We have pretty much avoided Inuk Networks over the past two years, aware that it was there, but not thinking that there was anything new for IPTV in its approach.
But after meeting the company this week, in a hangover from the IBC conference where we tried to tie up, we get a picture of a company with a strong vision and a clever approach to the market and the increasingly standardized way of carrying out IPTV.
The company may be strong on technology, but we’re not sure about its understanding of geography. The company called itself Inuk in 2005, after a brief fling with the name Ubivisum, taking the new name from the Inuit word for people. Inuits live in Greenland and parts of Northern Canada. It then proceeded to buy its middleware technology from Iceland, a country mistakenly associated with Inuks, but occupied by Europeans (Celts and Vikings) for almost a thousand years.
In keeping with its naming conventions it has called its latest product Igloo, which of course is an Inuit or Inuk house, again used in Greenland but not in Iceland.
We talked this week to marketing director Nick Ruczaj, who explained the company’s unique slant around free and low priced IPTV for students.
Igloo is in fact a downloadable PC or Mac client that behaves like a virtual set top box. It is designed for students, mostly in their halls of residence, who instead of having TVs tend to have Personal Computers attached to the multicast ready, academic network Super Janet, part of the precursor to the modern day internet.
The joint academic network was linked to the original US internet (Arpanet) back in the 1970s, and with faster and faster backbone technologies up at 10 Gbps speed, which will later go to 40 Gbps, it was renamed Super Janet and connected all the research universities in the UK together and to the outside research world, as well as to the public internet.
It is the fact that the routers and switches that make up this network can support a multicast, which the major public ISPs like British Telecom do not, and the fact that this is a private network, and not part of the larger public internet, that means that it is a perfect target for an IPTV network. It needs little or no build out, has oceans of capacity, and so far the service has captured 20,000 students with free TV services, and some paid, sub-Skye pricing, VoIP services.
Now the company overnight with the launch of Igloo will be hunting for more like 70,000 to 100,000 students as the new university year begins, contracted mostly through the university IT departments, adding an optional pay TV layer along with its Freewire branded free channels that it has been delivering for the past year. If it achieves that it will overnight become the biggest IPTV service in the UK.
When it first did this Inuk added the Widevine digital rights management system to encrypt its H.264 compressed multicast, delivered from a central Docklands head end, to Telsey set top boxes. When Inuk found that students didn’t have a TV in their halls, because they are mostly large concrete buildings impervious to antenna signal delivery, the company was forced into the rapid creation of a PC based monolithic C++ application to emulate the set top in a PC. All student these days have high speed internet connections in their rooms, and therefore PCs.
Inuk went to Icelandic IPTV middleware company Zignal for software that can support set tops with broadcast TV, VoD services, PVR, digital radio and on-line gaming.
‘For each university there is a small scope of work to upgrade their local networks to optimize Quality of Service at their edge routers, and local Ethernet switches, but apart from that this is free TV for students for no cost,’ says Ruczaj.
‘The biggest problem is that these firewalled halls of residence can’t always support this many concurrent network streams. In Canada, at Waterloo University where our next network is being built, the set up is better. They firewall the university computers, but not the student residences, so that’s less of a problem,’ Ruczaj says.
The pay TV services are a bouquet for $20 a month, including a sports channel which to the outside world cost $20 on their own, and 19 other premium channels of entertainment and music. ‘One of the channels features the new US serial about an ambivalent serial killer, called Dexter, and we will have a poster in almost every university room in the UK of the blood spattered Dexter, asking if they’d like to subscribe to the service,’ says Ruczaj, and he reminds us that only one person in each house needs to subscribe for it to have TV so they can share the cost.
‘The new Igloo software is not a hard coded monolithic piece of software like the one we threw together last year. It offers a transparent EPG, which disappears after 4 seconds of non-use and re-appears at the touch of the mouse. The system disables the screen saver, and the power save features, and by January it will act as a DVR and store to the PC disk.’
The software will download for free and the premium channels can be signed up for over a web interface.
Another deal that Inuk cut in the run up to its second academic year is for Cable and Wireless, one of the biggest ISPs outside of British Telecom in the UK, to offer broadband lines which carry the wholesaled Inuk proposition of IPTV. This means that where a university has students outside its halls of residence they can get a discounted C&W unbundled DSL line and Inuk VoIP and IPTV, all contracted for by the University. The universities are duty bound to offer subsidized external accommodation anyway, so by adding the broadband bill to the room rent it means Inuk can be sure that it will reach around 70,000 or more students overnight.
The C&W network is multicast ready, unlike BT’s lines, and it acquired its way into the ISP market with the purchase of Bulldog in 2004 and since has heavily invested in building UK wide broadband coverage.
Inuk reckons that this deal is worth £70 million ($140 million) over the next five years, so round £14 million ($28 million) a year, which is from an almost zero revenue business which has been two years in the planning.
The revenues come in commissions for all those C&W broadband lines, some margin on the VoIP-out calls to the PSTN, the paid TV bouquet and advertising on the 30 free channels, which is about to take off in an addressable advertising trial starting in the new term in October.
IPTV advertising start up Packet Vision announced back in February that it had landed its first contract with Inuk Networks and Inuk will use the Packet Vision ad insertion technology to deliver ads direct to a tightly targeted youth audience. It would be enough to just single out 18 to 21 year olds, but to also be able to tell if they are male or female, their location and also how much disposable income they have and what programming them are interested in, should lift the appeal of addressable advertising considerably.
In the first place UK universities saw Inuk as a way to reduce the amount of P2P file sharing of video files on their networks, but now that Inuk has this stranglehold on student entertainment it can begin to think of more and more ways to build its student oriented revenue base. Getting outside the halls of residence this year was one way, but the deal with C&W means that as students leave their university, they can also offer them services elsewhere in the country, when they move on and there is also the possibility of new content.
‘There are 14 UK universities which create existing TV channels, but at the moment these are only seen on a couple of TVs in the common room or student union bar,’ says Ruczaj.
‘Loughborough has its own ‘totty TV’ for spotting and featuring attractive students, as well as its British Universities Sports Association channels, but also Manchester has its own ‘Stars’ of the campus.
‘We can put all of that content on to one channel, plus we might add a two hourly news channel, and the prodigious outputs from film schools. College Football in the US is a huge business, so why not outside the US. Also how many people might like to follow their old university team once they leave University. There might be a kind of ‘friends re-united’ of teams which you played for in the past, tracking and possibly watching video of games involving your old team mates.’
And Ruczaj reels off ten other original programming ideas of how to extend the reach of a TV service for students in a way that’s reminiscent of how Apple keeps coming back to music, and Steve Jobs when asked about offering video kept saying to analysts ‘It’s about the music, stupid,’ and the company has kept extending the revenue possibilities. Back in the 1980s universities were given free copies of Unix, because its author, AT&T Labs, had signed a consent decree to keep out of computer markets and was not allowed to make money from it. The result was that students were all Unix literate and Unix became the operating system of choice for most future computer architectures except for PCs ‘ that’s the power of students for you.
The next issue is to scale revenues here not only with C&W as an ISP but also offering the channels wholesale to other ISPs. Inuk also wants to take the idea abroad. Already universities in Canada and Ireland are signing up for the Freewire idea, and there are discussions in Scandinavia, Europe, Asia and the Middle East. And Ruczaj promises to remember ‘It’s the students, stupid,’ and says the company will not be wasting its resources going head on up against all of the big operators in the IPTV world.