From despair, to finding its niche, and quickly onto flying the nest, the last few years have been a rollercoaster journey for Net Insight’s Sye live streaming product. After reporting a remarkable spike in sales for the first nine months of 2019, Sye quickly attracted acquisition interest with the Swedish vendor this week agreeing a $37.2 million sale to an anonymous Fortune 500 buyer.
In our view, Net Insight has sold Sye at the optimum time. Faultline has typically taken the stance that Net Insight has been ahead of the curve and this has been half the reason for a shortage of major contracts. Others have now caught up and people are no longer shy about investing in low latency technologies and the buzz around live viewing synchronization, particularly live sports and in-game betting, has given Sye a new lease of life.
It means Net Insight has shifted the business for some 30x Sye’s annual revenues, for a business which has branded huge net losses on the Net Insight balance sheet – incurring an operating loss of $4 million for the first nine months of 2019. However, 2019 was Sye’s time to shine as revenues soared 433.9% for the first nine months of 2019 to $0.9 million. Net Insight confirmed to Faultline that Sye is indeed the only product associated with the company’s Streaming Solutions segment, so this should vanish from company filings from Q1 2020.
So, what exactly is Sye? “True live streaming” is the product’s marketing mantra, which it achieves using a protocol developed in-house based on UDP (user datagram protocol) and delivered either as a pure software license or on a SaaS basis, available on-prem close to a transcoder. Sye runs on Microsoft Azure and is insensitive to throughput degradation from RTT (round-trip time) which – importantly – makes distance irrelevant.
Sye also includes refined ABR technology that is aware of the client’s available bandwidth – providing the highest possible ABR profile at any given time to maintain picture quality and ensure smooth channel changes. The Sye client is provided as an SDK, handling networking, decryption, decoding and video stream rendering. The Sye SDK supports AVC, HEVC and AAC (advanced audio coding) codes.
Central to Sye is the QoE reporting element. Data is hoovered up from ingest, streaming functions and the client itself, reporting metrics including ABR levels, viewed channels, start time, duration, and active streaming node, plus network quality metrics including packet loss and bandwidth.
All this enables customers to set OTT latency to harmonize with linear broadcast, or even set OTT latency a few seconds ahead to be faster than TV.
As an example, one of Sye’s most recent deals came at Mediatech, a Hong Kong-based video engineering firm (not to be confused with silicon giant Mediatek), to power the live sports mobile app for local horse racing firm Hong Kong Jockey Club. Here, Sye is enabling ultra-low latency video synchronization between screens showing different angles from multiple track segments. Distributed via Mediatech’s CDN, Sye’s low latency protocol creates an increased betting window while synchronizing screens creates a level playing field meaning everyone has the same fair chance of placing a winning bet. A niche deal but that’s exactly what Sye is.
As we said, Sye has been lacking tier 1 clients with millions of subscribers that really should be the ones investing in the technology. That is probably because Sye really comes into its own supporting purebred CDN technology companies, rather than selling directly to giant operators and media organizations. This means revenue is variable, based on usage with no volume commitments.
Prior to the Mediatech contract, Net Insight joined forces with CDNetworks to expand the reach of Sye, bringing ultra-low latency support for live streaming synchronization of video, audio and metadata across various streams and devices to CDNetworks customers.
It leaves Net Insight as a two-horse business – peddling its core media network technology, comprising the flagship internet media transport product Nimbra, alongside ScheduALL, which optimizes operating costs with centralized systems like MAM and content workflow.
Going by its most recent filing, the Nimbra product line is in a strong position – bringing in net sales of $29.8 million for the first nine months of 2019 of which $9.5 million came in Q3. The nine-month figure was a slight decline of about $230,000 from a year earlier but on much improved operating earnings of $5.4 million, a $1 million annual increase. ScheduALL, housed in the Resource Optimization division, brought in $2 million in Q3 2019, up 3.2%.
To date, Net Insight says it has invested $22.9 million in Sye, so that’s a tidy $14.3 million profit. Proceeds from the deal will be funneled back into the core media transport business, while Net Insight notes that the experience gained in launching and developing Sye, relating to virtualized software and cloud-based technology, will continue to benefit the company. About 30 employees will transfer with Sye to the new owner.