This is an update to Thursday’s post about Evertz’s announced acquisition of a DTC Interactive Graphics Company. We had speculated the unnamed acquisition target was Bergen Norway based Sixty AS. We can now confirm the acquisition is a part of Sixty AS. More specific, Evertz is acquiring the Ease Live technology platform, and associated engineering team and customer base.
In Friday’s 396-word press release (loquacious by Evertz standards), Evertz built on its earlier 96-word press release by identifying the acquisition target, the rationale for the transaction, and the alignment with the existing Evertz product portfolio.
The Ease Live platform is “an interactive graphics platform for connected devices and remote cloud production of graphics.” The preceding sentence is excerpted from the press release. When it comes to graphics, use cases are preferred descriptors.
Below are two examples from the Ease Live website. The screenshots highlight the common use case of interactive graphics for polling a consumer. This is possible because the graphics platform can render an overlay over the video and gather selections from the consumer.
We will tip-toe a little when describing the technical components. The novelty of the above examples is where the graphics are rendered coupled with an immediate feedback loop created with an individual consumer. The location of the graphics rendering is then either the end-device itself or some location closer to the consumer than the production environment – now referred to as “the Edge” in casual industry discussions. From a business perspective this holds the promise of creating a one-to-one relationship within the economic framework of a multicast environment.
As an industry we do not have to stop at polling.
Here is another use case from an alternative interactive graphics solution provider Singular Live. The below excerpts show the use of the Singular Composer Platform for the INEOS 1:59 Challenge live stream produced by Sunset+Vine and INEOS. Eliud Kipchoge would run a sub-two-hour marathon in the race.
What you see in the above screenshots is a custom interactive (live) overlay, enabling a consumer to select a preferred vantage and toggle between various data options.
Use the above to tickle your imagination with the creative possibilities. Other popular ideas today are gambling or interactive advertisement. More ideas will emerge.
Creative professionals will see new opportunities to engage with audiences and tell stories. Unapologetic capitalists will see opportunities to gather data on usage and viewership to further monetize high-value content. “For video rights holders this opens the door for more sponsorships, advertising inventory, and eventually, in game betting and wagering” reads the Evertz press release.
Examples of analytics and engagement metrics are also available in the Ease Live collateral (see below).
The “Proven Results” graphic in the above appears to have some basis in observation. Sixty’s 2019 Norwegian regulatory filing indicates its 2019 research and development investments in Ease Live went (in part) to build analysis tools to measure the participation of consumers. The result (quoting from filing) was a 68% response rate to polling and an increase in viewing time among half of users. These figures come from an early adopter of the Ease Live platform identified in both the filing and the Evertz press release: The National Basketball Association (NBA).
Media companies and sporting leagues are famously secretive about technology deployments for undisclosed – and we would argue unconstructive – reasons. Groups willing to discuss next-generation technology deployment, such as the NBA, deserve recognition.
(The below quotes from the 2018 Nordic Summit are excerpted from an article published by SVG Europe).
The keynote speaker at the 2018 Nordic Summit in Bergen, Norway (held at Media City Bergen) was Steve Hellmuth, NBA Executive Vice President Media & Operations. He was interviewed by Ken Kerschbaumer of the Sports Video Group. The discussion topics were NBA fan engagement and global reach. Topics even more pressing in late 2020.
Launched with the 2014-15 season, the NBA International League Pass is a subscription OTT service of the in-venue feed of an NBA basketball game to interested parties living outside of the US. It is not a re-broadcast of the main feed, rather the subscriber receives the video (and audio) feeds from the stadium – no commercials, instead showing team huddles during timeouts, mascot shenanigans, halftime entertainment, and such.
At the Nordic Summit, Hellmuth revealed International League Pass was growing at a rate of 25% a year and the fastest part of the growth was occurring on mobile devices. Against this context Hellmuth offered the following comment about how the NBA is working to improve the mobile experience: “The other thing we’re working with is live, in other words augmenting video with player tracking and other things, and also allowing users to find their own graphics.”
That was early 2018, which we may come to refer to as the halcyon days of the sports ecosystem. The NBA was one-year into a new domestic broadcast rights deal that was almost triple the previous rights deals, international expansion was breathtaking (Chinese broadcast rights tripled), and digital initiatives (as noted above) were proceeding expeditiously.
The current environment is different. Acquisitions are often a sign of the times.
To establish the business context needed for a serious conversation, we have included the below chart from Sports Media Watch listing the most-watched (non-NFL) sports casts since March 11th, compared to the same period in 2019. The choice of March 11th is deliberate since the NBA suspended its season with the positive COVID test of Utah center Rudy Gobert on March 11th.
What is illustrated in the above table is a problem for all parties in the sports ecosystem. Many explanations are proffered: (i) crowded sports calendar, (ii) unusual calendar timing, (iii) cord cutting, (iv) politics, and (v) empty stadiums. We are not inclined to guess at how much of the viewership declines are attributable to the quality of the television product in an empty arena, but it is some nonzero portion.
During the 2018 Nordic Summit Hellmuth noted the value of bringing the stadium experience to the viewers. “The fans are right there, they are well lit, they all wear their color coordinated T-shirts, and they are part of the action. And it is what generates global ratings: when people tune in, they see an engaged and focused audience projecting themselves onto the field of play – and they stay watching. They do not change the channel. If you tune into a half-filled stadium, with no noise from the crowd – in any sport – you are likely to turn away,” said Hellmuth.
