QuickPlay Media Takes Over Network Control Center from Qualcomm’s Flo TV

11/4/11Follow @bvbigelow

[Clarification 11/5/11, 11:10 am. See below.] Toronto’s QuickPlay Media says its goal is to stream video to any IP-connected device on behalf of any media network or wireless carrier.

To accomplish this, the Canadian startup founded almost eight years ago has raised about $42 million in venture capital, and established several offices in the United States and London for its 150 employees. More importantly, though, QuickPlay also acquired the data and network operations center that Qualcomm (NASDAQ: QCOM) built for in a San Diego office park for its independently operated Flo TV subsidiary.

“This is probably the best facility in the world for delivering video content,” says QuickPlay CEO Wayne Purboo, who opened the network center to journalists and wireless industry analysts in mid-October. The network operations center, or NOC, looks like NASA’s mission control, only darker. Rows of computer-equipped desktops face a wall with more than two dozen 50-inch TV monitors. A data center on the other side of the wall has more than 300 terabytes of storage capacity.

QuickPlay is using the 30,000-square-foot control center, which includes a nearby satellite dish farm, to manage the satellite-based feed and Internet Protocol (IP)-based distribution of both live and on-demand content for customers like AT&T, T-Mobile, Sirius XM Radio, Motorola Mobility, Research in Motion, and Sony Pictures Entertainment.

Wayne Purboo

“We’re still in significant growth mode,” says Purboo, who closed the purchase in July. “We are building a cloud-based, IP video head-end to manage and support video delivered across multiple devices,” Purboo says. Flo TV never became a profitable business for Qualcomm, but Purboo says, “We believe there are significant cost savings to delivering video over IP.” With Qualcomm’s NOC, Purboo says QuickPlay can provide its premium-quality infrastructure to media companies at a lower cost than they might face if they tried to build their own network.

QuickPlay is growing fast to ride the growing wave on Internet streaming video. The company’s revenue has grown by 360 percent from 2005 to 2010, enough for QuickPlay to be named to Deloitte’s list of the 500 fastest growing companies in North America. The network ops center in San Diego, though, is key to everything that QuickPlay is pulling together for the next generation of Internet-connected devices.

Purboo won’t say how much QuickPlay paid for the center, but he disclosed that Qualcomm considered multiple bids, “and in no way were we the highest bidder.” Rather, Purboo says QuickPlay Media “presented the best business case” to operate the facility.

Just what that business case is—and how QuickPlay will be able to operate a more profitable business than Flo TV—has yet to fully unfold.

Qualcomm reportedly paid about $800 million to develop its Flo TV business, including an estimated $683 million to acquire the necessary broadcast spectrum licenses it needed to stream wireless video in scores of U.S. metropolitan markets. As investments go, though, Qualcomm did pretty well—selling its licenses for the 700 MHz spectrum in more than 100 U.S. metro areas to AT&T for nearly $1.93 billion last December.

[ Clarifies that ATT U-verse mobile already was QuickPlay customer at the time of acquisition] At the time, some industry observers wondered why AT&T didn’t also acquire Flo TV’s infrastructure to help alleviate its own strained wireless capacity. QuickPlay, which already was a longtime managed video service provider for ATT U-verse mobile, stepped forward roughly eight months later to claim Flo TV’s physical assets. Sirius XM is currently QuickPlay’s biggest media customer, although Purboo says, “we do see a time when we’ll have many of those tier one media companies.”

Purboo says QuickPlay is distributing video from FreeWheel, DoubleClick, and some 4,000 other media partners. The company streams about 200,000 videos a month, from short sessions of less than 30 seconds to full-length feature films and TV episodes. Including live events, such as the 2011 Stanley Cup Finals and royal wedding, the company counts about 40 million video “consumptions” a month.

It’s also clear, though, that QuickPlay faces an enormous challenge in managing the complexity of sending video to a universe of different Internet devices, on behalf of customers like AT&T and T-Mobile.

Purboo contends that QuickPlay is at the forefront, strategically, as streaming video moves from being a sideshow to the main event. Yet the QuickPlay CEO also seems to be counting on the company’s ability to knock down the barriers between rival companies, technologies, and pricing schemes. For example, Purboo says QuickPlay has been integrating its technology with the set top box used by AT&T U-verse, so users can record a program on their home digital video recorder, and then decide whether to watch it on their TV, tablet, or smartphone. Cable TV service, on the other hand, traditionally imposes an additional charge for every TV or other device that gets the feed.

So while Purboo describes QuickPlay’s strategy as “very much an ecosystem play,” it’s also clear that he’s looking for the carriers and media companies to move to a new business model in which consumers pay a simple flat rate to watch their streaming video anywhere, on any device. Just how likely does that seem to anyone out there?

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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