With the purchase of mCube, Verisign's acquisition rampage is finally over. Now company officials say it's time to put those pieces together to build the industry's largest content-powering machine. VeriSign is again on an acquisition spree, and this time it has its sights set on big global media. It doesn't want to become a media company, it just wants to be the big granddaddy content enabler that services them. To do so it has put together a portfolio of content management, delivery and transaction companies over the last few months, culminating in last month's $250 million cash purchase of m-Qube. VeriSign's intent is obvious: to combine its new acquisitions with its old to create a vertically integrated giant that will dominate the wireless content space — an ambition VeriSign's Vernon Irvin is not refuting. “Two and half years ago VeriSign wasn't even in this space,” said Irvin, who is executive vice president and general manager of VeriSign Communications Services. “If you look at what we've built in the last two years, though, there really is no close second to what we've accomplished.” The acquisitions, however, aren't just intended to build further reach into wireless, Irvin said. They give VeriSign both additional geographic and industry scope. Last month VeriSign purchased for $67 million Kontiki, a Sunnyvale, Calif., technology firm that provides managed peer-to-peer delivery systems that enable fast and high-quality delivery of video and other multimedia content over broadband networks, helping VeriSign reach into both wireline and wireless worlds. In February it bought Austria's 3United, a wireless application services provider, which will extend VeriSign's reach further into Europe. The crowning acquisition, however, was of mobile transaction broker and premium short message service specialist m-Qube, which VeriSign snatched from the outstretched hands of Motricity. As VeriSign expands into different forms of mobile content, the one prerequisite gluing all of its offerings together will be the need for its customers to get paid. m-Qube, along with a handful of other global transaction providers like Qpass and mBlox, manages the authentication and settlement services for the vast majority of mobile content sold worldwide. Adding those recent acquisitions to its earlier major purchases of mobile messaging services player LightSurf and Jamba, which VeriSign has grown into a $150 million ringtones and games business, VeriSign seems to have almost every base of the mobile content sector covered. In fact, Irvin said that VeriSign's spending spree is most likely winding down. It may look into making a strategic acquisition here or there to expand its geographic reach, but otherwise the core machinery is in place, he said. For all of the empire-building VeriSign has done, it has little to publicly show for it. It has yet to announce its first major media brand customer. And, Irvin admitted, practically none of the $1 billion in revenues VeriSign's communications group took in came from a major media company. m-Qube will rectify that situation slightly, bringing with it major media deals with CBS, Nickelodeon, Reuters and GQ, but Irvin said that VeriSign has been in independent negotiations with several big entertainment companies in the last year, and of the two largest wireless media content deals announced last quarter, VeriSign won one while m-Qube is powering the other. However, VeriSign declined to name the companies. By 2008, Irvin projected that VeriSign could be drawing as much as 30% of its communications revenues from the media and entertainment industry. “The choice is clear,” Irvin said. “They can either go to five separate companies and manage those separate relationships or they can go to VeriSign and focus on their own brands and content.” But according to VeriSign's soon-to-be competitor mBlox, those five separate companies might be exactly what a media company in a highly competitive market will need to differentiate itself. mBlox executive chairman Andrew Bud conceded that VeriSign's vertically integrated strategy is a cunning one that will appeal to certain media companies, but he added that the ruthlessly competitive nature of the industry will lead many companies to seek whatever edge they can. “Any vertical company can only possibly create a limited number of solution sets — some of them will be excellent, others will be merely good,” Bud said. “An open ecosystem, however, can produce literally unlimited solution sets, far more of which will be excellent rather than just good.”
