Insider Reporter

Insider Report

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

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


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IPTV subs to rise by 50%+ in 2009

The global IPTV market has withstood the worst of the worldwide economic storm during the last six months, putting it on track to achieve more than 50 per cent subscriber growth in 2009, according to iSuppli.

In the fourth quarter of 2008 and the first quarter of 2009, IPTV added 2.5 million and 2.3 million subscribers worldwide, respectively. Global IPTV subscribers are set to rise to 33.3 million at the end of 2009, up 56 per cent from 21.3 million in 2008.

"With the economy in the dumps and revenue growth from voice services having evaporated, global telcos are turning to IPTV to drive their growth," said Lee Ratliff, senior analyst for broadband and digital home at iSuppli. "The good news is that this strategy is paying off, with IPTV subscribers and revenue rising."

In 2010, IPTV subscribers will rise another 56 per cent to reach 52 million. By 2013, the number of subscribers will double, reaching 115.6 million.

IPTV revenue is growing even faster than subscribers thanks to increasing Average Revenue Per User (ARPU). Revenues are expected to increase to $58.2 billion by 2013, with a Compound Annual Growth Rate (CAGR) of 44.4 per cent from just $9.3 billion in 2008.

Mobile subs 4.6bn

Mobile subscriptions will rise to 4.6 billion by the end of this year, boosted by a continuing mobile phone boom in emerging economies, the International Telecommunication Union (ITU) said.

That represents about two mobile subscriptions for every three people in the world, although in developed economies many people have more than one subscription. Mobile broadband subscriptions would top 600 million in 2009, with fixed broadband subscribers at 500 million, the United Nations telecoms body said.

ITU said its latest statistics highlighted major regional discrepancies, with mobile broadband penetration rates still low in many African countries and other developing nations. There is one fixed broadband subscriber for every 1,000 inhabitants in Africa, compared with Europe where there are some 200 subscribers per 1,000 people.

OTT $11bn by 2012

A new global report from MRG shows how OTT (Over-the-Top) video services will offer new opportunities for IPTV & Cable Operators and media owners to expand their reach through TV-centric open Internet services. Revenues in 2012 should exceed $11 billion, with Internet Set-top Box (ISTB) penetration (including game consoles) exceeding 57 million. Besides cost containment practices, the report identifies what kinds of OTT video content consumers want (and will pay for), based on a global consumer survey done specifically for this report.

"The real question isn't whether Service Providers (SPs) should implement OTT, as most analysts already agree," states MRG Analyst Mike Galli. "The real question is how and with what results, which is why we did a ROI analysis for Tier-1, 2 and 3 IPTV SPs explaining the best practices, cost-loading and break-even points for several different configurations of OTT service."

The report also disputes the belief that "smart TVs" (TVs with Ethernet ports) will replace ISTBs in the next five years, as predicted by some CE promoters. "ISTBs will continue to be strong players beyond 2015," states MRG President Gary Schultz. "This is illustrated by the evolutionary path ISTBs must follow to stay ahead of the fast changing OTT business." The report further asserts that many HD (High-Definition) TVs will rely on (external) ISTBs to provide the needed storage, hybrid-processing, progressive download, and EPG-processing capability at an affordable price to deliver HD content.

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SeaChange Acquires VOD Company

SeaChange International, Inc., a provider of software and hardware solutions for video-on-demand (VOD) television, announced its acquisition of all of the issued share capital of eventIS Group B.V.

eventIS is a privately owned Eindhoven, Netherlands-based company that provides VOD and linear broadcast software and related services to cable television and telecommunication companies primarily in Europe.

For 2008, eventIS generated U.S. GAAP revenues of approximately $13 million and was profitable. It has approximately 70 full-time equivalent employees.

Under the terms of the definitive agreement, SeaChange paid €25.5 million ($36.6 million) upon the closing of the transaction today. In addition, SeaChange is obligated to pay €1.2 million ($1.7 million) in cash to the former eventIS shareholders on each of the first three anniversary dates following the acquisition.

Warner and Cisco partner

Warner Music Group and Cisco announced the expansion of their relationship into a strategic agreement in which WMG will use the Cisco Eos social entertainment platform to power many of its artist Web sites. Eos will now be available to WMG to deploy an unlimited number of sites for their portfolio of artists and labels, and play a significant role within WMG's direct-to-consumer initiatives.

