Presentation - Internet Securities

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Presentation - Internet Securities
Internet Securities
June 29, 2006
Jim Olson, Executive Vice President, TANDBERG Television
Agenda
•
•
•
•
Company overview and financials
Market leadership, vision & strategy
IPTV key technologies
Next-generation TV network
Confidential | www.tandbergtv.com
2
TANDBERG Television – The vision in television
“Leading the way in digital media content creation and delivery with
advanced compression, on-demand and interactive technologies”
•
Over 800 employees around the world
•
Nearly 2,000 global customers
•
Revenue of over $289 million in 2005 (profitable)
•
Publicly traded on the Oslo Stock Exchange (TAT)
•
Global sales and 24-hour/7support and monitoring operations
Executive Management:
Eric Cooney - President and Chief Executive Officer
Fraser Park – Chief Financial Officer
Eric Baron – General Manager, Europe, Middle East, Africa
Jim Olson – Executive Vice President, Corporate Development
Graham Cradock – General Manager, Asia Pacific
Al Nunez - Senior Vice President, Americas Sales
Confidential | www.tandbergtv.com
3
Nearly 2,000 global customers
The World Is Watching
Confidential | www.tandbergtv.com
4
Market Segments
Satellite
Telco
IPTV
C&D
DTH
Interactive
On-Demand
Compression
C&D
Cable
Switched
Digital
Broadcast
Networks and
Programmers
Mobile
HFC and
IPTV
DSNG/
DENG
TV
Content
Distribution
ATSC/
DTTV
Internet Media Delivery
Targeted Advertising
Confidential | www.tandbergtv.com
5
MultiMultiformat
Delivery
Satellite
Distribution
IPTV Product Overview
5720
SD Encoder for
C&D
Xport Slicer – VOD Content
Prep
Mediaplex-20 and iPlex
Video Headend
EN5990
HD MPEG-4 AVC
Encoder
5980
HD Encoder for VC-1
Confidential | www.tandbergtv.com
zBand PUSH VOD
Entertainment Edition
AdPoint
On-Demand
Advertising
Platform
6
StoryTeller
Interactive Content
Development
Content Producer
Interactive Ad Creation
Financial highlights – Q1 2006
• Revenue $84.2M, up
24% over 1Q05
• Gross margin 57.4%,
up from 56.3% in
1Q05
12 month trend
150.00
140.00
130.00
120.00
110.00
• EBITA $18.3M, up 56%
on 1Q05
100.00
90.00
80.00
70.00
• Net cash flow from
operations of $7.1M,
up 27% over 1Q05
Confidential | www.tandbergtv.com
TAT
7
OSE
NASDAQ
Digital index
31/03/2006
17/03/2006
03/03/2006
17/02/2006
03/02/2006
20/01/2006
06/01/2006
23/12/2005
09/12/2005
25/11/2005
11/11/2005
28/10/2005
14/10/2005
30/09/2005
16/09/2005
02/09/2005
19/08/2005
05/08/2005
22/07/2005
08/07/2005
24/06/2005
10/06/2005
27/05/2005
13/05/2005
29/04/2005
15/04/2005
60.00
01/04/2005
• 1Q06 operating profit
16.7M, up 29% over
1Q05
Quarterly profitability trend
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Re v e nue
EBITA
EBITA %
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
50.0
50.3
56.7
65.7
71.2
74.4
78.5
84.2
7.7
8.7
13.4
11.6
13.1
16.1
17.2
18.3
15.4%
17.3%
23.6%
17.7%
18.4%
21.6%
21.9%
21.7%
Re v e nue
Confidential | www.tandbergtv.com
EBITA
8
EBITA %
Vision, leadership and strategy
Confidential | www.tandbergtv.com
9
Drivers of TANDBERG Television’s growth
•Growth in
digital TV
subscribers
•Increasingly
competitive
environment
for platform
operators
•Consumer
demand for
interactive TV
services
•Growth in
time-shifting
and placeshifting TV
•Large uptick
in HDTV
households
•Service
provider race
for HD
superiority
Confidential | www.tandbergtv.com
•Growth in
new media
delivery
−IPTV
−Internet TV
−Mobile
devices
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Evolution of consumer media experience
•1990
•2001
•2003
•2004
•2007~
•2006
What Consumers
Want
Interactivity - media
Convenience
for video
