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Ross Video spending $236M to develop cloud-based platform as firm eyes IPO

June 16, 2023
3:52 PM
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Ross Video is spending nearly a quarter of a billion dollars to develop a full suite of cloud-based video-production software as it hopes to generate new revenue streams in anticipation of going public by 2025. The Ottawa-based manufacturer said Friday it has received a $49-million investment from the federal government’s Strategic Innovation Fund to help finance its ambitious plan to build a hybrid cloud event-production platform. Ross Video is investing a total of $236 million in the long-term project informally dubbed “Ross 365” in a nod to Microsoft’s family of cloud-based services, known as Microsoft 365. CEO David Ross said that just as Microsoft provides desktop and cloud-based versions of applications such as Excel and Word, broadcasters and other Ross Video clients that now produce content in physical studios using on-premise hardware and software will soon be able to quickly set up virtual production studios with cloud-based switching, editing and other production equipment. “In 15 minutes, you’re up and running covering the event,” he explained, adding that users will have the option to subscribe to the software or rent it on an as-needed basis. Ross said the company has already begun migrating its technology to the cloud in response to rising market demand for virtual production services. Ross Video’s revenues have been growing at an impressive annual rate of 17 per cent for the past three decades. Its CEO and majority shareholder said bolstering its cloud offerings will help the firm stay a step ahead of the competition as it moves closer to $500 million in annual sales and lays the groundwork for an initial public offering that’s expected to happen in the next couple of years. “How do you continue to grow at 17 per cent a year is one of the ways we like to think about this,” Ross said. “If we see that the market is fragmenting in yet another new way, which is hardware versus software, then we want to be able to be playing in both sides.”

'Relatively small' market

While Ross believes there is considerable long-term upside in the shift to the cloud, he doesn’t expect the company to see an immediate windfall from the new offerings. Cloud revenues across the video-production industry remain “relatively small,” he said, adding that all market signals suggest 95 per cent of Ross Video’s customers are “still planning to buy hardware for years and years to come.” He likens Ross’s cloud-based technology to a rental car. For people who drive every day, he notes, it’s more economical to own a vehicle rather than rent one. “There’s a certain point where it makes sense to just jump in there and have your own equipment,” he said. “If you’re going to do a newscast two, three or four times a day … maybe it makes sense to just buy the equipment.” The cloud project is the latest major capital investment for Ross Video, which has acquired 19 companies in the past 15 years. The family- and employee-owned firm, which does most of its manufacturing at a plant in Iroquois, south of Ottawa, is a leader in technology that includes robotic camera systems and graphic-generating software used by some of the world’s biggest broadcasters at events ranging from the Super Bowl to the Academy Awards. Now at more than 1,500 employees, Ross Video expects its workforce to surpass 2,000 in the next few years as it continues to roll out new products and services and expand its market share. But Ross said Ross Video will always be a proudly Canadian, Ottawa-based enterprise, adding that the federal government’s latest investment shows it is “seriously looking at Ross as a company of national significance.” As the firm looks to become a force in the cloud while building on its legacy as a hardware manufacturer, its chief executive said he couldn’t be happier to have federal backing. “We’re embarking on a war on two fronts. The support coming from the government of Canada makes it easier for us to split that and do both really, really well.”