Interview with Destiny CEO Steve Vestergaard
On the conference call in July you stated having a "toolkit of technologies". We see DSNY
with several disruptive products; can you give us your vision for the locking and watermarking
technologies?
One of our challenges is to not spread ourselves too thin and to focus on the highest margin low
hanging fruit, first. Ideally, we'd like to market these products through a partner and we've had
those sorts of discussions, but nothing has come to fruition yet.
That leads us to the most frustrating part of being a DSNY shareholder; when or how can
Destiny ramp up the manpower to monetize them? G2 seems to be taking longer than expected
to come to market and our fear is that these other goodies are never monetized.
That's a reasonable fear and probably the biggest risk. We have money in the bank with positive
cash flow and have access to debt, so we are able to grow our manpower. Currently, we are
outsourcing a number of activities we are able to do in house, such as website design and app
development to third party companies to progress things more quickly with internal staff and
projects. We are also hiring - we've hired a couple people already this year - but we want to be
careful to grow sales and marketing functions to coincide with the bigger commercial push and
would expect to hire more aggressively as we get our first bigger G2 sales.
Do you have a budget in mind for the development of the self-serve encoder software and the
enterprise batch encoder? Will you need to finance this? And if so when?
The batch and stand-alone encoder, along with the credit system is in process and is coming
along nicely. We are able to launch this without raising money,
Will the launch of G2 require funding?
No.
Can you explain how G2 provides 90% bandwidth cost savings and how caching using G2
differs from typical caching from other online media methods? Doesn't caching happen with
traditional streaming?
Caching works with anyone doing HTTP streaming. That's when you don't use a streaming
server and place the content to be streamed on a webserver. ISP's automatically cache HTTP
(the protocol used by web servers) traffic to save themselves money.
There are proprietary caching protocols for streaming servers, but they aren't as widely
deployed and providers that use caching don't pass on the savings. Caching is more difficult
with a streaming server because the communication with the player is bi-directional. Caching
wants to see the exact same data flow each time.
On the call you stated that G2 utilizes the browser in unique ways. Will constant browser
updates be a problem for G2? If Chrome, Firefox , Safari and Explorer are always updating,
can G2 keep up?
We use techniques that are part of the fifth version of the web page definition (HTML 5). All web
pages that are compliant with the standard have to continue to support these techniques.
New standards add techniques, but don't take old ones away.
There are non-standard extensions that various browsers use, but we don't support those.
Unlike player based video content that no longer plays with new players, our content will always
play.
We used the same standards based approach with Clipstream G1 and content from thirteen
years ago still plays today. Here's an example of a radio play video game we developed in 1999
that still plays today. http://www.radio-play.com. As you visit the different locations, the audio
changes depending on what you've visited and in what order.
Excuse the quality - that was state of the art in those days. Our new quality is http://
www.clipstreamaudio.com
Could you elaborate about the new stand-alone applications for the iPhone, iPad, Android,
tablet, and Blackberry that you indicated would be launching in the next couple of months and
how Destiny plans to get the word out on this?
These are Play MPE applications and the conversion of these apps. has been outsourced, so
our developers can work on other projects. We regularly advertise Play MPE and users will
learn of it both through the ads and our system. We are able to directly email our users when
something new like this comes out.
Has DSNY privately or publicly demoed to a company or entity that is able license it
immediately?
We've done private demos, but only for investors so far. We're having calls with potential
customers - I just talked to a big one this morning - but they are waiting for the public demo.
One of the things that is holding us up is we are obfuscating our code, to make it more
difficult to reverse engineer or steal. We already have three levels of security and are
adding a couple more.
Will all the demos for Clipstream be in Destiny's home offices, or are there plans to demo at
other company HQ's?
We plan to make a demo publicly available on our website in the very near future.
Are there any JV/partnership opportunities out there regarding new video compression and
CODEC technology in conjunction with Clipstream?
We developed a proprietary CODEC, as the ones that are out there use more CPU than the
technique we use as available on smart phones.
Is there a concern that with HTML5, publishers will have already committed and won't be
anxious to switch to another format, even if it drastically reduces costs? Is there a window of
opportunity?
