David McCourt, former CEO of “triple play” firm RCN, wants to stake out his share of the Internet-enabled television market, expected to be worth $10 billion in three years. His firm, Narrowstep, is a pioneer in streaming high-quality video from websites.

McCourt says that the future of television is largely dependent on the Internet, and television on the Internet is an area where his company has a distinct advantage. Narrowstep can build entirely new channels for businesses or niche broadcasters using the Internet Protocol TV spectrum (IPTV). For consumers, it can facilitate “video on demand,” which sends video to multiple platforms.

His former company, RCN, laid fiberoptic cable in national markets and bundled telephone service with cable television and fast Internet connections. Its coverage area included Princeton Borough and Township. During the telecom boom in 2000, McCourt built the firm to 3,600 employees nationally and more than 500 at the Carnegie Center. In the year 2000 RCN announced ambitious plans to develop a multi-building corporate campus in Lawrence Township. But after the telecom bust, the firm moved to Virginia and spun off its cable business to Patriot Media.

So far Narrowstep has just 20 employees working from its Princeton office, located in Forrestal Village, with about 55 in its New York and London offices. But it has launched more than 180 channels and is signing new clients and partners at breakneck speed. Among them are Virgin Media, the Sci Fi Channel, the William Morris Agency (the world’s largest talent and literary agency) and Telefonica (the third largest global telecommunications company). Just announced: two new channels, Watch India for expatriates from India and MTBcut for exreme sports enthusiasts.

Narrowstep is in the business of moving, managing, and monetizing content, says Barak Bar-Cohen, senior vice president of Narrowstep. Small Narrowstep channels pay $5,000 a month for revenue, licensing, and bandwidth, much less than they would pay to a regular cable firm and at higher quality than on a YouTube-quality channel. “If you are serious about launching with high quality and superior quality, to really monetize your content, we have the end-to-end solution,” Bar-Cohen says. “We launch channels for people who don’t want to be squeezed into a cable lineup. If you launch over the Internet, it is more cost effective, and you have much greater reach.”

Founded in 2002 by Iolo Jones, Narrowstep is publicly traded on the over-the-counter market and has yet to earn a profit. In 2006 McCourt was asked to scale and grow the business as chairman and interim CEO. Through his investment firm, Granahan McCourt, McCourt had been the lead investor in a $7.4 million deal. Last month Narrowstep raised an additional $10.5 million with a private placement of common stock and warrants. McCourt is the largest individual shareholder, and the lead institutional investor was RENN Capital Group.

Narrowstep had $1.6 million in revenues for the three-month period ending in May, compared with a loss of $3.3 million. The revenue comes from licensing the technology, selling bandwidth to the channels, plus taking a cut of advertising and sponsorships, and Bar-Cohen points out that Internet TV broadcasters possess valuable information about their viewers that can help sell these sponsorships.

“In the short to medium run, we are building the inventory of channels and making money for our partners,” says Bar-Cohen. “In the long term, we will be in a position to aggregate the inventory of channels in vertical markets and sell advertising and sponsorships against those verticals.”

Narrowstep’s new partner, Watch India, will help broadcast Indian TV channels — Bollywood movies, news, hit TV series, music, entertainment, religion and the latest sports — live over the Internet for about $25 per month. Watch India’s web portal will also allow users to watch any of its movies on-demand without additional charges. Its market is the more than 4.5 million Indian expatriates in North America, plus more than 30 million worldwide. Its programs include those from India’s top networks and TV stations including the largest one, Zee Telefilms (with an office at 14 Washington Road).

Internet TV is the ideal platform for extreme sports channels, says Bar-Cohen. Until now, mountain biking fans could watch races only by buying a DVD. Now viewers can see live coverage of some events or choose video-on-demand. Scotland-based MTBcut.tv features rider bios, interviews, and race coverage.

Narrowstep’s competitive edge, says Bar-Cohen, is its telvOST platform (“the most television-like and true community building Internet TV experience available”) and its end-to-end solution. “We believe we have the best technology, coding, ingestion (how you take content on a tape), advertising, monetization, viewing — all the components of the end-to-end platform to monetize and launch channels,” he says.

YouTube is known for user-generated low quality video, in contrast to Narrowstep’s professionally produced content that can be distributed in high definition format. But YouTube just announced that it will enter Narrowstep’s market and try to monetize high-quality commercially licensed video. Other competitors include the Platform, which has been bought by Comcast, and a company called Maven.

None of Narrowstep’s competitors, Bar-Cohen says, own their own distribution networks, whereas Narrowstep has built out its own high quality network. “We saw it as an important strategic advantage to build our own content distribution network configured around video. This allows us to pass on huge cost savings. “If we get the technology right,” says Bar-Cohen, “we will be able to take our share of the huge advertising dollars.”

Narrowstep (NRWS), 116 Village Boulevard, Suite 200, Princeton 08540; 609-951-2221; fax, 609-951-2252. David C. McCourt, interim CEO. Home page: www.narrowstep.com.

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