The NBA was able to resume its season in October with 22 teams in a bubble within Orlando, playing an abridged eight games among the 22 teams to conclude the season and then playing a full playoff complement of games, crowning a champion. 171 regular season games were lost. 176 regular season games lost all gate revenue, as did all 82 playoff games. According to ESPN reporting, the bubble ended up costing the NBA $190 million, but allowed it to maintain broadcast rights payments in the amount of $1.5 billion. The net impact to the NBA’s revenue of the events of early 2020 was a decrease of 10%.
The revenue loss for next season is forecasted at much higher levels. At the time of this writing, the start of the next NBA season is still being decided. Media reports are indicating perhaps a late December or mid-January timing is possible and an abridged regular season is a given, and fans in the attendance unlikely. Since roughly 40% of league revenues comes from venue sales (tickets, concessions), the NBA is projecting (ESPN reporting) an approximately $4 billion revenue shortfall.
NBA revenues are an example of a greater phenomenon. What the revenue impacts to sports leagues in 2020 is making clear is the sports economy cannot maintain historical levels of profitability as a television-only product or at least how television products have been traditionally distributed and monetized.
It is a choice to view the current circumstance as an opportunity.
Follow the above observation back through the desire for a personalized, one-to-one relationship with consumers to the technologies enabling the relationship, to the value of an interactive graphics platform.
We spoke to Andrew Heimbold, CEO of the aforementioned Singular Live to understand how the disruption of the live event market in 2020 has impacted the demand for interactive graphics. Unsurprisingly, end-user inquiry about interactive graphics has substantially accelerated in 2020 according to Heimbold.
Andrew also offered a comment on the Evertz acquisition of Ease Live. “We view the acquisition as further validation of using cloud-based technologies for graphic overlays” said Heimbold. “It is representative of where the industry is transitioning in 2020. This is the new horizon of content producers truly engaging with global audiences.”
Why then did Sixty sell Ease Live?
“Ease Live over the last three years, through Sixty AS and prior to acquisition, has expanded its capabilities with its customers” said Kjetil Horneland, CEO, Ease Live. Horneland continues in the press release “We are excited to be part of the Evertz family adding significant fire power to our growth.”
The growth ‘fire power’ will take the form of access to a much greater level of sales and marketing resources.
Whereas Sixty has been operating since 2002, Ease Live platform has only a three-year operational history. It has accomplished the challenging work of building the platform, maturing the concept, and securing initial reference customers like the NBA and TV2.
Growing the business from its current revenue base of around $2 million USD will require the combination of lots of time and lots of investment. For the 2019 calendar year, Sixty (Ease Live parent) spent about $5 million USD on its operating functions, including sales and marketing.
In the notes of its regulatory filing, Sixty’s management team indicating management had reduced the Company’s cost base by 60% in Q1 2020 versus 2019 levels. Awfully difficult to growth a business in the global media technology sector with a cumulative spend across operating functions of $2 million. To put that annual total in perspective, it is roughly what Evertz spends every two weeks in the form of selling, administrative, and general expenses.
A seller motivation of gaining access to greater sales, marketing, and distribution resources of a larger entity is a familiar one. Below is a chart excerpted from Devoncroft’s 2020 Big Broadcast Survey. It illustrates supplier executive responses on the primary motivations for considering a company sale initiative.
Why then did Evertz buy Ease Live?
Evertz, whose tagline in the press release is “the global leader in cloud media and entertainment technology solutions,” will integrate the Ease Live platform into its cloud production solutions. To paraphrase the release, this integration will offer Evertz live sports, live events, and linear channel customers interactive graphic overlays at the edge to drive interactive experiences.
In the words of Evertz CEO Romolo Magarelli, “Digital has become the priority for our entertainment, sports and news customers, so we are excited to bring interactive graphics to the edge.” The press release continues “our customers are looking for fast implementations of graphics that can drive new ways to engage their audiences.”
Romolo’s quote is notable for several reasons. Foremost, Romolo is providing the quote. Brian Campbell, EVP Business Development, and Doug Moore, CFO, handle investor communications at Evertz, and Romolo is rarely quoted in press releases.
From the start of 2013 until today, Evertz has issued 132 press releases. Not counting this release, Romolo has been quoted in a total of eight of those releases and only one since 2017 (NAB Show cancellation earlier this year). Six of the releases (2013 – 2017) containing a CEO quote relate to some milestone in Evertz’s participation in the industry’s IP transition: (i) launch of EXE platform, (ii) joining AIMS, (iii) NAB Show 2017 IP product introductions, (iv) high-profile IP installation with Weather channel, (v) high-profile installation with Turner, and (iv) IBC Show 2017 IP product reviews.
The nature of those quotes is best illustrated by the October 1, 2013 announcement of the EXE IP routing platform, where Romolo stated “The opportunity to innovate is tremendous, and Evertz is committed to add immense value. We were there at the onset of the transition to High Definition Television and have helped shaped the transition and the industry. We expect to do the same in this space.”
The overtone of the above analysis is Romolo tends to get quoted in large, strategic product development initiatives by Evertz.
How this segment of the graphics market evolves is going to be interesting to track.
SVG Europe Article on 2018 Nordic Summit
Press Release on Evertz Acquisition of Ease Live
ESPN article about NBA revenue disruption
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