GlobeCast no longer sees itself purely as a satellite services provider. That is the key message as the operator gets ready to launch a new offering, which it believes will help transform its business. GlobeCast is launching WING Content Exchange this week, an IP-based video sharing and collaboration network for broadcasters that allows for the totally secure contribution of video coverage from any wired or wireless network. The service will also come with a range of collaboration tools and value-added services that will help newsgathering organizations.

The launch of WING means that GlobeCast now sees itself as playing an important role in the network agnostic content management business. The operator views WING as the first step into this business. GlobeCast also sees the use of terrestrial networks alongside satellite as a competitive advantage to its business, although it admits satellite will remain the basic tool for distributing content.

In terms of potential customers for WING, GlobeCast is already conducting Beta tests with France Télévisions, a French broadcaster, and a number of other major broadcasters are also testing the product.

In an exclusive interview to Satellite News International Editor Mark Holmes, GlobeCast President and CEO Christian Pinon talks for the first time about the importance of WING and why he believes the launch of the service is such an important one for the company. Pinon hails WING as a “significant change” in company policy and hopes the service “will bring more people into the content business.”

Satellite News: Could you tell us about the launch of WING and the significance of this announcement for GlobeCast? What impact will this product initiative have on the news gathering industry? What kinds of deals are you looking to do with the product?

Pinon: It is a key announcement for us because it is a significant change in our product policy. WING basically provides a service using any type of wired or wireless Internet connection to enable content exchange. With this kind of service, I would say a news agency, sports agency or broadcaster can contribute from any location to its hub or partners. It can be used for live video streaming or for point-to-multipoint content exchange using file transfer, partly based on email protocol. WING is our first step into content management. It is about contributing, distributing and broadcasting content.

WING will help to provide a cost-effective solution to bring content, whether live or not, from whatever location to headquarters, and using any available infrastructure. This is very important. This can be satellite, ADSL, UMTS or leased lines. It will enable both existing organizations and newcomers in the market such as news and sports agencies to bring to their offices, not only pictures and text, but video and even live video. Due to the inexpensive nature of the solution, we believe we will grow the market and bring more people into the contribution business.

Satellite News: How much are you investing in WING? I believe you are in discussions with a leading global news service/channel already? When do you expect to close this deal? What will be the main competition for WING?

Pinon: We have some preferred partners as beta testers. One of them is France Télévisions. We can mention them because they were the first to trust us and experiment WING successfully with the opening of the Viaduc de Millau in France for their national news bulletins. We also have an important American broadcaster as a partner, but at the moment we cannot mention the name.

In September of this year, we will have a fully-fledged product. In terms of investing and developing WING, we sub-contracted the development to the research and development division of France Telecom (FT). FT is very strong in the areas of IP and on top of their expertise we bought some additional specifications as well as some financing to the table. From our perspective, we brought about 3 million euros ($3.87 million), which is a significant investment for us. However, that does not mean that the cost of development would have been limited to three million euros starting from scratch. You also have to consider how FT managed to exploit its wide experience in the field of IP to develop a product matching GlobeCast’s requirement. This product is also of interest to France Telecom and some units of France Telecom may benefit from it. It was really a development that was made possible because we are part of France Telecom and we have access to France Telecom research and development.

Satellite News: In terms of overall revenues, how important will WING become for the overall GlobeCast picture?

Pinon: Firstly, WING is about the contribution business, which means bringing the content from location to the broadcaster or the news agency. Currently, the contribution business for GlobeCast represents around 20 percent of our overall revenues, so about 70 million euros ($90.5 million) per annum. WING will enable us to maintain and even grow our business in this area. In terms of our expectations, it will be about 10 million euros ($12.9 million) throughout the next two years and then growing to 20-30 million euros ($25.8-$38.8 million). We do not know exactly because this product will enable us to address new markets, so we do not know its limits.

Satellite News: Does the announcement of WING mean the company is moving away from its traditional satellite service provider roots? How do you see the role of the satellite service provider evolving in the next 12-24 months?

Pinon: We used to be a satellite service distributor. We are not any longer. We use satellites, but we are becoming more agnostic, which means we use terrestrial networks when we are able and when competitive with satellite solutions. So, terrestrial solutions are now part of the competitive advantage of our network in terms of distributing content, but satellite will remain our basic tool. Our objective is not to sell space segment, our objective is to provide a service to our customers with satellite or with fiber or with a radio solution.

Satellite News: Could you tell us about your recent link-up with Eagle Broadband and the opportunities for a satellite company in the IPTV arena?

Pinon: The benefit will be huge in the medium term. It will enable us to demonstrate that satellite can be used to distribute content such as TV channels in an IP mode. This can be a very economic solution to distribute content to remote sites such as DSLAMs. It means satellites can be a good value-added solution to bring the content to the edge of the network. What we are seeing is that, again and again, IP is entering our classic broadcasting business –IP for contribution with WING, and IP for distribution with Eagle Broadband.

