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Addressing consumers’ demands in the brave new world of digital entertainment

27 March 2009

Andrew Burke, Chief Executive of Amino Technologies plc

Out with the old, in with the new

The saying “May we live in interesting times” is meant to be a curse. Well, the world of digital entertainment has never seen more interesting times and, for many traditional players, it may well be a curse. However, for disruptors, challengers and innovators, there has never been more opportunity. For the IPTV players and for a new generation of challengers that Amino enables, the field is wide open and the opportunities are large with the IPTV market currently growing at a rate of 17.6%.

IPTV (Internet Protocol TV) is a system where a digital television service, instead of being delivered through traditional broadcast and cable formats, is received by viewers through the technologies used for computer networks.

Market ready for lift off

At last we’re entering the commercial phase of IPTV market development as take up increases. Major operators and content players across the world have now committed to the business, deployed the infrastructure and attracted serious customer numbers with innovative new services.

Video is now being consumed over the internet in new and exciting ways and more people than ever before are accessing video through their computers. For example, the UK launch of BBC’s iPlayer service just over a year ago has triggered a sea change in the way that we watch television in the UK – with some 41 million downloads in December 2008 alone. This trend has now been replicated elsewhere around the world to the extent that 75% of the online population is now streaming video over the internet. Whatever it is we choose to watch – the Olympics, President Obama’s acceptance speech or short clips on YouTube, more and more of us are turning to our personal computers to watch video. This is the forerunner of this video content moving directly to the TV.

Advertising revenue is following this viewing trend and telecoms operators around the world are very aware that doing nothing about online video is simply not an option. They face increasing competition on all fronts from the traditional cable and satellite service providers as well as the new breed of IPTV and Over-the-Top Internet video offerings. Enabling video over the internet is a key way to help these operators to continue to build end user revenue, accelerate market share and reduce customer churn.

Making sense of the chaos

The current IPTV market offers interested buyers many different solutions from multiple suppliers. The big question for operators is how to make the most of these options to make sure that the IPTV solution they choose is complete, open and sustainable.

Our ambition is to help those companies make sense of this complex market with a complete offering which enables them to deliver market leading IPTV services to their end customers, drawing on the skills and knowledge of the best of the ecosystem suppliers. The three pronged strategy that we have in place enables us to deliver this ambition. We want to build scale, to enhance our product line and to move up the value chain.

Giving the viewer what they want, when they want it

Additionally, during the current downturn consumers are increasingly staying at home rather than spending money on going out. At the same time, consumers are becoming more demanding. They want the content they like and they want to view it in different ways, through different devices. Operators need to understand the consumers’ needs and buying preferences better if they are going to win the battle for market share in IPTV.

AssetHouse, which Amino acquired in June 2008, is a true leader in digital content merchandising software bringing our customers greater visibility of their consumers’ viewing behaviours and preferences so that targeted content can be delivered. We call this offering ‘full circle TV’. AssetHouse has now been fully integrated into the Amino Group and in September we saw our first licence sale when we sold our Asset Factory offering to Sezmi, the US based TV 2.0 service provider.

The opportunity for Amino

There can be no doubt that these are challenging times for the global economy. We are unlikely to be immune from this downturn; however, we believe that we are well positioned to continue to benefit from the long term prospects that this market offers. We have a number of factors in our favour – a broad geographic reach giving us good market visibility and a high level of sensitivity to our customer and end user behaviour; a large and loyal customer base; a strong balance sheet and healthy gross margins.

We believe that these attributes position us well, not only to weather the downturn but also to strengthen our market share going forward. New markets are emerging, notably in the Far East, network capability is improving all the time and, perhaps most importantly, end-users are consuming video online like never before and are becoming increasingly demanding in the level of service that they require.

We understand the market, we have a highly relevant proposition and we are ready for the next wave of this constantly evolving sector. We also believe that we have the appropriate strategy to drive shareholder value in this market. We believe that we are set fair to continue to deliver these plans through the strength of our organic offering, but also through carefully selected acquisitions.