There's definitely inertia, but many are committed to Flash and will have to change no matter
what. A lot of companies using HTML 5 outsource it and we could potentially partner with some
of those transcoding and hosting companies. IE. the customer with inertia can keep the same
supplier and price point and we can lower the partner's costs, sharing the savings. There's not a
lot of loyalty to a particular video format - people just want something that works.
When Adobe introduced Flash, they put Clipstream ( non java) on hold for 9 years. Now
that they announced they are getting out of the mobile space, wouldn't G2 be a great way to
dominate the space again? Does Adobe know about G2?
We've talked to big Adobe customers, so I'd be surprised if they didn't know about it. We could
compete technically with Flash even with G1, but the price points were too low and we were
losing money on the sale by the time you figured in pre-sale and post-sale support, customer
acquisition costs and commissions. We expect to dominate the mobile space and there isn't
a lot of alternative other than the HTML 5 CODECS.
DSNY is already partnered with the 2nd largest ad agency in the world (Dentsu); have they
seen G2 and don't they seem like an easy first license? Is Omnicom Group aware of G2?
We have access to Omnicom, but haven't talked to them yet. I presented an early demo to
Dentsu in their offices in Tokyo in February and they were quite excited, but we haven't done
demos since.
(OUR OPINION BASED ON HIS RESPONSE)
(because DSNY already has a working relationship with Dentsu AND they have seen a demo of
G2, we feel they will be one of DSNY’s first licensing deals. Having the 2nd largest ad agency in
the world utilize G2 would immediately validate the technology)
From the call you said "some of the inquiries that are coming in are telling me that there are all
kinds of opportunity". Can you elaborate on these inquiries or the applications being requested?
"we have tremendous interest from some of the biggest companies right now". Care to share
what industries?
I named four sales verticals. Calls are coming in from all four.
We get this email quite frequently. "Who keeps selling DSNY if this is such a disruptive
technology?"
Care to give your opinion on who or why the large selling?
I'm aware of a large investor that had a margin call and had some forced selling. Besides that,
I'm guessing some of it is coming from the market makers. They try to fill orders on the offer to
maintain liquidity, then hope to buy it back a few cents cheaper on the bid.
Has the lawsuit involving the $100K investor (years ago) ever been resolved?
No. We could probably settle that part, but we are pushing ahead with the counterclaim, to
get trading records, etc. as part of the discovery process. We are being cautious to keep
expenditures reasonable as we know that investors don't like spending on litigation.
How does G2 impact the "cookies" market? If video will initially be stored on a DSNY server, do
you own this data?
The ownership of the data would be a contractual issue, but we would see the usage logs. We
expect to get great statistical feedback on how well the technology is working by reaching out to
millions of impressions, then looking at the logs.
Follow up...in your opinion what are the ramifications with the elimination of streaming server
usage?
You still need a server (the web server), but spending on hardware infrastructure and server
licensing should go way down.
Most people aren't aware of the exposure and potential spyware/ hijacking that can occur
when they click on or view an online video. Because a G2 is viewed on the Net and never
downloaded, have you ever considered that G2 also disrupts the virus software industry?
Obviously, there are other ways you can get a virus than just streaming, but players have all
kinds of exploits. Did you know that someone could even remotely turn on your camera or
microphone if your settings aren't right (right click on the video to see your settings). Players
are written in assembly and have full access to your entire computer and they create an open
security channel with the outside world.
You mentioned in the conference call that Destiny had access to credit...With the low number of
shares total and outstanding; would the company also be interested in a financing/JV that was
accretive in the future?
l
We have a $500,000 line of credit with the Royal Bank in Canada. We would look at a possible
financing in the future if we are happy with the market cap at that time, as we are interested in a
combination of resellers and an acquisition strategy in the future to more quickly build our sales
force, especially outside of North America.
You were pretty cautious on the conference call with regards to revenue from Clipstream G2. A
recent research report is projecting the first revenues to be generated from Clipstream G2 in the
2nd quarter of 2013.
We'll see revenue long before then. That's just their opinion.