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Insider Report

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

w/e November 13, 2009 SCRI International, Inc © 1984 - 2009


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AEG and Action 3D team on HD 3D concerts

Since partnering in the spring, AEG and Action 3D have already compiled footage from 56 artists from five different festivals, with the goal of upping that figure to 150 artists in 2010. The strategy has been to pinpoint fests like Lollapalooza, All Points West and Austin City Limits, allowing the filmmakers to film multiple artists over the course of one event.

"Our goal was to mimic a concert," said John Rubey, president of Network Live, a division of AEG Live, comparing the Matthews film to "U2 3D," the first live-action digital 3D film, released 2008, which consisted of pieced-together concert footage shot over the course of the Latin American leg of the Irish band's Vertigo tour of 2006. That film took more than a year to complete, while the Matthews footage was shot Oct. 3 and will hit the screens in December. According to Rubey, the release date was chosen to take advantage of the window between the release of 3D tentpoles "Disney's A Christmas Carol," released Nov. 6, and James Cameron's "Avatar," which bows Dec. 18.

To date, only "U2 3D" and "Fly Me to the Moon" have been released only in 3D, and neither tallied huge box office in the U.S. Other 3D pics have opted for a mixed 2D/3D release. Of 3D concert releases, only "Hannah Montana/Miley Cyrus: The Best of Both Worlds" has been a major success. AEG has seen boffo numbers for 2D concert release "Michael Jackson's This Is It," released through Sony, with $186 million worldwide.

Wednesday's announcement comes on the heels of Sony Pictures' Hot Ticket division's plans to make its first foray into the 3D realm with the concert pic, "Kenny Chesney: Summer in 3D," set for a limited engagement run in April.

AEG claims to have the largest library of 3D music concert content, which, in addition to Matthews, includes a number of leading artists currently in negotiation with the producer. It has already been reported that AEG filmed several 3D live sets of Phish from Festival 8 in Indio, Calif., in late October. According to Rubey, the company plans to roll out "best of" edition from Lollapalooza and Austin City Limits as followups to the Matthews feature in 2010.

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AV Industry Poised to Rebound in 2010

Confidence in current av trading conditions has reached a new low, but companies are more optimistic about the future than they were earlier this year, according to the latest study by InfoComm.

The study - carried out by the trade body mainly with North American companies, but with an input from the UK and Europe - puts the 'InfoComm Performance Index' (IPI) at just 57.1, against 59.4 in July. Based on expressed confidence by respondents to the InfoComm International Economic Shapshot Survey, the IPI stood at 70.4 in September 2008, but fell dramatically in the first six months of 2009. It is now expected to rise to 63.8 by early 2010.

Demand has fallen with performance, but is also expected to rise during the next six months. The InfoComm Demand Index (IDI), which measures end-user demand for av products and services, has continued to fall. It hit a new low of 51.1 in July and was expected to fall to 47.2 by the end of 2009.

But despite four quarters of bad news, InfoComm is bullish about the future, saying that 'there are several indicators suggesting that the industry is at least maintaining the status quo if not poised to rebound in 2010.

Markets av companies expect to be 'most promising' in 2010 include higher education (16.2 per cent), corporate offices, other than financial (11 per cent), schools/education (7 per cent), government/military (6 per cent) and healthcare (5 per cent).

U.S. Online Ad Spend Fell 4% In Q3, Outlook Improving

U.S. online ad spending dropped for the third straight quarter during the third quarter of 2009 by 4% to $6.4 billion compared to a year ago, according to new data from market research firm IDC. Globally, online ad dollars slipped 1% to $14.7 billion over the period.

While still in the red, those figures represent an improvement over the prior quarter declines of 7% and 5.6% in the U.S. and worldwide, respectively, and signal that Internet advertising may have begun to recover, said IDC. The firm expects the U.S. market to dip again in the fourth quarter, but only by about 1%, before seeing a return to actual growth in the first and second quarters of 2010.

