Interesting bits from the CC

[admin]

CEO Steve Vestergaard about Play MPE:

So in the spring of 2009 Universal and Warner each press released they wanted to standardize on our system globally. They actually put the releases out, put them on their own websites, and that’s still the case. We’ve been working with all the majors since 2009 to implement their technical wish lists. So we’re actually on year four of building out requests from that initially proposal.

The problem was for us to be a global system that they could rely on across their operations all over the world, they needed us to redo our infrastructure and software – they needed it to be mission critical. So we needed to redo our coder software to be permission-based and collaborative, and what that means is that staff in one country could work with staff in another country, and they could share releases and do a local sense.

We needed to update the server software for 100% uptime and real-time failover. Even to go down for a minute wasn’t acceptable. We needed to expand from one server facility to four and actually, we’re actually in the process of adding a fifth facility in Australia. And the facilities all talk to each other so you know, a real-time backup, a real-time failover; and the system can’t go down because the one facility takes over for the other.

We needed to redo the player software to support 27 languages and to not be so radio-centric. So for example, journalists don’t care about broadcast-quality music – they just want to access the stream quickly versus the original system was very focused on radio. It was all about exporting it to radio software packages and that kind of thing.

So our R&D expenditures have actually more than doubled since 2009 as we’ve invested really heavily in this new infrastructure and R&D development for Play MPE. And it may sometimes seem like there’s no light at the end of the tunnel because this has all been expenses and no new revenues, but we’re coming to an end of this four-year effort and we expect Play MPE revenue to start growing again and to potentially grow quite rapidly.

The good news is that although there are large fixed costs for infrastructure, R&D, our 24-hour customer support, etc., the variable costs are minor as we expect new revenues to be really high-margin and for the new dollars to directly impact earnings.

So as to some for-instances, we just recently announced our new Daily Play MPE website and we, as Fred mentioned, we just announced our new global agreement with UMG and EMI labels. Combined, they represent almost half of the major label music business worldwide. We also expect a number of further Play MPE development announcements and expect all outstanding Play MPE development projects from 2009 to be rolled out this current fiscal year.

So the music business is a big multi-billion dollar business, and sometimes it can seem like they move really slowly but we think that by working closely with them over the years and insuring that our system meets their workflow requirements we can build a really big business for our shareholders. So our staff have been having weekly calls with the staffs of the major record labels and the major record label staff have been intimately involved in helping design and test what we’ve been building for the last several years.

So we expect this multi-year investment to finally start generating returns for investors again and for patience to be rewarded. So we’re quite excited about what 2013 might hold for Play MPE. Besides our core business we’re experimenting with other Play MPE initiatives which we will announce as soon as we’re able to.

[admin]

With regard to Clipstream G2, there were some technical issues that are not completely resolved yet:

The good news is that about 60% of users had a great experience but the bad news is about 40%, especially Internet Explorer and Safari users and users outside of North America received really poor quality. So the reason is that the video automatically downgrades when the bandwidth or CPU are limited, and many ISPs were throttling back the bandwidth below the minimum average that we expected that people would have access to.

So again, I’m really glad we launched it in such a small way to such a limited audience because that gave us time to fix the problem. Our developers worked through Christmas using existing compression algorithms we owned – we already own them – to reduce the required bandwidth while maintaining quality. So the extra math that was required to squish the video farther really strained the CPUs on older equipment, so it created a lot of problems for our developers but they’ve been able to work through it and they’ve been able to get it working.

So on February 27^th, right before the end of this quarter we’re announcing, we announced that we were rolling out paid commercial trials to the market research industry as our first vertical. So they’re using our technology currently for video questionnaires and they’re paying for it, and are helping test it for us in a real world environment.

So if I was to kind of sum it up I’d say we’re at about the 95% point with the technology, which means that only about 5% of the sessions are experiencing problems. That’s enough that we can charge money and start building the business, but we do want to get it perfect. To us perfect is YouTube quality or better for 100% of the users using HTML-5 browsers.