Client and Product Development Update
In July 2014, AllDigital entered into agreements with two new strategic clients that bring new opportunities for the company. Both clients are currently in a “discovery”
The rapid growth of consumer consumption and adoption of over-the-top (“OTT”) video remains a key area of focus for AllDigital. Strategic Analytics forecasts that North America OTT subscription video revenues alone will increase 116% to $8.8 billion between 2013 and 2019. At the same time, sales of devices that support OTT content are also increasing. Strategy Analytics forecast that the segment will increase 54% this year compared to 2013, climbing to more than 35 million units sold. A recent study from Parks Associates found that 20% of U.S. households have a streaming device, up from 14% in 2012.
AllDigital’s sales pipeline has improved in early Q3 as global brands continue to engage companies like AllDigital to distribute and monetize their media content. There are emerging opportunities to either acquire the rights to digitally distribute media content, or share in the upside of digital media globalization through revenue sharing arrangements. The company believes that the rapid growth of the OTT market in terms of both the number of installed devices (e.g., Amazon FireTV, AppleTV, Roku, etc.) and global consumption of digital media will represent a significant growth opportunity for AllDigital as AllDigital believes that it is uniquely positioned to take advantage of this paradigm shift.
From a sales and business development perspective, AllDigital continues to focus on providing VoD, live streaming, third party data integration (such as news, weather, sports) and high-speed notifications with an emphasis on TV apps, mobile and syndication points via web browsers to the desktop. The company’s ultimate goal is to provide ultra-low latency solutions that will accelerate the rapid globalization of media content with an emphasis on the creation, management and monetization of TV apps and virtual “channels”
To power AllDigital’s next generation solutions, the company continues to make progress in the development of its ultra-low latency live streaming server platform as well as an updated version of its AllDigital Cloud digital broadcasting platform (“AD Cloud v2”). As the company gets closer to the formal launch of AD Cloud v2, the company anticipates an increase in the use of partner resources such as Akamai CDN Delivery and Amazon Web Services to power and support its digital broadcasting content management system and application frameworks. AllDigital anticipates an improved customer experience, greater scalability, and more favorable cost structure from AD Cloud v2 due to its micro services architecture.
Key features of AD Cloud v2 include:
• Offering a transcoding utility as a platform as a service (PaaS) that can run on multiple third party cloud networks;
• Offering an on-demand hosted solution as a software as a service (SaaS) for clients needing a full end-to-end transcoding workflow;
• Building a library of high quality reusable components to allow us to create repeatable and scalable streaming centric services for clients; and
• Eventually, we anticipate releasing SDK’s to allow third party developers to create their own services using our digital broadcasting tools.
In late 2013 and early 2014, AllDigital experienced a significant business interruption, in part, from the turnover of numerous employees including project managers, developers, and certain executives. In order to continue to operate its digital broadcasting platform as well as satisfy existing client contracts and commitments, the company incurred extraordinary expenses in the form of recruitment fees, third party consulting fees, credits due to customers and increased payroll expense, all of which AllDigital believes will not continue in the future.
AllDigital has recently reduced its monthly operating expenses by approximately $100,000 by eliminating, consolidating or reducing non-essential services such as outsourced public and investor relations, inefficient sales resources, internal human resource recruitment, various third party consulting fees, and other cost reduction measures. AllDigital believes that additional cash flow efficiencies can be achieved, depending on business requirements, to further reduce cash burn, and put the company on a path to cash flow break-even or profitability.
In order to assist AllDigital in reducing the company’s cash burn rate, Brad Eisenstein elected to resign as the company’s Chief Operating Officer effective August 8, 2014. On that same date, Michael Linos was appointed President of AllDigital. Mr. Linos will take over many of Mr. Eisenstein’s responsibilities to ensure continued operational efficiency and will continue to oversee AllDigital’s marketing and sales efforts. AllDigital anticipates that Mr. Eisenstein will continue to provide services to the company in a consulting capacity. Management and the board of directors deeply appreciate Brad’s essential contributions to AllDigital, and the company looks forward to continuing to work with him in a consulting role.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
With the exception of historical information, the matters discussed in this press release including, without limitation, the ability of AllDigital to realize approximately $750,000 in additional client revenue from new strategic clients, AllDigital’s belief that the rapid growth of the OTT market and global consumption of digital media will represent a significant growth opportunity for AllDigital, the progress being made by AllDigital in the development of its ultra-low latency live streaming platform and its AD Cloud v2, and the projected increase in the use of partner resources to support AllDigital’s digital broadcasting management system, are forward looking statements and consideration that involve a number of risks and uncertainties. The actual future results and performance of AllDigital could differ from those statements. Factors that could cause or contribute to such differences include, but are not limited to, potential strategic clients deciding not to move forward with projects with AllDigital; unexpected product develop delays; adverse economic and market conditions; lack of capital necessary to fund new product development;
About AllDigital: AllDigital Inc., a leader in digital broadcasting solutions, is the developer of AllDigital Cloud, a content management system (CMS), focused on the virtualization of digital content. AllDigital Cloud empowers enterprises to stream content across multiple devices including mobile, desktop and digital television, providing total control over the global distribution of digital media assets. Mainly serving media and entertainment companies, enterprise brands, non-profit and government organizations, AllDigital sets itself apart by offering highly scalable and ultra-low latency (ULL) digital broadcasting solutions, including cloud storage, origin transit, content management solutions, integration services and related customer support. AllDigital Cloud provides high-speed data transfer, scalable storage, encoding / transcoding, VoD, linear programming, and real time reporting.