Cisco Eos is a hosted white-label "software as a service" platform that enables Media & Entertainment companies to create, manage and monetise social entertainment experiences built around their branded content. WMG deployed Eos for four new sites: Grammy-nominated rock band Paramore; R&B singer Trey Songz; rock band Halestorm; and a redesigned Eos site for reggae singer Sean Paul. WMG also announced that it intends to use the Eos platform to create approximately a dozen additional sites by the end of the year, including a brand new site for singer/songwriter and American Idol alum, Jason Castro, as well as for R&B songstress Estelle, and hip-hop phenomenon Lupe Fiasco.

Discovery joins Comcast online trial

US reports say Discovery Communications is the latest company joining Comcast's OnDemand Online Trial. Until now Discovery has resisted, its’ main concern about making its material widely available online has been the risk of cannibalizing its existing business and upsetting the cable operators that provide its bread and butter.

In July, CBS became the first broadcast network to join the Comcast trial service, which requires users to authenticate themselves as paying cable subscribers. Time Warner's HBO and Starz Entertainment are partners in the trial. Other networks involved include Time Warner's TNT and TBS along with Rainbow Media, Scripps Networks, A&E Television Networks and BBC America. Comcast expects to launch On Demand Online nationwide in the fourth quarter of 2009, if trials are successful.

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Quantel Reports Increase in Sales & Profits

In some of the toughest market conditions around the world for many years and while some competitors are reporting losses, Quantel increased its turnover by 12% and reported its best operating profit since the company’s Management Buyout in 2000.

Quantel also announced that it is currently seeking to recruit 20 graduate-level staff. Most of these are for new positions within the Research and Development Lab where work continues apace on a host of exciting projects. This outstanding performance has been driven by success in three main areas of business, each carefully addressed by Quantel as a result of customer-focused developments: Stereo3D – Quantel’s technology leadership in this rapidly developing area has resulted in sales of more than 40 stereo-enabled post production systems in just 18 months.

To meet rising consumer demand, more and more cinemas are becoming equipped for Stereo3D and the number of Stereo3D movies being produced is increasing rapidly. As a result, Stereo3D box office revenues were over $1billion in the past year.

With TV broadcasters also looking to Stereo3D as a potentially lucrative new revenue stream (for example, BSkyB in the UK is launching a dedicated Stereo3D channel in 2010), this exciting new business will be a major growth area for years to come.

High Definition – HD broadcasting is rapidly gaining momentum around the world. Quantel makes HD easy – all of its systems can produce HD and SD simultaneously and Quantel has enormous experience of fast-turnaround HD production with customers such as ESPN and Rogers Sportsnet.

Quantel is ideally placed to help broadcasters make the move to HD; TPC in Switzerland and WDR in Germany are two recent examples. File-based workflows – the potential efficiencies and economies of file-based workflows are proving irresistible to broadcasters.

The benefits of Quantel’s seminal FrameMagic technology have now been extended into the IT file-based world. Now file based workflows can deliver on their full potential. All Quantel’s broadcast sales now demand file-based workflows with tapeless camcorders and the integration of third party applications such as Apple Final Cut Pro. Quantel workflow now extends to third party editors as well as a seamless file transfer between EVS and Quantel servers.

“I’m really proud of what we’ve achieved this year,” said Ray Cross, Quantel CEO. “While many other manufacturers have been reporting substantial contractions in their results, we have grown our business by 12%, which would be a notable achievement even in favourable market conditions. We’ve done it by listening carefully to our customers and focusing squarely on delivering what they need to move their own businesses forward. We have more exciting developments in the R&D pipeline, which is why we’re looking to recruit more talented engineers. Quantel is set to take full advantage of the upturn in the market as it unfolds.”

Avid acquires Max-T

Avid has acquired Maximum Throughput, founded in 1998 and best known in visual effects for their Sledgehammer line which provides storage and IO solutions to complement workstations and provide conform capability. A little over a year ago they introduced MAXedit™ which offers a scalable, multi-seat HD/SD editing solution and also has a web component that provides a “comprehensive web-based editing platform”.

