Show time for Nevada County’s tech companies
Nevada County’s small but growing electronic media industry will be pursuing its share of the multibillion dollar world market when the doors of the giant Las Vegas Convention Center swing open this morning.
A dozen local companies are among 1,400 exhibitors assembled in Sin City to promote their technology and services to the largest broadcast and electronic media companies in the world.
More than 100,000 members of the industry are in Las Vegas this week for the 2005 National Association of Broadcasters convention, which bills itself as the “world’s largest conference and exhibition” in the industry.
“NAB is our most important show,” said Dan Castles, president and CEO of Telestream, a Nevada City automated work flow specialist that will have almost 40 employees at the show.
“NAB is the world’s largest professional video show,” he said. “For anybody trying to make a living in video, NAB is the place.”
For Graeme Little, president of tiny Videoframe Inc. of Nevada City, NAB is the only show. “It is our one big show of the year,” he said.
With the exception of the Nevada City operation of Thomson of France (better known to locals as the Grass Valley Group), Nevada County companies are small-niche fish in a sea of technology whales.
But area tech leaders are taking advantage of the move toward high definition television, a lack of worldwide broadcast standards, and the explosion in consumer media to establish profitable businesses they hope will grow into big ones.
Increasingly, they are extending their reach overseas, where the move from analog to digital broadcasting technology and the weak dollar create opportunities for companies that can adapt their technology to regional broadcast standards.
At stake is a worldwide market for broadcast and related equipment estimated at over $66 billion, with 45 percent of the market in the U.S. alone.
The tech pioneers
Many of Nevada County’s electronic media firms were started by alumni of Grass Valley Group, a pioneer in video production switchers that is now owned by Thomson.
An $8 billion company with worldwide operations, Thomson sells products for every phase of the broadcast operation: acquisition, production, storage and playback of video.
The company’s Grass Valley line of products is part of Thomson’s Video Network Solutions group, which posted an operating profit of $250 million in 2004.
Thomson’s annual report attributes the increased earnings in part to improved performance by Grass Valley broadcast products, citing higher sales and a better product mix.
“We had a very strong 2004,” said Jean-Marc Hoffer, a Thomson vice president who is responsible for the Grass Valley line of products and its 300 employees in Nevada City.
“A lot of production houses and sports channels invested in (high definition) equipment, and that is a strong driver for us,” he said. “What we expect in the future is that other areas of the world will move to HD, so we hope to catch some growth in the rest of the world.”
The long-awaited move to HD television has stimulated sales for the company’s professional video switchers and cameras, and Thomson is seeking to expand its base by selling to low-end users.
“The other driver that we are trying to develop is going down market, using our technology to go to low-end broadcast,” Hoffer said. “We have been successful in the U.S. selling production switchers to churches, universities and sports arenas, so we are enlarging our customer base.”
The world is moving to digital broadcast technology, but it is using several different formats. This has prompted Thomson to design its products so that they can be adapted to any format.
“It’s a weakness and a strength,” said Hoffer. “Our strategy is to be agnostic regarding format because you have a lot of different choices all over the world. …”
Profit from compatibility
The lack of a worldwide broadcast standard creates many business opportunities for Telestream, according to Castles. The company makes products that resolve compatibility issues in the transfer of video and other data.
“We really solve the ongoing compatibility issue between different manufacturers’ products, as well as working with the various standards in the video industry,” he said.
While broadcast will always be a major part of Telestream’s business, Castles is looking at other communications segments to expand the company’s business.
“People are finding new ways to use and distribute video to broader and broader markets,” he said. “We’re launching a family of consumer applications (at NAB), which is new turf for us. It’s a big pond, but it is also chaotic and fickle.”
The company is introducing at NAB today four new Flip4Mac digital media components that enable Macintosh OS X users to make, edit and play Windows Media from Quick-Time based media applications.
“We see a continued expansion of the number of people and businesses creating content,” Castles said. “It’s just exploding at the bottom end, in terms of who is buying editing packages and wanting to get it somewhere. It’s grown significantly.”
Little believes the development of HD television and the lack of a worldwide digital broadcast standard are behind the upswing in broadcast equipment sales that started last year.
“Most of the companies I’m aware of in the television business are doing very well,” he said. “If you’re not doing well now, there’s something seriously wrong with your product line.”
Upside of a weak dollar
Videoframe produces control system and signal monitoring equipment for the broadcast industry and is benefiting from a weak dollar overseas and the hodgepodge of broadcast formats.
“We’re focusing hard on the international component because the U.S. dollar is weak, which means our goods are cheaper,” President Graeme Little said, pointing to a contract the company won in Asia from a European rival because of the weak dollar.
“We watched our price go down and their price go up, and we didn’t do anything,” he said. “We just waited, and eventually we got the contract.”
Much of Videoframe’s equipment is integrated into systems built by other companies, but the company will be at NAB with new features and enhancements of its current product line.
And like every other video company in western Nevada County, Videoframe will be seeking ways to exploit the move to digital broadcasting.
“You’ll find that most of the companies here locally benefit tremendously from the business that’s generated by changing standards,” he said.
Nevada County’s video vanguard
900 E. Main St., Grass Valley
Headquarters: Menlo Park
Products: Digital video technology for television, broadcasting, and computer video production and post-production. Equipment is used to produce and edit content for TV shows, commercials, news, music videos and video games.
AJA Video Systems
443 Crown Point Circle, Grass Valley
Products: Digital-analog interface systems for the professional broadcast and production/post-production industries.
960 McCourtney Road, Grass Valley
Headquarters: Pittsburgh, Pa.
Products: Television broadcast transmitters and microwave radio systems.
Cedar Ridge Systems
15019 Rattlesnake Road, Grass Valley
Products: Commercial, industrial and scientific instruments; control systems and related electronic system equipment, including products for professional television and radio broadcasters.
200 Litton Dr., Grass Valley
Products: Video editing systems and software for end users, distributors and system integrators.
870 Gold Flat Road, Nevada City
Products: Digital switchers and keyers; video graphics devices for computers, networkable frame buffers, frame synchs and converters.
119 E. McKnight Way, Grass Valley
Products: Hardware for the television industry, including multimedia and broadcast routers.
125 Crown Point Circle, Grass Valley
Products: Routing control switchers, master control switchers and signal processing systems for standard and high definition television.
Quartz Electronics Ltd.
848 Gold Flat Road, Nevada City
Headquarters: Reading, England
Products: Routers and switchers for video displays, including frames, panels, televisions, and high definition television. (Primarily a sales office.)
Sierra Video Systems
104 New Mohawk Road, Nevada City
Parent: Kramer Electronics Co., Hampton, N.J.
Products: Audio and video equipment, analog and digital routing switchers, and terminal equipment for broadcast and presentation applications.
848 Gold Flat Road, Nevada City
Products: Hardware and software for the exchange of high-quality video and audio via the Internet.
Thomson Broadcast and Media Solutions
400 Providence Mine Road, Nevada City
Products: Cameras, switchers and servers, video recorders and systems for the broadcast television industry.
101 Providence Mine Road, Nevada City
Products: Signal monitoring software, hard surface control panels, video node proxy interfaces, video node spot signaling monitoring units, modular frames and cards for the broadcast and audio-video post production industries.
Sources: Nevada County Economic Resource Council, National Association of Broadcasters, The Union research.
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