Heading into the 2017 NAB Show, it’s hard to name another company with as much momentum as online video tech product and service provider NeuLion.
Whether it’s powering the live and on-demand streaming of the NBA playoffs globally, launching a new digital destination for yet another American university’s athletics department, or advancing the live 4K streaming tech for yet another Ultra HD TV manufacturer, it seems not a week goes by without NeuLion announcing something new. Just the other week they were honored at the 2017 Cynopsis Sports Media Awards, winning the category of Best Mobile App for their revamp of the Big Ten Network’s new BTN2Go Personalized Apps, while separately picking up an honorable mention for Best Live Stream Presentation for UFC 205 in 4K.
At NAB, NeuLion will be powering the M.E.T. 360 Studio from the LVCC Grand Lobby to deliver live and on-demand content directly from the studio stage to viewers around the world.
Chris Wagner, EVP and co-founder of NeuLion, chatted with the Media & Entertainment Services Alliance (MESA) about the origins of the firm, the challenges of 4K OTT delivery today, and what’s next for the Plainview, N.Y.-based company.
MESA: For NeuLion, give me a little background on how the company started, what the impetus for it was, what gap in the market it was filling, things along those lines.
Wagner: We started the company in 2004. The group of 15 of us back then, we’d all been in the technology space for a long time. We wanted to take our expertise in technology, focus it around the internet and video, and change the experience for viewers, offer the ability to personalize and deliver one-to-one services very differently from broadcast television. That was kind of our idea to change the way how entertainment could be experienced and viewed. So that was kind of the impetus behind it, and that’s how we got started.
MESA: 2016 saw you guys make all sorts of news in the 4K space, with the UFC 205 event being the culmination of a big year for you guys. What are some of the challenges you encountered doing that? What do you have to be aware of, and what did you learn that you guys can incorporate with your next offering?
Wagner: Video quality has always been a very big focus for us. When you carry and deliver content from the NFL, NBA and UFC, their brand and their quality of production that gets produced in the arena or on the field, they really want that to resonate with viewers. So video quality has been a big focus of ours, starting with HD, and now with 4K, and we make the experience better than what you’d find with traditional broadcast cable or satellite.
Over the last three years, consumers have been able to get higher quality video over the internet than they can from the traditional players in the broadcast TV industry. We knew 4K would be a place for us to really create a competitive reason to pick NeuLion.
There aren’t a lot of people doing live 4K delivery over the internet. With 4K, you’re talking four times the quality of HD, twice the frame rate of what normal television is, and we’re doing 60 frames per second, as others are doing 30fps. To be able to do this over an unmanaged network, which is the open internet, requires a strong technology platform.
How can 4K signals be encoded and then delivered adaptively over an unmanaged network? Our Digital Platform employs what we call multi-CDN switching, being able to move 4K streams across multiple CDNs to get the best performing CDN to get to the internet service level provider. Once we reach the viewer, we want to make sure we can control the quality on all UHD television sets that are selling. I think at CES they talked about one in four TVs by the end of this calendar year in the United States would be 4K TVs, all connected to the internet.
So to control the experience on the TV, we built a 4K player that gets embedded in the firmware of the set that gets distributed by the big TV manufacturers, like Sony, LG and Samsung. And that kind of completes the 4K ecosystem. So being able to deliver the content adaptively, being able to choose different CDN tasks, the best performing streams, and then hand-shaking with the 4K player that’s on the set so that you get true 4K quality.
We’ve also added a lot of interactive features in our 4K player that we know sports fans like: instant replay, slow motion, multiple audio and video feeds, and other engaging features that sit in that player that’s on the TV. So, the challenges were coming up with the technology that would connect both the CE device and the encoding of the content. We’ve done that. And then the last piece that we accomplished was to be able to create a business model around it. So, a rights holder that has 4K content can pick several different ways to monetize that content.
They can deliver 4K ads in the streams themselves. They can set up 4K content behind the paywall, and consumers can pay with a credit card to watch it. So, the video quality and the merchandising kind of go together as well.
We’ve been continuing to build out our expertise in this area for several years, starting with one-off live 4K events with the NBA, Univision and others. UFC was our first partner to pick this up and make it a consistent part of the UFC digital offering.
We reached about 180 countries with UFC 205 with an average digital ticket cost of $60. Fans received both an HD stream and a 4K stream so, depending on what kind of device they connected to the internet, we would deliver the right video content, over the top, in 4K.