That forecast is in line with others that predict a rebound in 2010 after the first down year for online advertising since 2002. Last month, eMarketer revised its online ad spending forecast for 2009 downward, projecting a 2.9% decline to $22.8 billion. It expects moderate growth to return next year and in 2011, with spending to increase 5.6% and 6.6%, respectively.

ITV and Hulu poised for joint content deal

ITV and Hulu, the VoD service that will soon launch in the UK, are to sign a deal this month allowing the broadcaster to distribute full-length episodes of ITV shows on the platform. The landmark deal will significantly boost Hulu's UK appeal, as well as potentially transforming ITV's online presence.

As part of the deal, ITV will gain an equity stake in Hulu UK, understood to be about 25%. Hulu's parent company is equally controlled by Disney, NBC Universal, Providence Equity and News Corp.

Hulu was expected to launch earlier this year following the demise of Project Kangaroo, the online VoD venture backed by ITV, Channel 4 and BBC Worldwide, which was blocked by competition regulators in February.

However, since then, the online video market has changed markedly with the launch of MSN Video and the imminent launch of YouTube's long-form service and SeeSaw, the VoD service formed from the remnants of Project Kangaroo.

MGM headed for sale

According to Variety Magazine, sources say they expect that MGM will essentially be auctioned off within the next few weeks.

This would mean that a major, such as Time Warner, could buy the MGM-UA library while another entity might acquire the logo, and yet another deal could be made for United Artists. Sources speculated that Kirk Kerkorian, who has already bought and sold MGM twice, might buy the logo once again.

Last summer Harry Sloan was bounced as MGM's CEO and Stephen Cooper, a specialist in restructuring companies (Krispy Kreme was one of his projects) started meeting with bankers with the aim of restructuring some $3.7 billion in debt. There was speculation that the combined assets of MGM may now yield as little as $1.5 billion in the present market.

The various equity owners of MGM, including several private equity firms, have already written down their $5 billion acquisition, which closed in 2004.

MGM's library contains 4.000 titles, but some specialists in film libraries consider its list of titles to be geriatric.

Any sort of auction would need approval of a two-thirds majority of the bondholders, and a coupld of the bondholders insist they have not been contacted as yet. Some sources believe a pre-packaged bankruptcy is still an option, and there is still an expectation that Time-Warner might make a last eleventh hour bid.

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Adobe Systems to layoff 680 jobs

According to a Reuters report, an Adobe spokesperson confirms the company is "restructuring its business to align costs with its fiscal 2010 operating plan and budget, the company’s three-year strategic priorities and the realities of the business environment." San-Jose based Adobe did not provide any further information.

The company - which is known for its document- and photo-editing programs and software - reported a decline in sales earlier this year.

This will not be the first steps the company takes to cut cost, Adobe laid off 600 employees last December due to the economic recession.

Earlier in September, the company said it was acquiring Omniture, which makes Web-traffic monitoring tools, for $1.8 billion.

Chyron 10-Q Report Predicts Continuing Depressed Conditions through 2010

The follwoing is an extract from Chyron's 10-Q report, to be read in line with the company's Q3 financials showing a 34% decrease in revenue for the nine months.

"Over the past few years Chyron has made continued progress towards its goal of becoming a provider of digital graphics workflow solutions for broadcast, online and out of home applications. Our AXIS on demand online content creation software continues to generate interest as our broadcast customers look to replace a high fixed cost business model with a variable, low cost model.

We expect that the global economy will continue to be depressed for the remainder of 2009 and into 2010, and that many of our customers may wait to make purchase decisions until they have more visibility of where the economy is headed and how it might affect them. We have adjusted to this by reducing headcount, cutting salaries and taking other expense control measures while continuing to emphasize investment in R&D and product development. Our strategy is to seek to gain market share in broadcast and online graphics content workflow solutions and expand the use and penetration of our AXIS online graphics creation platform. We believe that because our addressable market opportunity is no longer restricted to broadcast television, we have additional opportunities for growth. We plan to continue to focus on our growth strategy in order to emerge stronger when the recovery takes hold."

