Tandberg CEO Confident Over HD In Europe

Tandberg Television expects to play a key role as the high-definition TV (HDTV) market takes shape in Europe. While the market in the United States for high-definition (HD) continues to show promise, the story is not the same in Europe.

Tandberg, a company that creates products and systems for the delivery of high quality live video and on demand content across all platforms, expects the market in Europe to pick-up. Eric Cooney, CEO of Tandberg Television, told SATELLITE NEWS in an exclusive interview: “In terms of the European market for HD, last year’s IBC [conference] was interesting and enlightening. We were approached by a number of European broadcasters with questions about HDTV and wanting to look at our HD encoders/professional receivers, etc. In discussions with these broadcasters, it became clear that their interest in HD was driven by a demand for HD content from markets outside of Europe, in particular the Americas. Clearly the demand for premium HD content in one region is creating a demand for the production and transmission of that content around the world.”

But, while Europe may be behind the United States, Cooney believes all the factors are in place for HDTV to be a success in Europe. “We are clearly at least 2-3 years behind the American market as far as a consumer HD proposition in Europe. However, I do believe it is just a question of timing. The same market forces – availability of low-price consumer receive devices and compelling HD content – that are driving HD in the Americas will eventually drive the demand for HD in the European and Asia Pacific markets as well.”

While European broadcasters are looking at opportunities to export content, they will also be encouraged as to how HDTV is developing in the United States. Cooney believes HD is close to reaching critical mass. “It is clear North America has reached its tipping point, or its critical mass to coin a few phrases, with an estimated 9 million HDTV sets in the U.S. market today. Clearly, the price point for the receive devices has come down enough, such that they are seen as affordable by a significant number of people. On the content side, we have reached a point where there is compelling HD content available from popular channels including HBO, Showtime, ESPN and Discovery. These channels are available today and, in most cases, via either the local cable operator or a satellite service provider. Further, the provision of HD services has rapidly become a competitive differentiator for the satellite and cable operators.”

Satellite Business

Tandberg TV provides solutions to cablecos, satellite operators and telcos. In terms of its satellite business, replacing existing systems in 2004 will be one of the key drivers of revenues. “In the DTH [direct-to-home] segment for 2004, the primary business driver is a replacement or an upgrade of some early generation MPEG 2 systems, in some cases installed as many as seven to 10 years ago. From a regional perspective, we see a number of these type of replacement systems being evaluated in both the Asia Pacific and the EMEA [Europe, Middle East and Africa] regions driving revenues in 2004. For the American market, the drive is really for increased channel offerings, in particular HD,” Cooney said.

Many satellite pay-TV operators are looking to implement changes in terms of their set-top box (STB) strategy going forward. “If we look at the DTH segment slightly beyond 2004, the story gets very interesting when you consider the implications of both HD and AVC [advanced video coding]. When I say ‘AVC,’ I am referring to both Microsoft’s [Nasdaq: MSFT] Windows Media 9 and the MPEG-4.10 compression schemes. Professional AVC offers about a 50 percent compression efficiency gain over existing MPEG-2 systems,” Cooney said.

He continued: “Given the very significant installed base of MPEG-2 set-top boxes, and the need to replace those boxes with a move to an AVC solution, there must be a compelling driver to make this change. A compression system that offered the combination of HD and AVC would be the ideal solution to really drive the replacement of the installed STBs. That technology will be available for deployment in 2005.”

Tandberg’s most recent deal in the satellite sector was an agreement with Intelsat to provide the satellite operator a turnkey video solution, including the latest digital compression and control and monitoring equipment plus integration services, for a hybrid satellite and fiber network connecting seven sites between the United States and Europe. “Intelsat, as a traditional satellite operator, is extending their services to their customers with a goal of providing ‘any content anywhere’. They are implementing a combination of fiber and satellite links around the world to effectively enable this ‘any content anywhere’ offering for their customers. Tandberg Television’s ability to provide the turnkey system, including HD compression, control and monitoring software and complete integration/commissioning services, for this complex fiber and satellite network truly differentiates us,” Cooney said.

Double-Digit Growth

It promises to be a hectic year for the company as it bids to continues to drive its business in different areas. Cooney became CEO in June 2003 and believes the company is well-positioned after completing a restructuring process. It has returned to profitability and is now concentrating on identifying growth segments, rather than internal restructuring. It is confident that it can achieve double-digit growth in revenues in 2004. Cooney commented: “My objective is very simply stated as aggressive profitable growth for Tandberg Television. We plan to do this both through targeting high growth market segments – broadband (video over xDSL to the home) and cable, but also through growing our marketshare across our existing core segments (satellite and terrestrial). We would expect double-digit top line growth in 2004 compared to 2003.” –Mark Holmes

(Eric Cooney, Tandberg Television, +44 (0) 23 8048 4000)