With its recent acquisition of NVision, which was completed just before Christmas, Miranda Technologies has strengthened its product line at a time when broadcasters are increasingly looking for integrated solutions. Miranda's chief technical officer Michel Proulx talked to George Winslow about what the deal will mean for their business and how the dismal economy is changing the way broadcasters are looking at HD upgrades. An edited transcript follows:
Q: What will the NVision deal mean for you, particularly for your HD work?
A: It is all about having a broader product line as we continue into the HD transition. If you look at product lines that Miranda has been providing, we've always been strong in infrastructure but we've never had routing switchers. That was a hole in our product line we attempted to fill back in 2002, when we first tried to acquire NVision. While that deal didn't finalize because we lost our financing, we've now been able to fill that hole.
I think the timing for the acquisition is good because people revisit their routing only when they make a major infrastructure change and HD is one of those major infrastructure changes.
Our main product lines -- interfacing, infrastructure, master control, channel branding, monitoring -- all have a deep connection to routers. So adding this missing piece will help all of the existing pieces we had as well.
Q: What about NVision's other product lines?
A: NVision had the routers and switchers, which we didn't have, and they have master control. As you know, we've master control and branding for sometime. So you might expect there to be some overlap there but in a sense there isn't. Their product line was more aimed at call letter broadcasters and network broadcasters while our product lines are more geared to specialty channel. So this gives us a richer master control product line.
In this day and age, when customers have less and less resources, having broader, more deeply integrated solutions that are connected together is important. Customers lean more towards an integrated solution, because they don't have play integration games with too many product and vendors and because it increases their buying power, which means they can get a better price. We were already running up against that with some of our competitors and this puts us back in a good position.
Q: How do you see the demand for HD upgrades and HD capable products as move into 2009?
A: First of all, we no longer make standard-def production equipment -- it is all HD/SD now. There are obviously places around the world that aren't doing HD but wherever we go they say they are buying the product because it does both HD and SD. They want to protect themselves because they know in a few years they'll be doing it. That goes across all product lines.
In 2008, we saw a very, very healthy HD business in the U.S. because the local stations started to produce their own HD content, news. A large number of stations converted their operations to HD because it became an important competitive issue.
Now going into 2009, we're not sure the same pace is going to continue in the U.S. because of the economy and the financial crisis. We are down to the stations that would love to do it for competitive reasons but they are going to have a serious problem with ad revenue.
From that perspective, we are a little afraid but luckily the planet is big and there are markets around the world that are just starting to move to HD. So as a global company, we see the demand shifting into other regions.
Q: Will the poor economy also impact how people are approaching their HD upgrades?
A: For two years now we have been predicting that per-channel revenue for broadcasters is going to go down. Since we believed that revenues were going to decline, our focus has been on creating solutions where capital costs and operational costs can follow the revenue curve in a way that allows our clients to maintain profitability.
So for two years we've been trying to explain how you can reduce cap ex and op ex but I don't think they were hearing us. In the last two months, though, when we talk about those things we are getting traction. The conversation we were hoping to have before, we're having now because of the economy.
Q; What might that mean with some of products, say the branding and playout products?
A: There are lots more channels out there. With the increased competition, the key is retaining your audience. That requires more branding and creating schedule awareness so that the audience sticks to your channels. But you can't rely on TV guides or program guides to do that because they have gotten too big. You have to promote your upcoming programming.
But doing more branding implies higher costs so we've come up with tools to create these promos in an automated way with a fraction of the people and the costs. Years ago we automated playout, now what we are doing is automating the creation of the branding content.
This is particularly important for HD. For some people, going to HD has meant they have to do twice as much because they are producing both an SD and HD channel. You see example of people trying to get around this problem by producing in HD and then downconverting to SD. But that compromises your HD branding, which is not the right things to do because graphics are so important in HD. The last thing you want to do is position everything towards the center to accommodate 4:3 center cut.
Our solution avoids those problems. It allows them to produce independent branding for SD and HD with only one playlist. That means you can create them for half the price.
Q: Any examples?
A: We have clients that are using our graphics solutions to centralize their graphics creation. Media General, for example, converted to HD but rather than converting all the graphics capabilities at each station, they've developed a centralized graphics service. One of the stations in the group has become the graphics factory. This allows them to have a centralized 24-hour team producing graphics for newscasts throughout the day and night without each of their stations having to have all this new equipment for HD. They can also operate with fewer graphic artists.