Stuart Waite, Head of Advertising and Interactive, Alcatel-Lucent

Stuart Waite was formerly CEO of Tamblin, a high-profile UK-based interactive TV technology provider (its clients include BSkyB, the BBC, Channel 4, ITV, Five, and Flextech) that was acquired earlier this year by Alcatel-Lucent. Waite recently spoke to [itvt]'s Tracy Swedlow about the events leading to Alcatel-Lucent's decision to acquire Tamblin; about the role the former Tamblin is now playing within the telecommunications technology giant; about new interactive TV applications and multiplatform content-distribution systems that Alcatel-Lucent is developing; about the importance of IPTV to the future of the interactive TV industry; and much more.

[itvt]: You've gone from being the CEO of a small, independent company to being part of a huge public company? How is that change working out for you?

Waite: Well, it's definitely a massive change. There's a very big difference between running a small operation, where you do five jobs all at once, and being part of a very big organization, where they want you to concentrate on just doing a few things very well. It actually kind of agrees with me at the moment. I'm really enjoying it. Of course, the benefits are overwhelming: the access to resources that being part of a large company brings; and also the large number of great people they have--smart people who are working on research and development and other things in multiple geographical regions, and who have lots of different ideas about how to do stuff. It's really interesting. Obviously at a small company, you never get exposed to that sort of thing, so, from that perspective at least, it's really exciting.

Also, I'm finding that there's a huge amount of interest in what we're doing--so that's keeping us very busy. Right now, it's really all about getting everybody up to speed and trying to deliver on a few of the promises that we've made. But I would say that we've been embraced with open arms: everybody here is very positive about the acquisition, and the news seems to have traveled fast across the entire Alcatel-Lucent organization. Also, the fact that we're now working on projects that have the potential to be deployed from the US to the Asia-Pacific region and beyond makes it very exciting and interesting.

Another great thing about being part of a much larger company is that we can now concentrate on new long-term business models with operators and broadcasters: instead of trying to ensure that projects initially turn a profit to cover our cash flow, we can plan a return on investment over a much longer period of time. We can share the commitment with the operators and broadcasters, and help them develop solutions and business models that work for them over a longer period of time, rather than trying to find the surefire winner in the first three months.

[itvt]: How difficult has it been for you and your team to adapt to Alcatel-Lucent's corporate culture?

Waite: What's been great about this acquisition is that Alcatel-Lucent have let us get on with the job. There's been no pressure on us to act, present or sell in any particular style. In fact, they really appreciate and encourage our entrepreneurial approach to getting things done. Tamblin has been able to transfer relatively intact, becoming the Advertising and Interactive Group within Alcatel-Lucent. Of course, we now have new processes to follow and new systems to work within, but they are there to help us scale from 15 people to a sales force of thousands across the globe. Without those new processes--and the cultural change they bring--we would quickly become swamped with managing just the internal queries alone. Our whole team has moved with us and they too are enjoying the additional resources and facilities a large company brings. We're now growing quickly in order to support various new projects coming onstream in the new year, and our digital agency is really starting to take shape.

[itvt]: Could you tell us a little about the events leading up to Tamblin's acquisition by Alcatel-Lucent? Why do you think they decided to purchase you?

Waite: We started talking to the then Alcatel back in 2005, after we had identified IPTV as a market that we wanted to get involved in, with our "traditional" interactive TV skills and offerings. We had obviously made a decent name for ourselves in the UK in the red-button space, working with Sky, and with the various broadcasters there that use our tools. And we could see that, with the amount of money being invested in IPTV by the telecom operators around the world, those operators would eventually be looking for kinds of solutions that we had already sold to Sky, ITV, the BBC, and so on.

So, in addition to identifying a number of operators to talk to directly, we looked at the major technology vendors in the IPTV space, and Alcatel came out on the top of our list as being one of the most serious players in that space--not just because they have high-quality middleware and other video solutions, but because they have extensive relationships with operators and multiple deployments. So, from an application development perspective and from an interactive advertising perspective--which, of course, were the things that we were most interested in--we could see that Alcatel was an excellent company to talk to about either partnerships or licensing our products. We had our first meeting with them in 2005, and we discussed partnerships, licenses and so forth, and we eventually got to know some of the key people pretty well who were looking after their IPTV business. After a while, we felt comfortable enough with them to ask them directly, "We're looking for investment or to be acquired, in order to achieve our goals. Are you interested?" And they said, "Yes. We are interested. Let's talk more." However, the fact that, around that time, they were beginning their merger with Lucent meant that our conversations were put on the backburner for a while. But eventually, two years after our first conversation and a year after them saying they were definitely interested, we were able to finalize a contract.