Interactivity
Portability
Choice and Control
Mobility - voice
Portability
Convenience
TV
TANDBERG transactional
InteractivityExpanding information access
•1980
Confidential | www.tandbergtv.com
•1990
Time
11
•2000
Media Convergence (any content,
anywhere, any device, anytime)
nt
nte
Co
ed
fin
de
rc e
e rme
Us
om
-C
ng
TV
rv i
se
Ad
on
al
isi
xtu
lev
Te
nte
st
Co
ica
Un
TV
HD
ull
dP
an
H
US
)
-P
od
D(iP
VO
sic
Mu
al
git
Di
TV
IP
)
VO
(TI
TV
ted
hif
e-s
s
Tim
ne
ho
ep
et
bil
e rn
Mo
Int
up
alio
Di
rad
&
eo
vid
st
ca
ad
bro
ed
Fix
Enabling Technologies
•1950
IPTV leadership
• TANDBERG Television is the #1 market share
leader in video headend compression across
broadcast, IPTV, cable and satellite
• Total video headend market $1.08B 2005
– TANDBERG Television share $250M - 26.5%
– Encoder market to quadruple by 2012 (Parks Associates)
• Nearest competitor under 16% market share
• Total 2005 IPTV compression market US$160 –
180M
– TANDBERG Television share 30 – 40%; revenue leader
Confidential | www.tandbergtv.com
12
TANDBERG Television’s strategy
• Enabling the future of digital TV
• Build track record of firsts
• Maintain market and technology leadership
• Lead the digital transition to any content on any platform, any
time
• Extend leading customer solutions in all formats
– Widest product range
– Highest performance
• Key Solutions:
–
–
–
–
–
–
–
MPEG-4 AVC, HDTV, IPTV
Open on-demand, PUSH VOD,
Interactive end-to-end solution
Targeted advertising insertion and placement
Interactive advertising
MPEG-4 AVC broadcast backhaul, MPEG-2 broadcast video
MPEG-4 baseline for mobile
• Open Technology Provider
– Platform neutral
• Cable, Satellite, Telco, Wireless, Terrestrial
– Device neutral
• TV, STB, PC, PVR, Mobile
– CA Neutral
Confidential | www.tandbergtv.com
13
IPTV Key Technologies
Confidential | www.tandbergtv.com
14
Why IPTV will be mainstream
• All communications service providers will migrate to IP
infrastructures, but telco is first
– Approximately 300 deployments…most under 10,000 subs;
still early stage
• Reduces operator cost structures and standardizes infrastructure
for interoperability across vendors
• Enables new lifestyle and experience opportunities for
subscribers
– Choice, mobility, portability, interactivity, and control
– TIVO, iPod and On-Demand programming just the beginning
– Early adopter consumers are driving demand for
personalized, interactive, and customizable TV offerings
• Provides new advertiser and operator revenue based on timeshifted, personalized targeting
Confidential | www.tandbergtv.com
15
SkyStream purchase strengthens IPTV
leadership
• Highly complementary product sets
– SkyStream significantly expands IPTV solution set
• High density, cost effective encoding solutions
• Mediaplex™ – best selling chassis headend in the world
• iPlex™ – world’s densest multichannel MPEG-4/MPEG-2 encoder/mux
– Attractive Satellite/Cable products
• SMR/EMR – Source/Edge Media Router – world’s leading encapsulator
• Z-Band – advanced software for ‘push’ VOD
• Complementary market coverage
– IPTV
• SkyStream very strong in Tier 2/Tier 3 telcos – esp US IOC market
• TTV Focussed on Tier 1 Telcos
– Enterprise/VSAT market - SSNW market leader, ltd TTV presence
• Substantially strengthened R&D
– Adds 50+ Talented Engineers, total 58 patents filed/pending
– Base in Silicon Valley – substantial local market of talented
engineers
Confidential | www.tandbergtv.com
16
Overview of key IPTV technologies
•
•
•
•
MPEG-4 AVC
– Benefits of MPEG-4 AVC for telcos
– Transition from MPEG-2 to MPEG-4 AVC
• How providers can adopt the new technology and overcome
content constraints.