EVS Q3 Revenue Down 47%

Pierre L’Hoest, CEO of EVS said: “The market continues to be challenging for the broadcast industry. The somewhat improving sentiment about the global economic environment has pushed some clients to realize some catch up purchases, and some other clients to start thinking about large projects again, but it remains unclear whether the coming months will show clear signs of recovery or continued cautiousness in the broadcast industry. In that market, we will continue to focus on the development and launch of new solutions that will bring the clients to the next level. We are also very proud that Sky News has elected EVS as key partner for the launch of its new HD news channel in the spring of 2010. This project will help us extending our know-how in the studio market as we develop some customized tools for it.”

Commenting on the results and perspectives, Jacques Galloy, CFO added: “The uncertain economic environment will continue to weigh on our business performance this year. Despite lower sales, we have decided to accelerate our R&D investments and have opened new R&D centers in Brussels and Paris as well as a new subsidiary in Switzerland. The 47.5% EBIT margin during the first nine months of 2009, as well as the interim dividend, show the resilience of the company during such a downturn. Following record year 2008, 2009 is a transition year towards a stronger 2010.”

DivX Q3 Revenue Down

DivX, Inc. announced results for the three and nine months ended September 30, 2009. The Company reported revenues for the third quarter of $16.6 million, comprised of $14.6 million of technology licensing revenues and $2.0 million of media and other distribution and services revenues. This compares to revenues of $24.4 million reported for the same period a year ago, which included $19.1 million of technology licensing revenues and $5.3 million of media and other distribution and services revenues.

"DivX is undergoing an exciting transition in its business," stated Kevin Hell, Chief Executive Officer for DivX, Inc. "We are moving beyond our core DVD licensing business into new categories such as Blu-ray players, digital televisions, mobile phones and set-top-boxes, driven by our substantial progress with premium Hollywood content initiatives and our DivX Plus(TM) high definition software and hardware solutions. Additionally and perhaps even more notably, through our acquisition of AnySource Media in August, we believe we are well positioned to define the next big evolutionary step in the television experience - Internet TV. We believe the opportunity in front of us is transformational, and will drive the business to the next stage."

Dan Halvorson, Chief Financial Officer and Executive Vice President Operations, added, "As reported by many partners and CE vendors, consumer spending continues to be weak but we once again delivered a solid quarter. We believe our focus on managing expenses keeps us on course while maximizing our ability to invest in the future growth of the business. We anticipate emerging products as a percentage of total technology licensing revenues will continue to grow and is projected to increase from approximately 16% for the third quarter to approximately 25% by the end of the fourth quarter of 2009. Our balance sheet remains strong with $143 million in cash and investments, or $4.38 per share, and we are focused on investing in technical innovation that drives growth in our core and new businesses."

HP to buy 3Com for $3.1 billion

Hewlett-Packard Co is making a move into the telecom equipment market by striking a $3.1 billion deal for 3Com Corp, in a major challenge to Cisco Systems Inc.

The deal is the latest sign that technology giants from IBM to Oracle Corp are increasingly encroaching in each other's markets as they seek to become one-stop shops for computing, networking and storage equipment. Cisco itself this year pushed into the computer server market, of which HP is a major player.

HP, which also reported higher-than-expected preliminary earnings on Wednesday, said it would pay $7.90 per share for 3Com, a 39 percent premium over its closing price. The deal values 3Com at $2.7 billion excluding its net cash.

"Cisco and HP are going to compete more and more," said Jayson Noland, analyst at Robert W. Baird & Co. "We're headed to a world where each of these large companies can give you everything you want."

By buying 3Com, HP will be competing head to head with Cisco in a wider range of network equipment, including routers and switches. 3Com also has a large presence in China and can help HP expand sales into one of the world's fastest-growing markets, analysts said.

QuStream/Pesa Q3 Revenue Down 37%

QuStream Corporation, a provider of high-definition (HD) broadcast solutions, announced its third quarter fiscal 2009 results.

