage, as well as the impact of more subdued economic activity on their customers’ project pipelines. Nonetheless, strong execution saw organic revenues down only 1% YoY.

1 537

Illegal operators disconnected

Irdeto provides encryption, conditional access and middleware solutions for MultiChoice set-top boxes and OTT services. In addition, the business helps MultiChoice monitor and combat piracy across sub-Saharan Africa.

This year, for example, 1 537 illegal rebroadcasting and streaming operators were disconnected, resulting in the elimination of pirated video entertainment services to 0.7m households.

We broadly manage our business across two major segments, namely a media security segment and a connected industries business.

In our media security segment, the content protection market is fairly mature, typically resulting in low single-digit, industry-level growth. The industry is also affected by traditional linear pay-TV operators coming under pressure due to shifting industry dynamics resulting from growing competition from OTT services. However, this provides new business opportunities, either through traditional operators adapting to the circumstances or with new market entrants. This year, we expanded our customer base, including six tier-one customer gains such as United Group, Sony Pictures and DAZN, and further diversified our offering for existing customers. These customer wins were principally in digital rights management, online piracy detection, cyber services and set-top box keys and credentials.

We also operate in the fast growing gaming segment through our subsidiary Denuvo. In the past year, we successfully launched two new product lines; an anti-cheat solution and mobile game protection. Denuvo’s Anti-Cheat integration is now available for developers and publishers through Steamworks and PlayStation®5.

24

Awards received globally

We remain 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 advanced Wi-Fi router security (Trusted Home) and Android TV app monitoring (App Watch). These products, among others, were recognised through one or more of the 24 awards we received globally over the past year at the Cybersecurity Excellence Awards, Cyber Security Awards, VideoTech Innovation Awards and the NAB 2020 Show.

In our connected industries segment, our focus on diversifying our revenue streams continued yielding positive results. Beijing Hyundai began to roll out our Keystone product to select models in-market and is expanding coverage to its remaining models (including Kia models through Dongfeng Yueda Kia). Incremental to already validated market segments like automotive manufacturing, fleet management and construction equipment leasing, we won our first deal with a leading customer in the connected trains segment, offering intrusion detection capability (Anomaly Detection System) to Selectron for its Threat Detection System. The healthcare segment is looking increasingly promising as a consequence of cybersecurity regulations gradually coming into effect.

As we exit a year in which demand for video entertainment was buoyed by global lockdowns, we expect to continue driving an increase in the contribution from our new service lines. As we pursue revenue growth, we remain focused on tight cost management which helped us deliver a 31% trading margin in FY21, having normalised from 39% in FY20, which included non-recurring, high-margin project revenues.