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news and views on broadcast and professional video/audio sectors, worldwide

w/e December 11, 2009 SCRI International, Inc © 1984 - 2009


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Video Traffic Grew 35% 2009

The question I got asked most frequently at last month's Streaming Media West show was when I thought the rate of growth for video traffic would once again begin to accelerate. Based on a recent survey conducted in September and October, of which 812 content owners responded, 53.3% of the respondents said their traffic grew on average of only 35%-40% this year.

When compared to the same survey last year, 53.9% of over 1,000 content owners said their traffic grew a total of 35% in 2008. This lack of growth probably comes as no surprise to anyone who tracks the CDN space as revenue amongst the CDN vendors has been flat all year. When pricing is down nearly 40% year-over-year and traffic is only growing at 35-40%, that makes it really hard for CDNs to show revenue growth from their M&E video business.

If you're wondering just how big these content owners are who took our survey, 13.4% of them spend at least $10k a month, 4.8% of them spend at least $25k a month and 3.9% spend at least $50k a month, just on video delivery. I'll be giving out more details and numbers from the CDN pricing survey in the coming weeks.

Freeview Dominates DTV Delivery in the U.K.

More Britons elected to watch free over-the-air digital television than to pay for it, according to the Guardian. Free, terrestrial DTV is delivered via Freeview set-top boxes, which are now in more than 18 million U.K. homes. The majority of new takers are switching from the region’s old five-channel analog service.

In the West Country, where the DTV transition was completed in September, 80 percent of analog TV homes elected to get Freeview for their primary sets. Around 10 million homes across the United Kingdom are said to use Freeview for their primary sets. The set-tops include an integrated personal video recorder.

Freeview is a joint venture of the BBC, ITV, Channel 4, Arqiva and BSkyB, the satellite provider with 9.5 million subscribers in the region. Virgin Media, the cable provider, has around 3.7 million subscribers. Freeview, free save for the price of the set-top, provides 50 digital TV channels. A new HD version will be launched next year in time for the World Cup.

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U.S. Ad Expenditures Declined 14.7% in First Nine Months of 2009

Total measured advertising expenditures in the first nine months of 2009 dropped by 14.7 percent as compared to the same period in 2008, according to data released today by TNS Media Intelligence, the leading provider of strategic advertising and marketing information. Ad spending during the third quarter of 2009 was down 15.3 percent versus last year, the sixth consecutive quarter of year-over-year declines.

“The updated monthly trend line on total advertising expenditures still shows no meaningful improvement through October,” said Jon Swallen, SVP Research at TNS Media Intelligence. “The slump has now passed its first anniversary and year-on-year comparisons will become easier in the upcoming months. Going forward, the timing, strength and durability of an advertising recovery will ultimately be determined by the way consumer activity rebounds.”

Internet display (+7.0 percent) and FSIs (+3.9 percent) were the only media types with spending increases for the nine month period. Online growth was propelled by telecom, travel and auto advertisers. FSIs benefitted from CPG companies expanding their couponing efforts as consumers became more value-conscious.

Among Television media, Cable TV networks continued to translate audience gains into a larger share of ad revenue. Year-to-date Cable TV expenditures slipped by just 2.9 percent, a much stronger performance than the TV sector as a whole. Network TV, now faced with comparisons against the 2008 Summer Olympics bonanza, saw year-to-date spending fall 11.5 percent and Q3 spending tumble 25.1 percent. Spot TV expenditures (-27.5 percent) remained depressed due to persistent weakness in auto and retail activity as well as cyclical reductions in political advertising.

Magazines (-19.7 percent), Newspapers (-22.8 percent) and Radio (-22.8 percent) severely lagged the overall ad market during the January-September period. Third quarter losses for each of these broad media groupings were less severe compared to the first half of the year and this could be construed as a positive indicator. However, these media are also into their second year of steep declines so Q3 comparisons are against the relatively low levels of year-ago spending.

Overall, local media ad spending was down 23.7 percent through September while national media dropped 10.1 percent.

