Positive operating earnings on hesitant market
The media market is still undergoing transformation, which means our customers remain hesitant about making new investments. Third quarter sales were SEK 105 (128) million and operating earnings SEK 6 (19) million. Operating margin was 6 (15) percent in the third quarter. It’s important to note that we’re not seeing any signals on a long-term slowdown, neither on the market nor on our ability to compete. On the contrary, the increasing consumption of media, in particular live broadcasts, inevitably leads to increased capacity needs. The high rate of change with position movements between different market players is currently creating natural uncertainty that slows down the pace of investment.
Sye, our solution for live OTT continues to attract interest. During the quarter we signed an agreement with Ericsson to integrate Sye in Ericsson’s offering to create a highly efficient, global content distribution service for media content. I’m also proud to announce that we were awarded “Best of Show” at IBC in Amsterdam, one of the world’s largest media expos. We received the award for our collaboration with STCC in June, where we were able to test Sye on a large scale for the first time. During IBC we also showed our new collaboration around remote production with Calrec and Grass Valley. Another exciting deal during the quarter include the contract with IP-Only, where we will deliver a remote production solution for live finance TV.
There are no major global sporting events in 2017, unlike in 2016. We take a proactive approach to the market to ensure our position in the longer term. In parallel, we’re continuing to approach the market at local level, which for instance resulted in the signing of an agreement with Chinese Television System (CTS), in the quarter, for the transmission of the World Universiade 2017 Games.
Technology shifts always take time, especially when including all levels of the value chain. Customers need to adapt to both new technology and new business models, while also needing to create content that attracts increasingly selective and fast-moving audiences. This places high demands on companies like Net Insight, to quickly satisfy customer needs and respond to changing consumer behavior. At the same time, the market offering has grown explosively, and content can now be customized on the basis of individual viewer needs.
This kind of fundamental change in the structures and processes of one of the world’s largest industry, obviously engenders some uncertainty in the short term, although many new business opportunities are simultaneously generated. This is especially true for a company like Net Insight, as we already have the advanced technology required to meet the emerging needs. Furthermore, we are investing in product development to be at the forefront of delivering technology for the future television.
With our total solution offering we are stronger positioned than ever. This is because the increasing demands of consumers automatically lead to increased capacity need, while new technology must be implemented. The result will be live broadcasts with drastically reduced delay, creating space for new business models, new collaborations and more viewers. We meet capacity requirements with our existing products Nimbra, ScheduALL and Sye. Therefore, I feel very confident about the future. I believe there has never been a more exciting time to be part of the global media industry despite the current sluggish decision-making of certain customers and the impact it has had on our sales turnover development during the year.