– Picture in Picture
HDTV
– Current state of end-to-end HDTV delivery options and the
likelihood of near-term telco HD deployments
VOD
– VOD delivery models
• Open Platform delivery solutions
• PUSH VOD
– Strategies for Telco VOD implementation
• MovieBeam
– Advertising
Interactive Television (iTV)
– Telescoping
– Branded portals
– Commerce
Confidential | www.tandbergtv.com
17
Benefits of MPEG-4 AVC part 10
•
•
•
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Enables more services in
telcos’ existing bandwidth
– 50% more
compression than
MPEG-2
Telcos with FTTH or ADSL
2+ networks can offer
cable-competitive service
offering with 20
Mbps/home:
– 2 channels HD
– 2 – 3 SD
– PUSH VOD
– Internet
Included in Blue-Ray Disc
and HD-DVD Forum
formats
Continuous picture
quality improvements by
encoding vendors
Confidential | www.tandbergtv.com
7 Mbps MPEG4
HD
7 Mbps MPEG4 HD
0.5 Mbps Push VOD
1.6 Mbps MPEG4 SD
1.6 Mbps MPEG4 SD
1.6 Mbps MPEG4 SD
2 Mbps Data
Source: DSL
FORUM
18
Legacy approach decodes and then re-encodes
132 channels
SD
SD
LINK
7
8
LINK
6
LINK
5
LINK
4
LINK
3
LINK
US
2
LINK
1
LINK
STAT
WS-X6408-GBIC
8 PO RTS GIGABIT ETHERNET
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TUS
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SD
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SD
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TUS
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TUS
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SD
SD
SD
C I S CSO
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STA
SD
SD
SD
YSTEMS
(132) 1RU encoders with gaps for replacement and front-to-side heat dissipation plus
(11) 12-slot MPEG-2 decoders plus Ethernet switch to aggregate
132 100Base-T cables to four optical GbE
150 watts per encoder + 500 watts per Ethernet switch + 250 watts per decoder rack = 23,050 watts
Confidential | www.tandbergtv.com
19
Mediaplex “transcodes” 144 channels
TANDBERG Television’s Mediaplex-20™ headends with
integrated transcoding
144 MPEG-2 to MPEG-4 AVC transcoders with 4 (up to 16) pre-aggregated optical GbE outputs
1800 watts (DC) X 3 units = 5,400 watts or
2100 watts (AC) x 3 units = 6,300 watts
Confidential | www.tandbergtv.com
20
MPEG-4 AVC high-definition (HD) TV
• Must be part of every IPTV operator’s video service tiers
• Enables premium service to improve ARPU and
competitive parity with digital cable and satellite
• Reduces transmission bandwidth required for pristine HD
by 50%
• Good HD picture quality at 7 Mbps per channel
• Multiple resolutions and frame rates now available enable
different pricing options
– 720p50 up to 1080i30
– Live Action Sports at high resolution could command
premium pricing
• TANDBERG Television is the only company
shipping MPEG-4 AVC HD today
Confidential | www.tandbergtv.com
21
How PUSH VOD works
1. Media Files are packaged,
encrypted and labeled with rights
for usage.
2. Media is transferred to consumer
device.
3. Consumer selects media to play
in On Screen Guide.
4. Encryption ‘middleware’ requests
keys from Transaction Server.
Network
PUSH Server
5. Consumer enjoys high quality
media-on-demand experience.
6. Consumer gets billed with
monthly statement.
Confidential | www.tandbergtv.com
Transaction Server
22
Largest PUSH-VOD service
• MovieBeam
– Deployed in 29 cities across US – world’s
largest VOD deployment
– Always 100 new release and special
interest movies - First to offer content
from all major studios in DVD Window
– Deliver 10 new release movies per week
– First to offer HD Movies
– No late fees
– All trick play features (pause, fastforward, rewind etc.)
– Network can reach 90% of the homes in
the US
– PUSH technology saves them millions of
dollars
Confidential | www.tandbergtv.com
23
On-demand solutions
CREATE
Confidential | www.tandbergtv.com
DELIVER
24
MANAGE
New advertising models driving innovation
• Announcement of deployment
of AdPoint® with Comcast
– Dynamic ad placement
software solution
– Enables monetization of VOD
AdPoint®®
Campaign
Manager
• Free VOD Æ ad supported
• Raises ROI for advertisers
Tracks campaign
information and creates
rules for content and ads
– Target ads
AdPoint®®
Media
Manager
Xport™
Producer
Postproduction
platform for
ads and adsupported
content
Confidential | www.tandbergtv.com
Manages
placement of
ads into
content at
cable
headend
25
iTV leadership
•
•
•
Paradigm shift in advertising
industry from linear ad insertion
to time-shifted, highly-targeted
insertion over life of program
NFL Sunday Ticket
Interactive TV gives additional
revenue opportunities
• Increased viewership
• Transaction revenues
• Increased ad revenues
Available now - over 20,000
hours of ITV programming from
TANDBERG Television
•
Over 70 % market share in US
•
Only cross-platform provider
(wireless, cable, satellite, IP)
•
More than 200 advertisers ran
ITV through TANDBERG
Television systems
Confidential | www.tandbergtv.com
26
Advanced IPTV technologies
• Fast Channel Change
• Mosaic Program Guides
• Ultra-compression
• Mobile integration
• Interactive platform
– Games
– Program guides
– Text TV for mobile
– Content management
• Personalization
Confidential | www.tandbergtv.com
27
Next-generation TV network architecture
k&
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Interactive
Advertising
Service
Provider
SetSet-top Box/Device
t
en
Open standard back
office software
Open standard
interactive client
Confidential | www.tandbergtv.com
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28
Questions?
Confidential | www.tandbergtv.com
29