[itvt]: Why do you think that Alcatel was interested in getting into the interactive TV authoring solutions space, and why do you think they chose Tamblin specifically? Presumably they were talking to other ITV tools companies as well...

Waite: Yes, they were definitely talking to other companies as well. I think they were interested in the ITV authoring tools space because they'd been closely following the GoldPocket-Tandberg merger, and then Tandberg's subsequent merger with Ericsson. They understood that, in order to fully leverage the relationships they have with operators around the world, they would have to provide more than black boxes and cables and network infrastructure--that they would have to look further up the value chain to content and advertising and application creation. I think they were very aware that interactive TV has worked very well on satellite, particularly in the UK: Sky makes money from doing interactive advertising and sponsorship and other applications on its platform. And the broadcasters that choose to do interactive services on the Sky platform make money too.

So they were aware that they had some weaknesses in the interactive TV application-development area, and that acquiring Tamblin would be a very simple, early-stage opportunity to plug those weaknesses, such that they could get a march on the opposition without investing huge amounts in R&D or undertaking the risk that would be involved in buying a larger company.

I think the things they liked about Tamblin were that we had a proven software product that we had sold to broadcasters and to satellite and cable operators; and that we had already generated significant interest in the IPTV space, such that operators and Alcatel competitors were talking about us--were mentioning us whenever they spoke about interactivity and about interactive advertising in particular. Alcatel had been looking at the interactive application-creation and interactive advertising spaces for a long time, and actually had an interactive TV strategy in place quite some time before they acquired us. They saw us as providing a very good way of kick-starting the delivery of that strategy from a products and services perspective, because being in the most advanced interactive TV market in the world, we had proven that our tools were of interest to broadcasters and content creators.

[itvt]: What do you think interested them in your technology specifically--other than the fact that it was already well-established in the market?

Waite: I think it was that they could see that we had the right strategy, from a technical architecture-type perspective, to support their middleware business, and also their services business where they create applications for operators. They saw that our technology would get them closer to content creators, because we take the technology out of the equation, so to speak: by using our templates, you can create and publish applications very quickly, without having to understand anything about the code, or the playout infrastructure, and so on--whereas Alcatel themselves at the time were finding themselves constantly building custom applications for their customers. Basically, they saw that our i-ZoneTV technology would allow interactive TV application creation to go mainstream, because you could create hundreds of enhanced TV applications and interactive ads etc. from a set of templates very quickly and very cost-effectively. And this kind of capability was exactly what their customers were asking them for. Those customers were starting to say, "Well, OK. We've now got our EPG, we've got some custom applications, and we've got some games. What's next? How do we use interactive TV for advertising? How do we use it for VOD promotion, etc.?"

So they realized that, with our tools and our experience, they would be able to sell their operator customers a method for increasing their media inventory significantly. By that I mean that those operators, by creating interactive applications and interactive advertising opportunities around the content that's on their platforms, could create a significant amount of inventory to generate revenues from that they hadn't previously had the capability to do. And, as I mentioned, Alcatel really wanted to operate in this space: in the past, they would get all the hardware plugged together, get the VOD working, get the EPG working, and then--other than perhaps providing a maintenance package--they'd walk away. And what they wanted to do was to continue the relationship with the operator, and continue to provide services on top of the basic IPTV infrastructure they'd deployed.

However, I don't think this acquisition was just about the technology: we were identified not just as having a product that plugged this gap in Alcatel's offering, but as being a team--a small team perhaps--but as being a team that could speak to broadcasters and to media and advertising agencies in their own language--a language that's not usually spoken by telecoms engineers. We can speak advertising: we can speak to brands; we understand the kinds of things they're looking for; and we provide a content-based solution, as opposed to a technical, wires-and-servers-type solution, which is what Alcatel traditionally did. Tamblin always sold something that was much more content-focused, much more revenue-generation and brand-focused, rather than servers and cables, etc.

[itvt]: You mentioned earlier that you were actively looking to be acquired. Why was that?

Waite: We got to the point, as all small companies do, where you say, "Right. We either continue as we are, and have a nice little company that makes a certain amount of money every year, and pay ourselves a Christmas bonus, and life goes on; or we can go and raise some VC money and get more serious about it; or we can position ourselves for acquisition and get more serious about it a different way." We chose the latter path. In the end, it took us two years to get Alcatel-Lucent to buy us, but we eventually did succeed in that.

[itvt]: Could you give us a brief overview of your i-ZoneTV platform and products, and of how your template-based approach to ITV works?