Univision Establishes Production Operation

Spanish-language broadcaster Univision is delving into production with the establishment of Univision Studios. It will be based in Miami, Fla., and headed up by Luis Fernandez, former president of RTVE Corp., the largest broadcasting company in Spain. He’ll report to Univision Networks President Cesar Conde.

The studios will contribute further to around 4,000 hours of original programming Univision says it does annually. The new division will generate reality shows, dramas, entertainment programs and telenovelas, many of which Univision now gets from Grupo Televisa. Univision has had a long-standing agreement for exclusive rights to run Televisa’s programming in the United States, though the two have clashed over Internet streaming rights--not included in the deal that runs through 2017. Univision recently entered a pact with Google to supply its programming to YouTube, with the exception of the telenovelas.

Univision Studios programming will supply programming across the company’s three networks--Univision, TeleFutura and Galavision--as well as

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Avid Restructuring

On December 1, 2009, in an effort to continue to align its expense structure, Avid Technology, Inc. (the "Company") committed to a reduction in force restructuring plan. The Company anticipates that it will complete the restructuring during the first quarter of 2010. In connection with the restructuring, the Company expects to incur total expenses relating to termination benefits of $7 million to $9 million, all of which represent cash expenditures. The Company expects to record the majority of these restructuring charges in the quarter ending December 31, 2009.

Cisco Makes Offer to Acquire TANDBERG

Cisco announced a definitive agreement for Cisco to launch a recommended voluntary cash offer to acquire TANDBERG. TANDBERG, based in Oslo, Norway, and New York, is a global leader in video communications, including a broad range of world-class video endpoint and network infrastructure solutions with intercompany and multi-vendor interoperability. With this proposed acquisition, Cisco will expand its collaboration portfolio to offer more solutions to a greater number of customers, further accelerating market adoption globally.

The acquisition is expected to close during the first half of calendar year 2010; however, the close date is subject to customary closing conditions, including regulatory review in the United States and elsewhere. Cisco expects the acquisition to be accretive to Cisco's non-GAAP earnings in fiscal year 2011.

John Chambers, Chairman and Chief Executive Officer, Cisco: "Cisco and TANDBERG have remarkably similar cultures and a shared vision to change the way the world works through collaboration and video communications technologies," said Cisco Chairman and Chief Executive Officer John Chambers. "Collaboration is a $34 billion market and is growing rapidly—enabled by networked Web 2.0 technologies. This acquisition showcases Cisco's financial strength and ability to quickly capture key market transitions for growth."

Fredrik Halvorsen, Chief Executive Officer, TANDBERG: "Cisco and TANDBERG share a vision of changing the way people communicate and collaborate," said TANDBERG Chief Executive Officer Fredrik Halvorsen. "This transaction is a vote of confidence, not just in TANDBERG but in our technology and our people. The combination of world-class technologies, Cisco's global scale, and exceptional people from both organizations will enable us to accelerate innovation and market adoption."

Evertz Technologies Q2 YTD Revenue Down 20%

Evertz Technologies Limited, a leading equipment provider to the television broadcast industry, reported its results, ended. Sales were $73.0 million, a 20% decrease year-over-year for the quarter but an increase marginally from the prior quarter. Gross investment in R&D increased by $1.4 million to $9.1 million, 18% higher than the prior year. Net earnings were $17.5 million for the quarter as compared to $34.1 million a year ago but increased from the prior quarter

For the quarter ended October 31, 2009, sales were $73.0 million, a decrease of $18.3 million or 20% as compared to sales of $91.3 million for the quarter ended October 31, 2008. For the quarter, sales in the United States/Canada region decreased by $18.7 million or 30% when compared to the same quarter last year. The International region grew by $0.4 million or 1% for the quarter ended October 31, 2009 when compared to the same quarter last year.

