Welcome to Open Insight, the blog for investors and stakeholders with an interest in our journey. This is where you can find out more about our offering and market position, our progress, our challenges and our growth.
In this issue, we look into the broadcasting industry’s use of cloud services for live broadcasts, and the potential we see for taking over a part of satellite distribution over time. We share the drivers behind our acquisition of Aperi and our decision to include JPEG-XS and ST 2110 technology in our Aperi portfolio, which complements our Nimbra 1060 platform and strengthens our market position. We shed more light on the positive developments taking place in time synchronization, where we have extended our patent protection for synchronization over existing IP networks. Other markets are also opening up, such as critical networks and synchronization in 5G networks.
Net Insight stakes a claim on growing cloud market
The traditional TV market comprising OTT (play TV) services from operators such as Netflix and HBO has been cloud-based for some time, and TV4 and SVT also use the technology for their play services. However, using the cloud for live broadcasts is a relatively new phenomenon.
The broadcasting industry is undergoing rapid transformation and is increasingly moving towards media transport via the cloud. Here, networks play a key role, and we are well prepared once progress starts to accelerate.
We also see potential for cloud services taking over part of satellite distribution over time. We are focusing on meeting our customers’ future demands, and our software-based Nimbra Edge platform is timely in this context.
Straight from the arena to your TV broadcaster
We distinguish between contribution, the distribution of individual events, such as a soccer match, from the arena to the TV company, and primary distribution which relates to the TV companies’ distribution of the match to cable TV operators such as ComHem and Boxer or other content owners around the world.
Most primary distribution and contribution currently take place via satellite, and the remainder through dedicated media networks.
In the near future, we expect existing media transport via satellite to shift to the cloud, a positive trend that is set to continue.
The cost benefits and scalability of the cloud mean that we expect a growing share of the satellite market to transfer to the cloud over the coming years, implying considerable growth potential for Net Insight with its Nimbra Edge solution.
The cost benefits and flexibility of cloud services are also opening up entirely new markets, such as those providing local content and minor sports that were previously unable to compete for inclusion in the TV companies’ schedules. OTT distribution, production over the internet and cloud solutions mean that this content can now reach interested end customers directly, live and with good quality. This is a very promising market going forward, although collaboration partners are required, which we are actively working to secure.
Customers with media focus in the spotlight
Covid and the need for flexible and efficient remote production has driven a very rapid technological shift towards IP and cloud–based solutions over the past year. Net Insight’s strong and broad portfolio makes the company well positioned to help existing and new customers to efficiently and securely use the new IP- and cloud-based media solutions. We are seeing demand from media and satellite operators, as well as TV and production companies and content providers who anticipate significant cost benefits from cloud–based solutions. The media sector has traditionally been conservative in terms of utilizing new technology because of very high demands on quality and security, but Covid has speeded up the transition and demonstrated that the new solutions can meet the demands, and we foresee accelerating growth in this area over the coming years. The transition to the cloud is also linked to the shift towards more license-based business models. In the short term, this will give Net Insight more stable revenue, but ultimately also increased recurring revenue streams with high margins.
Drivers behind the acquisition of Aperi
As part of Net Insight’s strategy of expanding the core operations in Media Networks, we acquired the product portfolio Aperi at the beginning of 2020 with the aim of complementing and strengthening our existing customer offering. Since then, we have focused on stabilizing the product, adapting product development to the market and securing deliveries to existing customers.
The Aperi offering is an important component of Net Insight’s strategy of offering open, automated and standardized IP solutions for all kinds of networks including cloud-based networks. The solutions are fully scalable and adapted to create first-class workflows in distributed media networks globally.
Decision to include JPEG-XS and ST 2110 technology in the Aperi portfolio
Today, the entire sector is moving towards IP-based workflows. The ST 2110 technology enables more flexible management of video, audio and other media feeds in live production in the studio, as well as consolidating video and IT infrastructure. Seamlessly connecting production sites over standardized IP networks for production, remote production and contribution is critical to ensuring high quality. We have therefore made the decision to include JPEG-XS and ST 2110 in the Aperi portfolio. Alongside the investment in JPEG-XS and 2110, Aperi’s world-leading virtualization technology ensures a strong market position for Net Insight.
A powerful total solution with high scalability
Aperi, which will include JPEG-XS and ST 2110 technology from 2022, complements our well-established Nimbra platform in several ways. In parallel with our offering relating to the platform Nimbra MSR (Media Switch Router which includes the Nimbra 1000/600/300 series) we are now able to offer a total solution for standardized IP-media transport.
Nimbra 1060 is a powerful IP media processing platform that supports the new IP production flows over 100 Gigabit Ethernet (GE) interfaces. The combination of Nimbra 1060 and our Aperi products provides us with a complete and scalable IP-video solution for production and distribution over standardized IP networks. These products cover all stakeholder needs, with Aperi 1101 used for small sites, Aperi 1105 for medium-sized sites and Nimbra 1060 for large sites and sites that require 100 GE.
Promising prospects ahead
This strategic investment opens up promising prospects for Net Insight. It strengthens our offering to national and regional service providers that have IP infrastructure with high bandwidth. It also improves our offering to TV and production companies, specifically in the field of remote production, and offers a strong solution for media companies with a consolidated IT infrastructure.
Time synchronization increasingly important on several markets
Time synchronization is becoming more important on many different markets, both for IP media but also in other critical networks such as 5G, emergency services, fintech, power networks and real time critical industrial applications. Following the positive Vinnova report on our time synchronization solution in critical networks and synchronization of 5G networks, we have intensified our discussions with operators and partners alike. During the quarter, we also carried out customer testing in operator networks and are planning to carry out further tests in Q3. We also improved our current solution of distributing synchronization over existing IP networks and increased our patent protection in the area.
Growing demand for synchronization solutions over IP networks
The Vinnova report and other market reports suggest a significant growth market in 5G synchronization. Our initial customer discussions confirm that there is clear demand for complementing current synchronization solutions, although the reasons vary between operators. For some, security and redundancy are key reasons, while for others it is the opportunity to avoid expensive investments in new IP networks.
Significant growth potential
Even if synchronization is important in the media industry, the main potential is currently found in other markets such as 5G and critical networks, where we currently do not have a strong presence. At the same time, we see growth potential in our core business in media due to the significant changes taking place, such as the trend towards remote production and cloud–based solutions. Here, we are looking into how we can best balance our investments and go-to-market looking ahead in order to optimize growth opportunities and minimize risk. Like for all new market initiatives, our partners and the initial reference customers will be critical.
Have a great summer!
After a challenging period, we are now seeing positive signs that the market is about to turn a corner. Our investments in the Aperi portfolio, our focus on more cloud-based solutions and the shift towards IP-based workflows, and our forward-looking work in time synchronization mean that I am confidently looking forward to a strong fall for Net Insight.
I hope you have a great summer and look forward to seeing you again after the holidays!
Crister Fritzson, CEO at Net Insight