Waite: i-ZoneTV is all about creating and managing interactive applications from a library of pre-developed and tested templates. It's also about workflow and working effectively within the value chain. When everyone else was developing WYSIWYG design tools, we went to market with a niche play, positioning templates as a fast-to-market, proven-ROI alternative. The strategy worked, with at one point all the major UK broadcasters using the product. We develop the templates to the strength of each of the platforms we publish to. By this I mean we do not dumb down our application capabilities to the lowest common denominator. This is key to our platform-agnostic approach and is why we're now able to offer template libraries for internet TV and mobile platforms.

[itvt]: How is your technology going to integrate with Alcatel-Lucent's IPTV platform, and with their partners' platforms--for example, Microsoft's?

Waite: Actually, one of the key things that also made Alcatel-Lucent interested in what we were doing was that we are platform-agnostic. At the end of the day, the applications that we manage via these templates are multiplatform/multi-device, and that is absolutely what Alcatel-Lucent's strategy calls for going forward. Yes, they have very strong partnerships with Microsoft and others, and they also have their own middleware solutions; and we can certainly work with those platforms and those partners. But we also make it possible for Alcatel-Lucent to say "yes" to clients who say, "Well, actually, we don't use Alcatel-Lucent or Microsoft middleware. We're using another platform. Can you still work with us?"

So Tamblin's philosophy of being platform-agnostic was definitely another reason for Alcatel-Lucent to be interested in us. We'd always taken the position that the content and the structure of interactive TV applications should be independent of the middleware. We've always felt that the content creator shouldn't be beholden to the restrictions, or the potential restrictions, of a particular middleware.

So, in answer to your question: Microsoft's and Alcatel-Lucent's IPTV middleware solutions are among the first platforms we're working with: we're already creating libraries of templates--which we refer to as "Starter Packs"--for Microsoft's Mediaroom, for Alcatel-Lucent's MyViewTV, which was actually originated by and is still used by Telefonica, and also for Alcatel-Lucent's original IPTV middleware platform, OMP, which still has a number of active clients using it throughout the world. The Starter Packs target three key areas: interactive advertising, enhanced TV and sponsorship, and interactive portals. And so with these Starter Packs we're already supporting three widely deployed IPTV platforms as part of our offering, and we have a remit to support any other platform Alcatel-Lucent's clients want to work with.

Ultimately, Alcatel-Lucent want to be able to support content creators and brands on whatever platform and whatever device they want to deploy their content to. The ability to deliver and monetize content on different platforms is a key part of the company's strategy going forward, and we'll be playing a significant role in that. We fully expect that, starting next year, we'll be deploying the same content to TV, PC and mobile, across multiple geographical regions, from a single system. So, if you're a content creator--a broadcaster or a production company--and you want to distribute your content to an IPTV operator in Germany, to a mobile operator in Poland, internationally to PC's over the Internet, and maybe to a second mobile operator in Norway, then we can do that for you from one centralized system, with one set of management tools using the template-based frontend management of i-ZoneTV. So Tamblin will be providing the frontend part of that strategy, allowing Alcatel-Lucent to say to content owners, "OK, so you have all this content: video, text, images, ringtones, pictures, or whatever--it doesn't actually matter. What do you want to do with that content?" "Well, I want to have a VOD portal on a tier-one operator in France. I want to have the ability to offer ringtone downloads via a mobile operator in Italy. And I want to have a Web-based download portal for my movie content available across the globe." And we would manage all that and set it up from one central system. That's the kind of approach that we're starting to talk to major broadcasters and content creators about right now. And I would expect that, by the middle of next year, we will be able to announce a number of these types of projects where we're delivering multiple types of content to multiple devices or screens, using a single, centralized system.

[itvt]: So what you're saying is that there are two main strategic reasons why Alcatel-Lucent acquired Tamblin: 1) because your technology allows them to sell additional value-added services to their IPTV/telecoms hardware and software customers; and 2) because they want Tamblin to serve as the frontend piece--or one of the frontend pieces--of a new strategy, under which Alcatel-Lucent will be providing a new platform to content-providers that will allow those content-providers to distribute their content on multiple platforms?

Waite: Yes. The strategy is constantly being refined, as we work closely with content creators, aggregators and distributors; but, in essence, this is a space we want to occupy.

[itvt]: I take it that you are currently adapting your i-ZoneTV templates to support PC and mobile applications, as part of this multiplatform content-delivery offering that Alcatel is pursuing. Can you talk a little about that?

Waite: Yes. There's no doubt that operators and content creators are looking for cross-media, multiple-device solutions. We are already committed to supporting Alcatel-Lucent's own mobile and mobile TV platforms. This will allow us to take our learnings from developing template-based applications for TV to the mobile world--something operators have already told us they're excited about, especially when you consider the market for mobile-based interactive advertising. We'll also apply this same approach to over-the-top Internet TV-based applications.

[itvt]: Presumably, this new Alcatel-Lucent content-delivery solution will include content-protection technology...

