Net Insight’s investments in Sye – its live OTT technology – are beginning to pay dividends as the Swedish video synchronization specialist reported a remarkable 433.9% increase in the Streaming Solutions segment for the first nine months of 2019 to $0.9 million. Faultline has reiterated in recent years that certain Net Insight technologies have appeared ahead of the curve and therefore virtually bereft of customer demand. Is Sye’s time now?
Admittedly, Sye accounted for just 2.5% of sales in the third quarter, rising by 181.6% from a year earlier, but this is up significantly from the 0.9% contribution to total net sales in the same period last year.
Investments in Sye have come at the cost of sizable net losses in previous reports, most notably the $6.3 million hemorrhaging in the company’s full year 2018 results, a dramatic 1,474% increase. Net Insight told Faultline at the time that costs associated with Sye totaled $4.4 million in 2018, which 2019’s figure could exceed with an operating loss for the first nine months of 2019 of $3.9 million associated with the Streaming Solutions sector.
However, Net Insight’s core Media Networks division continues to come to the rescue, offsetting Sye’s cavernous operating losses, bringing in net sales of $29.8 million so far this year, 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. Media Networks primarily constitutes the company’s flagship internet media transport product Nimbra, which back at IBC received an upgrade with the Nimbra 400 series. The Nimbra 400 series updates and expands on Net Insight’s offering within premium transport and effectively replaces the existing Nimbra VA series.
Sye, which can be delivered as a pure software license or on a SaaS basis, has benefited recently from deals with CDN technology companies rather than direct customer wins at operators or media organizations. This means revenue is variable, based on usage with no volume commitments. Last month, Net Insight’s Sye secured a deal with 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.
Combined with betting, Sye technology really comes into its own. It enables ultra-low latency video synchronization between screens showing different angles from multiple track segments. Distributed via Mediatech’s CDN, Sye’s low latency video 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.
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.
Net Insight’s Q3 was a different story though, reporting positive net income of about $0.2 million, albeit a 3.8% year on year decline, from total quarterly net sales of $11.6 million, down 2.4%. The ugly truth is that Net Insight has initiated a number of staff terminations and write downs of capitalized R&D costs over the past year or two.
The third and final sector, Resource Optimization, brought in $2 million in Q3, up 3.2%. This side of the business encompasses the ScheduALL product – software designed to reduce and control operating costs with centralized systems like MAM and content workflow.
Net Insight’s fortunes may also benefit from its recent allegiance to both SRT (Secure Reliable Transport) and RIST (Reliable Internet Stream Transport) alliance groups, with the former considered more advanced in terms of fundamental techniques like firewall traversal from both sides and encryption, while RIST has more path protection features such as link bonding and FEC (Forward Error Correction).
While Net Insight results are generally positive despite a number of blips, a red flag was raised back at IBC when eyes glazed over at the SES stand after Faultline drew comparisons between the fleet operator’s Satellite and OTT in Sync product and Net Insight’s own technology. Ironic considering SES is a Net Insight customer.
In the same breath, Net Insight appointed an interim CEO, Anders Harrysson, who will replace the departing Henrik Sund no later than mid-April 2020.