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NeuLion bets on public Internet, H.264 to provide IPTV success

Some IPTV pundits say that one day there will be as many IPTV channels as there are Web sites.

Such bold predictions may seem wildly optimistic, but the sentiment is understandable. Why wouldn’t someone with a message to communicate want to use the power of video to make their point? Video’s ability to educate, motivate and inspire are well established, and the Web’s ability to attract visitors with common interests to a specific site confers on it an innate ability to build an audience.

But much remains to be done if omnipresent IPTV service is ever to become a reality. In the meantime, NeuLion in Plainview, NY, is attempting to build a stable of content providers who wish to use the public Internet, NeuLion’s proprietary spin of AVC H.264 and the company’s encoding, distribution and metrics tools to build special-interest IPTV channels.

IPTV Update spoke with NeuLion co-founder and executive vice president Chris Wagner to learn more about his company’s service.

IPTV Update: Describe NeuLion’s IPTV service.

Chris Wagner: IPTV has a whole a lot of different meanings. For us, we deliver high-quality streaming broadcast TV or video on demand at DVD quality or higher right to a consumer’s television, and we use the public internet to do that.

We patented a propriety implementation of AVC H.264 to deliver at 700kb/s of bandwidth a high-quality experience. We only need about a half of a DSL modem to do that.

Consumers receive a set-top box and connect it to a broadband service and their television. We have been actively looking for content partners.

IPTVU: One of your content partners is KyLinTV, which is using your service to distribute its content from Asia to customers here. Could you provide some details?

CW: KyLinTV is a content partner of NeuLion. Their focus is on the Chinese households in North America — about 3 million households. They have brought together about 25,000 hours of video in addition to multiple linear broadcast television channels, which we manage and deliver for them. So they, as a partner of ours, provide the content, sales and marketing to their market. We do everything else. We take content from DVDs, FTP, satellite and other formats for movies, linear TV, or TV dramas. Soon, we will be broadcasting 12 linear channels for them — all streaming over the public Internet. KyLinTV feeds us their signal right from the satellite. In real time, we take it and encode it and put it out over the Internet.

We also have video on demand for DVD MPEG-2 files or other formats, so we can get it electronically and run it through our VOD encoder and put it into our H.264 format. We use our IPTV platform to manage everything.

KyLinTV sells a subscription and pay-per-view service. Customers can buy directly from their Web site. We run a call center and have a bunch of resellers. They do print advertising to promote their service, which they sell for $15 per month with no contract or risk. If a customer doesn’t like it, they can cancel.

With an IPTV implementation, there are no territorial or geographic limitations as there are with satellite or cable.

IPTVU: How do customers interact with your service? Is there a delay when they flip through the channels you provide?

CW: It’s exactly the same behavior they use with conventional television. They can click through the channels with their remote control. Everything runs on the server side for NeuLion, and the set-top box is Linux-based with a browser.

The user brings up a menu, uses their remote control to select broadcast television, and clicks a list of channels or clicks broadcast. Our service streams right over the public Internet within seconds. It is a streaming service.

Then home viewers could also go to video on demand and access to a library of over 25,000 hours of movies and TV dramas. We provide KyLinTV and our other customers with viewing analytics about the consumer’s TV usage, who are their subscribers, who’s watching what show, did they watch certain shows more than once? The amount of information we can provide is phenomenal and far cheaper than fees paid to Nelson.

For VOD, consumers have a second menu item where they can access TV dramas, and movies. The top 10 dramas from China are in the service. They sell these TV dramas in an interesting way. The first episode is free, and the second episode is 50 cents. There’s also cool bookmark feature that let’s you pick up past viewing exactly where you left off. So if you were watching a movie and then jumped over to the news and back to the movie you don’t miss anything.

KyLinTV also has a growing number of radio stations from China.

IPTVU: What is the background of NeuLion?

CW: NeuLion was started by four executives from Computer Associates with strategic investment from Charles Dolan of Cablevision and Charles Wang of Computer Associates. The move joins the interests of two of Long Island's most prominent businessmen, Computer Associates founder Charles Wang and Cablevision founder Charles Dolan in our start-up technology-media venture that delivers viewer-targeted broadcast TV and video to home subscribers over the Internet. NeuLion opened in early 2004 with offices in New York and China. We are actively commercializing an IPTV platform set-top box.

KyLinTV is our first content partner. They launched in 2005 and have about 4000 subscribers.

What NeuLion does is look for other companies, producers of content, networks or aggregators of content, advertisers and other companies that want to roll out a branded IPTV service. We basically white label this box, brand the box and service and make it exclusive.

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