Revenue for the third quarter of fiscal 2009 was US $3.1 million compared to US $4.8 million in the same period in fiscal 2008, a decrease of 37%. Revenue for the nine months ended September 30, 2009 was US $9.0 million, down 37% from the US $14.3 million during the same period last year.

Net loss for the third quarter of fiscal 2009 was US $0.4 million or ($0.02) per share compared to a net loss of US $3.2 million or ($0.14) per share for the same period last year. Net loss for the nine months ended September 30, 2009 was US $5.4 million or ($0.23) per share compared to a net loss of US $4.5 million or ($0.19) per share for the same period last year.

"The third quarter of fiscal 2009 saw a modest positive cash flow from operations in a challenging environment," stated QuStream's President, Howard Sutton. "The Company remains focused on executing its strategic initiatives to return to growth and profitability".

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Motorola Seeks Buyers for Set-Top Box Unit

Motorola Inc. is exploring a roughly $4.5 billion sale of its business making set-top boxes and other equipment for cable and phone companies, according to people familiar with the matter, the latest chapter in the struggling tech giant's effort to turn itself around.

Motorola is in the early stages of seeking buyers of its home and networks mobility division, the people said. Possible buyers include private-equity firms and other communications-gear makers. J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. are advising Motorola on the possible sale.

Blackmagic Design Adds DVCPRO HD for Premiere Pro

Blackmagic Design announced the major update for capture and playback of DVCPRO HD and DVCPRO 50 formats in Adobe’s new Premiere Pro™ for Windows™.

The updates for Blackmagic Design’s DeckLink, Multibridge and Intensity Pro, now feature direct capture and playback of DVCPRO HD and DVCPRO 50 as well as many performance improvements in Adobe's new Premiere Pro 4.2 for Windows.

DVCPRO HD features an incredibly low data rate for an online codec, and users can edit using a single internal disk such as a SATA drive or even an external USB 2 disk. Blackmagic Design also provides presets for quick and easy set-ups as part of this update.

This great new feature will mean Blackmagic Design customers producing indies, documentaries, sports, event videos, TV series and any long form video, can now take advantage of DVCPRO HD’s incredibly high video quality without the cost of expensive disk arrays.

“Our close development relationship with Adobe has enabled Blackmagic Design to take full advantage of DVCPRO HD’s incredible video quality with Premiere Pro," said Grant Petty, CEO, Blackmagic Design. “Our customers will love the power of Premiere Pro’s real time effects combined with the advantages of working with DVCPRO HD. The quality is extremely high and fantastic for online finishing!”

Updates to DeckLink 7.4 and Intensity 3.4 for Windows software installers are available for download now from the Blackmagic Design website at

These new software updates support all Blackmagic Design’s Multibridge, DeckLink and Intensity editing products for Windows 7, Windows Vista and Windows XP.


QuStream Appoints New President & COO

QuStream Corporation announced that Charles D. Tillett has been appointed President and Chief Operating Officer effective immediately.

Mr. Tillett joined QuStream in August 2008 as its Manufacturing VP and in 2009 was appointed VP and General Manager of the Company. Since joining QuStream, Mr. Tillett has been instrumental and a leader in the restructuring of the Company's operations. Mr. Tillett will continue to be based at the Company's headquarters in Huntsville, Alabama.

Howard Sutton, currently the President and Chief Executive Officer of the Company, is appointed Executive Chairman of the Board of Directors of QuStream effective immediately. Robert Beutel, the previous Chairman of the Company, remains a Director of QuStream.

Marvel Studios Names D’Esposito Co-President

Marvel Studios has promoted president of physical production Louis D’Esposito to the slot of co-president of the studio. The company said D’Esposito will work alongside Kevin Feige, president of Marvel Studios, to oversee the production schedule.

D’Esposito has been overseeing the budget and timeline of Marvel features, including “Iron Man.” He’ll report to Ike Perlmutter, CEO of Marvel Entertainment. Feige and D’Esposito will also have a dotted-line reporting relationship to Alan Fine, exec VP in the office of the chief executive and chairman of Marvel Studios’ creative committee.



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