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Espial Group presents at Echelon Digital Media & Technology Conference

Espial Group

Espial CEO Jaison Dolvane
Espial CEO Jaison Dolvane

Speaking at the Echelon Wealth Partners Digital Media and Technology Conference in Toronto this morning, Espial Group (TSX:ESP) CEO Jaison Dolvane explained his company’s role in blending over-the-top video content with traditional television content using Espial’s HTML5 Smart TV browser, which ships with leading Smart TV manufacturers.
Espial’s strategy “helps service providers reinvent the business of television,” said Dolvane to Echelon conference attendees.
The TV marketplace is changing significantly and quickly, owing to the rise of over-the-top video like Netflix and YouTube and the general trend of cord cutting.
Dolvane mentioned that when he was at the Internet and Television Expo in Boston on Tuesday, BitTorrent announced that it would be unveiling a live, linear, multichannel online broadcasting initiative called BitTorrent Live.
The primary stumbling block explaining why people aren’t en masse cutting the TV cord remains the popularity of live sports and the inability of streaming services to crack the obstacle of live streaming, without which TV watchers will continue to take a “both/and” approach, keeping their cable subscription while also streaming and downloading video.
Cable and Pay TV, in the form of cable, satellite and telecom operators, still accounts for more than 90% of global television marketplace revenues, which amount to $300 billion in total, said Dolvane.
Founded in 1997, Ottawa-based Espial went public in 2007, and has secured partnerships with leading chipset manufacturers and content providers, and provides standards-based software for set-top box IPTV delivery and Smart TV browsers.
Espial has $48.5 million cash reserves and no debt, with $25 million annual revenue.
Espial recently revealed its Q1 2016 results, which saw the company reporting a loss of $1.96-million on revenue of $5.3-million, a topline that was down 1.6% over the same period last year.
CEO Jaison Dolvane said at that time that the company was moving toward commercial deployment of their next-generation video services through real-world trials with Espial’s operator customers, citing two European deployments, including one with German operator Tele Columbus, that he believed would lead to future customer announcements.
“Our customers want us to do more, to take a broader role within the organization,” said Dolvane.
As recently as April, Tele Columbus and Espial jointly announced results from the ongoing field trial of Tele Columbus’s next-generation, 4K-ultrahigh-definition-ready video service, known as Advanced TV, based on key Espial video solutions integrated by Espial.
The unnamed European cable operator, with 1.5 million subscribers, is preparing for launch, according to Dolvane.
Meanwhile, Espial is getting ready to help one of its customers roll out 4K set-top boxes for 1.9 million North American cable subscribers, a fact that Dolvane mentioned this morning without naming the carrier.
Working with Comcast, who originated the RDK standard, has turned the media giant into a valuable ally for Espial, whose executives Dolvane says regularly offer their support and help “in terms of helping us promote ourselves, get into the marketplace, innovate together with us, because we’ve helped them gain skin on this platform with the entire operator community.”
Following a decision last October by an unnamed tier-one North American operator not to deploy Espial’s next-gen RDK solution, the company’s share price plunged.
In February, Euro Pacific Canada analyst Rob Goff reaffirmed his belief that Espial’s stock would rise again, saying, “We continue to believe Espial is uniquely positioned to capture an impressive share of the looming RDK/HTML5 adoption.”
At that time, Goff was modeling Espial winning MSO (“Multiple System Operators”, an industry term for a cable company) contracts covering more than 17-million subscribers over the next five years, noting that the company was expecting six MSOs with whom it is in advanced discussions to move forward within the next 12 months.
The deeper engagements with those six additional operators, the potential contract bid sizes for which are quite large, signals potential for significant new business, partially due to the increasing complexity with current deployments and also the need for greater professional services work.
Dolvane says Espial is talking to about 30 operators, all potential new customers, of about 200-plus worldwide.
For Espial, the challenge is to move from a position of $20 million to $30 million of forward-looking revenue to launching their next set of customers, which will move that figure up to $70 million to $80 million in forward-looking revenue.
“Really, our goal here, over the next three or four years is, how are we going to go get 20 customers out there? When we get 20 customers out there of that significance, you’ve now got $600 million in forward-looking revenue,” says Dolvane.
“It’s a long way to go, in terms of turning that into customers and deployments and things like that,” he adds, “but we’ve certainly progressed on that in a very significant way.”

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