Digimarc CEO: Demand for Its Intuitive Computing Platform Rises

Digimarc is seeing growing demand for its Intuitive Computing Platform (ICP) technologies among retailers and consumer packaged goods (CPG) companies, according to Bruce Davis, the company’s CEO.

The company also continues to have “many sustainable competitive advantages” over rivals offering similar technology,” he said at the Needham Growth Conference in New York Jan. 16.

Those advantages include Digimarc’s “expertise in signal processing,” where it’s best-known for digital watermarking, and an “expertise in large-scale embedded systems through our work with central banks and global deployment” of its counterfeiting system with “support from many large IT companies,” he said. It also has a “unique identifier/data carrier for auto identification and a lot of patents,” he noted.

There is “significant value in the patent portfolio” that Digimarc has, which he said includes 850 issued patents and 300 pending patents, adding it’s already 
“done a couple hundred million dollars of patent licensing.”

The company continues to see a “very large market opportunity” for its Digimarc Barcode identification system for packaging and labels that can improve store operations at retail, among other things, according to Davis.

The company has been using a licensing business model for Digimarc Barcode in which customers pay $50 per SKU each year for access to its platform, he said. In the area of paid-up licenses, Digimarc’s technology has been a required security feature of Blu-ray video playback devices and digital cinema projectors, according to Davis.

Only 11% of Digimarc recurring revenue is now coming from retail and CPG, far behind government security (67%) and digital media (22%), according to the company. But Digimarc expects continued retail and CPG growth, Davis said.

Digimarc Barcode started being implemented with regional grocers Wegmans and New Seasons Market, he told attendees, but he stressed: “The core of the strategy is to go after the big guys.” And, on that front, “we’re doing business with two of the top three retailers and two of the top three CPGs” already, he said.

The two major retailers that he was referring to were Walmart and Costco, he noted, adding: “We’re doing a lot of stuff with Walmart.” For starters, “most of the in-counter” point-of-sale (POS) scanners at Walmart are now “enabled for Digimarc Barcode reading” and the company’s mobile software development kit (SDK) is “in more than a dozen” Walmart consumer and store associate apps, he said. Walmart’s Sam’s Club locations are also using Digimarc technology.

Digimarc is also enabling Walmart’s new augmented reality (AR) scanning capability that was released on its mobile app for product comparisons in November, Davis said.

Digimarc also showed its own version of that app at the National Retail Federation (NRF) 2019 conference in New York, Jan. 13-15, he pointed out.

Digimarc’s AR app allows shoppers and store associates to “scan fresh items utilizing Digimarc Barcode for Thermal Labels to trigger AR experiences providing expiration dates, associated discounts, and other product information,” according to the company.

The app enables “dynamic pricing” to be implemented on fresh products, Davis noted. For instance, pricing can be reduced automatically if an item is near its expiration – and this capability can help solve food waste in the U.S., he said. The capability can also help brick-and-mortar retailers change pricing as often as online retailers including Amazon, to better compete and have a “more level playing field,” he said.

In-counter scanners are also already implemented at Costco locations and “handhelds are rolling out” there with Digimarc firmware also, he said.

Across the pond, meanwhile, “there’s a major retailer in Europe that we expect to be able to say something about pretty soon who is in production” to enable Digimarc Barcode, he told attendees, declining to identify that company. That retailer is interested in using Digimarc’s technology, but wants to work directly with its own suppliers to achieve that, he said.