Satellite News: When we spoke last year (SN, March 29, ’04), you said ultimately you wanted to have “20 percent of global revenues coming from Asia.” Are you on track to meet this prediction? What levels of revenue growth did you have in the region in 2004?

Pinon: Currently we are only talking about organic growth. We have not bought any companies so we are relying on our own resources. We have experienced 40 percent growth, which is very significant and in 2008 we will have 10 percent of our revenues coming from Asia. We may reach the 20 percent mark at the end of the decade. It is a very aggressive objective if we rely exclusively on organic growth. If we can speed up the process by developing some additional partnerships or making some acquisitions, we will reach our targets before these points. We remain open to possible acquisitions but we have to admit that there are not many interesting opportunities. We have relied on our internal strength and we expect that to continue.

Satellite News: Aside from Asia, will we see GlobeCast be more aggressive on the acquisition front?

Pinon: We are very cautious because we do not want to divert money from our shareholders and from their core priorities. We would rather rely on our resources. So, we try to be efficient, build partnerships, and not rely on cash injections. For example, in Australia we developed a joint venture with a local partner. In Asia we have access to a Singapore Telecom teleport. So, we build a network of partnerships to try and avoid spending cash. We are open to acquisitions, but we will not pay a high price and we have to ensure the payback of any investment. So to summarize, we cannot play with big money. That means we have to try to be clever and grow our own way.

Satellite News: When we spoke before you also had high hopes in the U.S. market, because you felt there was a potential recovery in the U.S. broadcast industry, and you felt that some of the competition was “close to disappearing”. Has this turned out to be true?

Pinon: We delivered what we were expecting in the U.S. in 2004. We had more than 10 percent growth and positive EBITDA. This year we are looking for revenue growth and positive free cash flow, which will mean a complete turnaround within two years, which I think is very impressive.

We see a slightly growing market in the U.S. for two reasons. Firstly, the market is growing and our market share is growing. I do not want to give names but some of our competitors have obviously lost ground and so we are back in the market and we are making deals and making significant progress.

Satellite News: What opportunities are there for GlobeCast in the HD (High-Definition) arena? Do you expect the landscape in Europe to significantly change in the next 12 months? Will HD be a significant revenue generator for GlobeCast?

Pinon: I would not say that the landscape will significantly change, but there will be a progressive change. There will be some channels moving to HD but it will not change the order of magnitude of the addressable market for GlobeCast. There will be progress. By 2007-2008, HD could account for about 10 percent of our revenues but not before then. Personally, I am very positive about HD, but we have to remain realistic. It will take time in Europe.

Satellite News: Obviously, since we last spoke last year there have been huge changes in the satellite industry, with a number of Private Equity (PE) companies investing in the industry? Do you think this is a positive overall trend for the industry?

Pinon: In terms of the consequences for GlobeCast, I would say these new owners will be driven by cash considerations and will avoid any inefficient diversification. I think it is good news for GlobeCast because satellite operators will dedicate their means to satellite operations, so selecting the right orbital slots and launching the right satellites. The service layer will be more for players such as GlobeCast to gain access to the best satellites, the best orbital slots, and combine satellites with terrestrial and fiber networks. So, it will prevent some satellite operators from trying to get access to the final customer.

Satellite News: Apart from WING, are there any other major product launches planned?

Pinon: WING, which will be on display at the National Association of Broadcasters (NAB) 2005 trade show, is only the first step of the WING family. WING will be a content management system, which will not only enable us to provide services to sports agencies and broadcasters, but also to multinational financial companies. WING will be a unique tool and according to our competitive intelligence there is no competitor that provides a complete solution to contribute and distribute content. What will be seen at NAB will be the tip of the iceberg and, step by step, we will launch new services consistent with the first WING services. By NAB 2006 we will have completed the family of products with the basic tools such as streaming, file transfer and for these two applications unicast and multicast versions. This will offer us a number of applications, including storing and broadcasting content. WING will also address the enterprise market by transferring files and video from headquarters to remote sites.

Satellite News: Finally, what are the major challenges for GlobeCast in the next 12 months?

Pinon: We are on track. We are not expecting any significant change in our priorities. Our priorities are to grow, especially in Asia, and to continue to recover in the U.S. and maintain the business in Europe. We have extended our geographic coverage. We have an office in Beijing and we will have an office in Moscow in a couple of months. We are now present in Brazil and will be opening an office in Dubai. Our coverage will be very comprehensive. We want to grow by offering more value to customers via new services and in particular the WING family of services. We are the only global operator to offer a secure content management network around the world.

(Lucy Smith, GlobeCast, [email protected])