An Avid spokesman, commenting on the aquisition, said: “This acquisition is an example of how Avid is investing in technology to complement our ongoing innovative work on our current solutions. Avid has notified all Max-T customers about the acquisition and communicated our assurance to honor existing support agreements, as well our plans at present time to discontinue future sales or new development of Max-T products.”

Arris acquires assets of EG Technology & Digeo, Inc

ARRIS has acquired certain assets of EG Technology, an Atlanta-based company for approximately $6.5 million. Under the terms of the agreement, Arris acquired EGT patents and video processing technology for digital networks, and will employ approximately 20-25 of the existing employees. The acquisition complements ARRIS video offerings by adding multi-functional, flexible, and scalable video processors to its portfolio of market leading voice, video and data solutions.

In addition, the company also announced that it has agreed to purchase the assets of Digeo, Inc., including its intellectual property portfolio, for a cash purchase price of approximately $20 million.

The Digeo acquisition, along with the recently announced acquisition of EG Technology (EGT), provides ARRIS with substantial technical expertise in video networking and an innovative multimedia services delivery platform. The engineering talent and intellectual property acquired as part of these transactions will be combined with ARRIS’ internal development efforts to accelerate the introduction of next-generation IP-based consumer video products and services. These new products will allow the Company’s customers to cost effectively integrate and distribute new forms of personalized multimedia content throughout the home.

ARRIS will continue to develop and market the current line of Digeo Digital Video Recorder (DVR) products, including Digeo’s Moxi Cable DVR and consumer HD DVR with its Emmy® award winning user interface. Moxi customers will continue to enjoy uninterrupted service and updates.

“Several years ago we laid out a strategy to establish ARRIS as a leader in video networking,” said Bob Stanzione, ARRIS Chairman and CEO. “Our strategy includes both organic development and strategic acquisitions. The Digeo acquisition, along with our acquisition of EGT last month, has enhanced our ability to aggressively pursue end to end video delivery initiatives.”

As a result of the Digeo transaction ARRIS will gain approximately 75 employees located in Kirkland, Washington. The addition of the Digeo engineering team will raise the Company’s research and development investment by approximately $3M per quarter. In addition to a highly talented work force and award-winning products and technology, ARRIS will acquire an extensive intellectual property portfolio in technologies including Digital Video Recording, Home Networking, E-Commerce, and Multimedia.

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Red Giant & Avid Team Up

Red Giant Software announced a collaboration with Avid®, to provide consumer video editors a f set of streamlined special effects tools used to create visual effects seen in films and on television. Customers who purchase the new version of Pinnacle Studio(TM) Ultimate will receive ToonIt and Knoll Light Factory effects plug-ins of Red Giant Software. Those who purchase new Pinnacle Studio Ultimate Collection will receive six cinematic effects tools from Red Giant Software. To support these Pinnacle Studio Ultimate versions, Red Giant Software will also offer free tutorials, providing practical instruction on topics such as enhancing the look and feel of video, adding pizzazz to text transitions, turning video into a cartoon, and creating dynamic animated backgrounds.

The bundled versions have been specially designed for Pinnacle Studio Ultimate and Pinnacle Studio Ultimate Collection users. They use the same algorithms and generate the same results as Red Giant's standard tools, but include streamlined controls for customers who are new to video effects.

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Disney Studios Names New CEO

Disney Channels Worldwide President Rich Ross has been named chairman of Walt Disney Studios overseeing production, distribution and marketing for all of Disney’s movie labels, including Walt Disney Pictures, Touchstone, Miramax and Disney/Pixar. In addition, he’ll also head Disney’s theatrical and music groups. He reports to Disney prexy and CEO Bob Iger.

Ross succeeds Dick Cook, who left last month after a 38-year tenure, on the heels of string of B.O. disappointments including "Confessions of a Shopaholic," "Race to Witch Mountain," "G-Force" and "Bedtime Stories"

A successor to Ross at Disney Channels Worldwide will be named in the next few weeks. Meantime reports from Cannes say Disney’s international distribution arm is looking forward to creating a new window for 3D releases onto TV screens. Stephen Moore, EVP and MD for Disney’s EMEA distribution arm, says they are already having dialogue with key broadcasters about 3D.

Asked whether 3D meant another distribution window, Moore said Disney was involved in many discussions on the potential impact of 3D in terms of TV broadcasting.

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2009-2010 Broadcast Pro Video Marketplace Reports

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