Cisco announced today that it plans to acquire NDS Group Ltd., a video software and content security provider. Cisco makes the acquisition to complement Videoscape, their platform that allows service providers to deliver next-gen videos. The company will shell out $5 billion in the deal.

Key Points

• Videoscape is a part of Cisco’s strategy to provide TV experience to PC and mobile platforms, while protecting content for media providers
• The acquisition of NDS will facilitate the delivery of Videoscape.
• The deal reflects Cisco’s increased focus on video
• The $5 billion valuation is in line with the companies earnings, and comparable to other deals in this category, including Cisco’s acquisition of Tandberg.
• Most of NDS’s software is included with long-term contracts of about 5 years
• NDS and Cisco will operate as separate companies until the deal is closed.
• Approximately 5,000 NDS employees will now work for Cisco.

CEO of Cisco, John Chambers had this to say about the deal: “Our strategy has always been driven by customer need and on capturing market transitions. Our acquisition of NDS fits squarely into this strategy, enabling content and service providers to deliver new video solutions that leverage the cloud and drive new monetization opportunities and service differentiation.”