MESA: We’ve gone over live, but NeuLion’s offering is also extended to OTT and TV Everywhere. What have you guys learned delivering those services, and what makes you stand out?
Wagner: We power a really cool SVOD service for Lionsgate and Tribeca Enterprises called Tribeca Shortlist. We work with the Big Ten Network and the Tennis Channel on their hybrid OTT/TV Everywhere products. And we work with straight subscription providers, like the NFL (Game Pass) and NBA (League Pass). And if you look at the market, the business models for internet TV include TV Everywhere, authenticating with the pay TV operators. We do that with the Big Ten, Tennis Channel, Univision.
With the Big Ten, we have over 300 affiliates that we actually create an authentication pass for. Comcast, Charter, Time Warner, to name a few, all carry the Big Ten Network, and we’ve created a technology pass that checks to see if the viewer is authenticated as a subscriber with one of those. So, that’s the TV Everywhere market. But some of our customers like Tennis Channel, Univision and the Big Ten Network, also have programming that falls outside of their TV affiliate deals. That’s an OTT opportunity. OTT business models are direct-to-consumer, offering consumers content packages, allowing consumers to pay for that content directly to the rights holders, so they would sign up for BTN Plus or Tennis Channel Plus or Univision Now.
That’s an OTT model, and what we’ve seen is kind of a hybrid of that, where people that own entertainment and sports rights want to be able to trigger different business models depending on how their rights work. And over the last year, I’ve seen a big move to kind of a hybrid of business models that combines this TV Everywhere authentication with an additional OTT offering of separate content behind a pay wall and direct-to-consumer purchasing with credit cards. And it also includes live ads that get delivered in long-form video. With the NeuLion Digital Platform, we are doing all of that within one platform.
It makes it a lot less complicated process for content owners or content rights holders. They don’t need to go out and build separate systems for each of those business models. They can handle it all with just one platform, which allows them to get market more quickly and to eliminate some out-of-vender complexity.
MESA: Now, it’s been over six months now since you guys brought Saffron Digital into the fold. What did that acquisition bring to NeuLion? How important was that to your guys’ business model?
Wagner: Saffron gave us three big synergies; three very positive things that came out of that acquisition. The first is it added technology to the NeuLion platform to enhance what we were doing around copyright protection and secured streaming. Our NeuLion Digital Platform now can accommodate live stream encryption, but it can also accommodate a multi-DRM strategy for copyright protection. So, depending on the rights holder and requirements they have for DRM, Hollywood studios would be a good example, the platform now can support live encryption or full DRM. Prior to Saffron, NeuLion’s platform was primarily an encrypted service, so now we can do both. That’s one big synergy.
The second is NeuLion is expanding globally. We see the European market as a marketplace that can be as big as our market here in North America. We’ve grown our presence in Europe substantially since the Saffron acquisition. We’ve gone from about 10 to 60 people. We have a large office now in London as a result of the Saffron acquisition. We’re opening up a new technology operations center (TOC) in London, and a new office space in London in this quarter.
We have been the largest streamer of US sports in Europe via the NFL, NBA and others and now we want to use this as a springboard to become the largest streamer of European sports and entertainment throughout Europe. We’ve already seen payoff there through exciting deals with Eleven Sports, the English Football League, SKY and others. So European expansion would be the second big synergy.
And third is just a general, broader market for us to sell to. NeuLion historically has done very well in sports; we’re the de-facto standard in sports live streaming. Saffron had some very strong brands in the entertainment space (ITV, BT, Carrefour) so those brands are now part of NeuLion. And NeuLion’s enhanced technology platform allows us to really offer a broader solution to entertainment and movie companies, and sports companies. So the third big synergy was just a larger market for NeuLion to plan with our platform that includes both sports and entertainment.
MESA: Now, you’ve already rattled off UFC, NFL, Big Ten Network, you guys have a ton of media and entertainment companies coming to you guys, but do you have any that you can single out? That you think are right up there as the top use case examples for companies that really make good use of NeuLion?
Wagner: Well, UFC has done a really good job. Not only have they pushed the envelope on quality with 4K streaming, they also have launched, which is a big trend for this year 2017, a new personalized service for their viewers. So viewers can actually go in to a UFC app, and they can pick personalize their experience thanks to an advanced customization engine that delivers curated video content, social feeds, custom schedules, stats, news-related content and more all tailored to the individual viewer based on their preferences. A viewer can specify that they want to watch 20 minutes of title-fight knockouts and the engine will respond with such a playlist. Essentially what UFC has done is they have taken the largest library of MMA content in the world, and allowed fans to go in and personalize exactly what they would like to see out of that library.
