SkyStream Networks, maker of a video services router, picked up Comcast Interactive Capital in its latest rounding of private funding, giving the company a second big boost in the cable space.
CIC joined returning cable companies AOL Time Warner and Shaw Communications to put up $4 million of $29 million raised in the latest round.
Other funding companies included venture capital firms 3i US, Crosslink Capital, Granite Global Partners, Integral Capital, IVP, Mayfield and Norwest Venture Partners.
While the cable operator funding commitment is small in scope, it looms large for SkyStream.
"This investment from leading cable operators validates our position as a leading video networking force in the industry," said Jim Olson, chief executive office and president of SkyStream.
SkyStream's Mediaplex video services router can be integrated into today's legacy video distribution platforms or server as a foundation product for future IP video platforms, SkyStream executives said.
The buzz on IP video, as an eventual platform for cable system operations, has been increasing over the past few months.
Some MSOs see IP video as a way to economically transport VOD content inside a cable system.
Comcast executives have talked about the benefits of using IP transport to handle all video, voice and data traffic in parts of a cable system over time.
SkyStream's services router is an encoding, routing and switching device, said Ramin Farassat, director of product marketing, hardware platforms, at SkyStream. It can aid operator efforts in the conversion to digital, from analog, and with the launching of VOD, HDTV and other services, he said.
"It's a standards-based product," Farassat emphasizes. "Operators can save money if they find a product that integrates functions."
The router has an encoding function and can multiplex signals, so it can help operators in the shift from analog to digital. It also can help operators transport VOD content between servers and headends using IP Video transport, a cheaper alternative to today's transport schemes, he said.
Farassat said the router could sit alongside operator legacy Scientific-Atlanta and Motorola headend systems, but that it could supplant those systems over time. "Many MSOs are looking to go to a standards-based environment," he said. "Using Mediaplex is a great choice to move towards a standards architecture."
Farassat says that some international customers have saved 40% on capital costs and 32% to 40% operational costs in a conversion from analog to digital using SkyStream gear. Even operating alongside existing plant, Farassat said operators could reduce some costs and simplify their network.
SkyStream envisions operators using its router for expanded VOD platforms, with the network DVR model, under development at AOL Time Warner, tailor-made for the Mediaplex application. That requires bringing in video in real time, replicating it, reducing the bit rate and change to a constant bit rate format, Farassat said.
All that needs to be done before the content can be save to a server, he said. "And it needs to be extremely scalable and be able to distribute it to various sites," he said.
Farassat said the router also could be used on the data side. As broadband penetration increases, an operator could use a SkyStream router to take "TV" content, reduce the bit rate and format it for broadband PC applications. "Operators would like to have video available in different formats at different rates," he said.
Over time, operators could send current MPEG streams through an IP video pipe, or convert more MPEG streams to IP format. "We can help move the cable industry, at their insistence, into the world of IP," Olson said. It will take time, he added, perhaps 10 years, but the transition to IP as a uniform protocol is top of mind to many MSO executives, he said.
Olson said SkyStream's cable operator money isn't passive. "We're developing a close partnership of what they need," he said, indicating that Mediaplex is being tested in several MSO labs. "They will work with us on a product roap map and direction," he said.
"We believe that increasing consumer demand for advanced digital video services such as VOD will be a tremendous growth engine for the cable industry," Louis Toth, managing director of Comcast Interactive Capital, said in a release.
"As an innovative and pioneering company delivering video-distribution products, SkyStream is strategically important to all leading entertainment and media companies. SkyStream's products enable advanced services for applications including video-on-demand, content delivery and broadcasting which provide new revenue streams for enterprises and compelling products for consumers," AOL Time Warner Ventures president Len Leader said in a statement.