Letter to Shareholders...
December 13, 2000
A Note To Our Shareholders:
The opening of Streaming Media West 2000, the streaming media industry's largest and most important trade show being held this week in San Jose, California, seems a perfect occasion to tell our Shareholders about the threshold we are crossing to the future of streaming media. Our exciting new business initiative - StreamHQ™ -- is the culmination of an eventful year for USA Video Interactive: we endured the rigors of SEC scrutiny to become a fully reporting company; we began generating revenues; we built an exceptional technical and marketing team; and we established meaningful partnerships with world-class corporations that will bring substance and potential to this initiative.
To explain our present situation and future direction, it helps to know what has gone on in our strategic planning during the past year. At the beginning of the year, we were focused on delivering predominantly systems-based solutions to video streaming and video-on-demand clients. By the Spring, however, our analyses of business trends were showing that the hardware-oriented systems solution was becoming a less desirable option for some potential customers, particularly in view of a shifting Internet video-on-demand and streaming video landscape and a deteriorating high-tech investment market. After significant market research, we decided that we would not eliminate our already-established corporate offerings, but we would include in our business plan an innovative services-oriented approach that would be effective and profitable even in a declining technology market…. we began to develop StreamHQ™.
Our months of planning and implementing this strategy and building out the infrastructure it requires are coming to fruition just as major corporations and other potential clients of our services are looking for an economical and cost-effective means to take full advantage of the Internet. In recent weeks, major business publications like The Wall Street Journal and Business Week have begun to analyze the fundamental changes that have occurred in the economy and the effects these changes are having and will continue to have on technology companies over the next two to five years. We know that providing value to our clients above and beyond that which our competition can provide is in the best long-term interest of the company.
If you have been following our personnel announcements, you have noted that several talented software engineers have recently joined us. These engineers are designing and developing the technology behind StreamHQ™ so we can offer our customers unique functional value and bring a new dimension to the media streaming industry.
To protect our intellectual property, I cannot detail all of the features of this service but I can give you a preview of why we are now headed to becoming a Tier 1 media streaming services provider. StreamHQ™ is an umbrella of end-to-end media delivery services from source to viewing, including content production, content encoding under the banner EncodeHQ™, asset management, media and application hosting, multi-mode content distribution, transaction data capture and reporting, and e-commerce. StreamHQ™ services will leverage the capabilities of the Internet while bypassing its latencies and are designed to be highly available, reliable, flexible, scalable and cost-effective.
We have chosen corporate partners who define excellence in their respective fields, such as data-storage leader EMC2 Corporation, and we designed the StreamHQ™ architecture for non-obsolescence, so we will constantly remain on the cutting edge and will not be encumbered by legacy components as hardware technology evolves.
StreamHQ™ embodies USA Video Interactive's media services vision by bringing the disciplines of video distribution, data management, and the web together in a unique way to meet customer requirements. StreamHQ™ is an enabling technology for media-driven corporate, education, entertainment, and other general business applications and can support countless specific applications, including rich media advertising, entertainment video delivery, video-enhanced websites, corporate training, educational portals (including www.k-12video.com), infomercials, merchandising, and many more.
We have planned an aggressive deployment schedule for our StreamHQ™ services. Today, customers are utilizing EncodeHQ™ and various streaming services, and we will be launching and detailing additional StreamHQ™ functions and capabilities in the coming weeks, in part tailored to the needs of our first major customers. The strength of the architecture's flexibility and scalability is its ability to meet the broad requirements of a diverse client base, from businesses with modest goals to those having a global media distribution vision. We are currently signing customers from the educational, corporate, and entertainment sectors and expect that many more will be attracted by the added value of our solution.
Meanwhile, we continue to pursue other aspects of our business plan, including patent licensing agreements, customized VoD systems, and continued development of still and motion picture wavelet codecs under the banners of WaveletHQ™ Viewer and WaveletHQ™ Player.
The WaveletHQ™ Viewer to be demonstrated at Streaming Media West 2000 is a still-image compression technology that competes with JPEG and similar compression techniques. The still-image technology has numerous applications, particularly where it is important to download images quickly or to economize storage space or transfer bandwidth. This product is an interim step in development of a fully operational streaming solution, the WaveletHQ™ Player, which will be introduced in 2001.
We are being joined in our Streaming Media West trade show booth by EMC2 representatives in unveiling our new, high-performance line of media streaming servers, the Hurricane 2 MediaCaster™, which provides our patented video-on-demand and streaming video technology to customers with unparalleled levels of information reliability, availability, and scalability.
Here at USA Video Interactive, we have many reasons to be optimistic. Our business plan has successfully evolved, not only to accommodate a shifting marketplace but also to place us at the forefront of technology development for that marketplace; and we have met every goal of this plan on schedule. I see enthusiasm about our future every day in the eyes of each of our staff members and it's contagious. We are fully confident that we're headed for success and meanwhile are endeavoring to be patient with an uncertain stock market. We hope that our shareholders will do the same.
Thank you for your continued support.
Edwin Molina
President |