So it’s made it easier for fans to find what they want to watch faster with this personalization. The result for that with UFC has been a pretty significant increase in time spent online, so total engagement has really grown for them. I would say they would be a real trendsetter around video quality and personalization. The Big Ten Network has done the same thing. I think across a number of NeuLion customers in 2017, this combination of moving to high quality video and being able to personalize content so it gets curated specifically for the viewing audience are two big wins for NeuLion, and wins for our content partners this year.
MESA: So you’ve mentioned personalization, what are some other trends we can expect to hear about in this space in 2017?
Wagner: OTT providers understand the importance of high video quality and personalizing their service. The next issue is how do I hone my business so I can activate more subscribers and mitigate any churn of existing subscribers?
At NAB we’re announcing our new Platform feature, NeuLion ACE Analytics, which focuses on these areas of subscriber acquisition and reducing churn. ACE Analytics leverages real-time OTT consumer watch, user and support data as content is delivered and consumed on internet connected devices. The goal here is to answer questions such as ‘How do I convert customers from free to paid?’ or ‘Who are my most valuable customers and how do I find more of them?’ and use all the data generated by our Platform to inform marketing and product decisions.
MESA: When I first started reporting in media and entertainment, DivX was all over the place, and you guys picked it up in early 2015. Just a quick rundown, what have you guys done with it? How have you incorporated that technology?
Wagner: DivX, we acquired in 2015, to your point. There are two big technologies out of that acquisition that kind of fit in with all the comments we’ve had thus far. The first is around 4K streaming. DivX has the largest library of codecs in the world. It’s offered under a solution called MainConcept, and MainConcept’s used by a lot of broadcasters with Kodak H.264 or H.265. So the NeuLion platform was enhanced to support 4K live streaming with a MainConcept SDK, which allowed us to implement 4K live streaming.
So, just as I talked about Saffron enhancing our platform around security and copyright protection, the DivX acquisition helped enhance our platform to allow us to get to market more quickly with 4K live streaming. So that’s MainConcept. And MainConcept is also a stand-alone solution that people like Microsoft, Adobe, Apple license MainConcept SDKs so that they can put in their video products: compression, decoding, both for video and audio. So that’s one thing is how it enhanced our platform.
Then the other is the consumer electronic business. NeuLion, prior to buying DivX in January 2015, we did not have a focus on the consumer electronic market. And we knew that, as I talked about earlier, to control the video experience throughout the ecosystem required a technology relationship with CE manufacturers, especially the Ultra HD TV manufacturers. So the NeuLion CE SDK is a piece of technology that we license. It represents about 20 percent of NeuLion’s business. That NeuLion CE SDK has been licensed to Sony, LG and Samsung, and that came out of work with DivX.
When we acquired DivX, the DivX development team began work on this 4K player so that it would work in concert with the NeuLion platform, as I talked about. So DivX gave us that CE business enhancements to the platform for the HEVC live streaming, and the playout of the video on the CE set with the relationships they had before we bought them with Sony, LG and Samsung, that we levered in order to get our new CE SDK license to those companies. Does that make sense?
MESA: Indeed. When it was its own company, and bounced around before you guys acquired it, there was a lot of news that you guys had been incorporating quietly.
Wagner: A lot of the leverage they built with the CE manufacturers came out of the use of the consumer DivX player that consumers could download for free. And, we have a new product there as well called DivX Mobile that you can download the app, and it essentially allows you to cast in your home network HD and 4K video wirelessly. Basically, it can cast and play it on your UHD set.
That’s the enhancement of our DivX consumer software base with the new DivX Mobile product. But, what DivX also got out of the NeuLion acquisition is a content platform that they didn’t have before that became very interesting to manufacturers of UHD sets. So if you’re selling a television, and you can watch 4K UFC content live on that set, you’re more inclined to buy that TV over another one. So the combination of the player on the set and, from the same company, delivery of the content over the top made DivX more valuable actually inside of NeuLion than outside of NeuLion.
NeuLion will be showing off its complete end-to-end video solution, MainConcept HEVC technologies and more at the NAB Show 2017, at the grand lobby #L-8 at the Los Vegas Convention Center. To book a meeting or for more information, visit http://go.neulion.com/NAB-2017_Meet-With-Us.html.