Wegener Receives Nasdaq Notice, Going Concern Audit Opinion

Wegener Corporation, a provider of products for television, audio and data distribution networks worldwide, announced that it received a notice from The Nasdaq Stock Market indicating that the Company's shareholders' equity as of August 28, 2009, did not meet the minimum requirement of $2,500,000 for continued listing as set forth in Continued Listing Standards for Primary Equity Securities Rule 5550(b) (the "Equity Rule"). In addition, the notice stated, as of November 27, 2009, the Company did not meet the Equity Rule's alternatives of (i) a market value of listed securities of $35 million, or (ii) net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years.

Wegener Corporation, in compliance with Nasdaq Marketplace Rule 5250(b)(2), also announced that the audit report included in the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2009 expresses an unqualified audit opinion from its independent registered public accounting firm, BDO Seidman, LLP, but contains an explanatory paragraph relating to the Company's ability to continue as a going concern .

Belden updating guidance for adjusted Q4 revenue & EPS at the high end

Belden is updating its guidance for adjusted fourth quarter revenue and EPS to be at the high end of the previously communicated range of between $365 million and $375 million and $0.27 and $0.32 per share, respectively, excluding the impact of the deferral of revenues and cost of goods sold with respect to its wireless segment and the impact of charges associated with already announced restructuring actions.

SeaChange Int'l Q3 2010 Revenue Up

SeaChange International announced financial results for its fiscal 2010 third quarter ended Oct. 31, 2009. Total revenues under generally accepted accounting principles (GAAP) were $53.3 million, which were $1.5 million higher than total revenues of $51.8 million for the third quarter of last year. Total non-GAAP revenues for the third quarter of $54.0 million were $2.2 million or 4% higher than last year’s third quarter revenues. GAAP net income for this year’s third quarter was $0.7 million or $0.02 per share compared with GAAP net income of $3.4 million or $0.11 per share for the third quarter of fiscal 2009. Non-GAAP net income for this year’s third quarter was $3.4 million or $0.11 per share compared to non-GAAP net income of $4.5 million or $0.14 per share for the third quarter of fiscal 2009.

Total revenues for the first nine months of fiscal 2010 ended Oct. 31, 2009, were $148.7 million, which were $0.8 million higher than total revenues of $147.9 million for the first nine months of fiscal 2009. GAAP net income for the first nine months of fiscal 2010 was $1.3 million or $0.04 per share compared with GAAP net income of $5.2 million or $0.17 per share for the same period last year. Non-GAAP net income for the first nine months of this year was $6.7 million or $0.21 per share compared with non-GAAP net income of $8.4 million or $0.27 per share for the first nine months of fiscal 2009.

The Servers and Storage segment generated revenues of $12.4 million in the third quarter of fiscal 2010, which was $2.0 million or 19% higher than revenues of $10.4 million for the third quarter of fiscal 2009. A near doubling of VOD server revenue in this year’s third quarter compared to the third quarter of last year was due primarily to increased server shipments to Comcast in support of its next-generation VOD architecture roll-out. Partially offsetting the increase in VOD server revenues was lower Broadcast server revenues due to the soft advertising market as noted.

“We are pleased to report a solid quarter of financial performance marked by double-digit percentage revenue increases in our VOD product lines and Media Services business segment,” said Bill Styslinger, Chairman and CEO, SeaChange International. “We saw continued strength in VOD software and server spending by our largest North American service provider customer during the third quarter, as well as encouraging results from our customer diversification strategy for our Media Services business.”

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RED Announces Three New Scarlet Cameras

RED Digital Cinema outlines the "replacement" Scarlet DMCS - their smaller sensor cameras. There are now three models: 2/3 Scarlet 8X Fixed, 2/3 Scarlet Interchangeable, and the Scarlet S35 with a larger sensor. Each Scarlet can be custom configured, although many of the accessories are common between Scarlet and Epic (and some also fit the RED ONE camera). The 2/3" models of Scarlet are expected in May-June 2010, the S35 in Summer 2010.

Pricing has increased for the 2/3 Scarlet 8X Fixed. For US$4750 you get 3K RAW up to 120 fps complete with a basic configuration of Brain/Lens, CF Module, REDmote, touchscreen LCD and a battery and travel charger. This includes one new ATSIC (high density custom silicon chip) and four new boards. The feature set seems more extensive than previously announced.

2/3 Scarlet Interchangeable (brain only) will be US$2750 and can be configured as an HDR stills camera, HD video camera at 1080, or 720P. The S35 (brain only) will be $7,000.

Since Scarlet was first announced, RED have been assailed by the appearance of video-capable still cameras, like Canon's 5D Mark II. Although any Scarlet configuration will be more expensive, there are considerable advantages to the RED path, among them:

  • 3K capture gives about 50% more resolution than 1080 HD;
  • RAW provides a much higher quality, and more flexible, signal for post production particularly when compared to the heavily compressed files from DSLRs; and
  • Scarlet provides a fully professional working environment for the DP with professional audio and timecode.

    RED also announced that their 18mm RED PRO PRIME lens is on track with pre-production models expected in 2 weeks time, and "limited" production is expected at the end of December. The first three Mini Primes (50mm, 25mm, 16mm) are "complete" with the 6mm and 8mm Mini Prime lenses due in December.

    Along with the Scarlet announcements there were other product announcements made. There will be a new version of REDCINE - X with a long list of new features. (All listed on page two of the post at RED (download) STATION has entered pre-production: one base can carry up to four modules for offloading CF or RED drive content. The Bomb Viewfinder is in testing in the field with production models expected to ship in January.

    Finally, RED Ray Pro has now taken priority over the "consumer" version with hardware decoding of R3D files (RAW) up to 5K and 30FPS and .RRD (RED Ray distribution format 4:4:4 files up to 4K and 30 fps. Output is to four DVI Program outputs and four HD-SDI outputs for each of the four quadrants of a 4K image. RED Ray Pro is now expected "January-Februarry 2010" with RED Ray Consumer targeted for "Spring-Summer 2010".

    Although the primary message is of further delays to the Scarlet product line, the added features will guarantee it has a market even up against improved DSLR cameras.


    Workstation Market Regaining its Health

    So far, the second half of 2009 for the workstation market is proceeding according to the script Jon Peddie Research (JPR) had written several quarters ago. A recovery is surely taking hold, but rather than the fast and furious type, it's shaping up more as the slow and steady variety.

    Q3'09 wasn't a gangbuster quarter for the industry, but then it wasn't expected to be. What JPR did predict was that the quarter would affirm two things: one, that the market did indeed bottom during the first half of 2009, and two, that the second quarter's modest uptick wasn't an aberration. And on those counts, the third quarter of 2009 came through, delivering modestly better results than did Q2. All told, the industry shipped 644.6 thousand workstations, resulting in a 7.1% sequential increase over the second quarter (and a more moderate 24.5% year-over-year decline).

    The third quarter's growth was of course welcome, but certainly doesn't signal an imminent return to the robust market levels of 2007 and 2008. Rather than making a dramatic stride forward, it instead marked one small step on what's more likely a prolonged road to recovery. The way it's panning out, the climb back up will take a lot longer than did the fall down. HP stakes its claim as the top workstation provider.

    It was just a matter of time. One look at the market share trend lines, and it wasn't a stretch to envision HP some day overtaking Dell as the volume leader in workstation market. In just a few short years, HP had climbed from a distant second in the market into a virtual dead heat with the long-time leader. But in the third quarter, HP jumped to a 40.3% market share, in the process pulling away from Dell (at 37.5%) to mark the first time (in the firm's records) HP has held clear control as the volume leader.

    It's been a dramatic reversal of fortunes. Looking back five years, Dell looked poised to dominate the workstation market by a wide margin. But then triggered (in part) by its long-standing strategy to stick exclusively with Intel rather than exploit upstart AMD's surging workstation/server platform, Dell saw its workstation share steadily drop to a low of 37.7%.

    When Intel finally bounced back, so did Dell, though without quite the same gusto. Because even though Dell had regained its footing, HP had been pressing its foot firmly on the gas and coming up fast in Dell's rear-view mirror. And finally in the third quarter, HP surged past to claim the position of sole market leader, in the process pushing Dell's share back down to its historical low.


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