Waite: Yes. That will be part of the next-generation platform that Alcatel-Lucent and its partners are developing right now: the content- protection, the personalization and targeting, the content and asset management, the storefront management, the payment systems, the subscription data and so forth, will all be managed out of this next-generation platform that we and our partners are in the process of building. And, again, Tamblin's role in all that is to provide the frontend tools to manage the content across multiple devices and networks.

[itvt]: And Alcatel is developing the content-protection piece of that in-house?

Waite: The content-protection elements will be developed in conjunction with Alcatel-Lucent's partners.

[itvt]: Now the operators that Alcatel-Lucent is targeting its interactive TV solutions at won't all be IPTV providers, correct?

Waite: That's correct. We're already talking to cable operators and satellite operators about being able to provide them the same types of services--after all, this is where Tamblin's experience is greatest. Ultimately, cable and satellite operators will have broadband connectivity in their set-top boxes as well--which gives us the ability to deliver the kinds of services we want. However, our initial sales push is with IPTV operators. That's where Alcatel-Lucent are very strong and that's where their existing clients are.

[itvt]: Have you been talking to Virgin Media, for example?

Waite: Yes. We've certainly contacted Virgin. Flextech--which is now part of Virgin--is an old customer of Tamblin's. There is genuine interest in the products and services we can provide cable, and Virgin is looking at these again. Following the merger of Telewest and NTL, and the acquisition of the merged company by Virgin, there has been a renewed desire to expand their interactive capabilities--especially in interactive advertising--and they are talking to many companies right now about what they should do. Our products are ideal for an operator like Virgin--they allow them to benefit from our years of experience while keeping the upfront investment at a manageable level.

[itvt]: What about the US cable market? Do you have any plans to target that, and, if so, are you doing any work with OCAP and E-BIF?

Waite: The Alcatel-Lucent sales teams already have relationships with operators throughout North America. As a result, we are able to benefit directly from these contacts. As interest for our products grows, we'll look to include other platform capabilities on our roadmap. The beauty of i-ZoneTV's architecture is that porting templates to another platform is a simple and cost-effective process.

[itvt]: Will Tamblin, as part of Alcatel-Lucent, continue to support all the services you previously offered to Sky and your other high-profile customers in the UK market? Which--if any--of your products and business areas will be discontinued, now that you are part of Alcatel-Lucent?

Waite: Yes, we are continuing to support out existing UK clients and are in fact looking to develop new clients in the UK. None of our products or relationships are being discontinued. In fact, just the opposite--we're looking to develop them even further. As part of a much larger company, we can now establish a different kind of relationship with our clients, as I mentioned earlier.

[itvt]: Earlier this year, you announced that Sky had tapped you to provide an SMS return-path solution--called "MiAds"--for commercials on its platform. How is that service doing to date? Is it getting a lot of usage?

Waite: It's still early days, but it has been very successful to date. Like with anything new, we find ourselves educating the market. What's interesting is that we now have strong demand for MiAds outside the UK, where platforms are less advanced.

[itvt]: Now one interactive TV application that Alcatel has developed, and that has always struck us as particularly interesting, is MyOwnTV. Are you by any chance working with that application?

Waite: Yes. It's been rebranded as ShareTV, and it's actually one of the first Alcatel-Lucent applications that we're working with. We're making sure that operators will be able to use i-ZoneTV's templates to deploy and manage it on their networks.

[itvt]: Could you describe what that does, for the benefit of our readers who might not have heard of it?

Waite: Yes. ShareTV is a UGC-focused application that provides an operator with a fully integrated system to enable its customers to subscribe not only to user-generated content but also to semi-professional and professional content, including dedicated advertiser/brand channels. So, for instance, if BMW, Ford or some other brand decided to begin offering its own broadband video channel, and if your pay-TV operator provided you with ShareTV, you could choose to have the BMW channel or the Ford channel appear in your EPG and watch it on your regular television set, as well as on the PC. Or it could be a channel about your local football team, or a family channel where various relatives would put up personal videos. ShareTV could allow you to source video from YouTube, Facebook and other types of community-based services, and then roll them into a personalized channel that can be viewed on your television or PC, and managed by your operator.

Of course, what makes this technology so exciting to operators is that it gives them an opportunity to, in essence, provide the types of services that until now have been done over the top by the Googles and MySpaces of this world. They can now use their networks to provide similar types of services, as well as subscription-based offerings. And because it works on the PC as well as on the television, if you travel to another country, you can still get the content you've subscribed to.

[itvt]: How is work on that application coming along?

Waite: At the moment, the backend piece is pretty much there, and we've done the first iteration of the frontend work. I know that the product team is looking to deploy it in Q1 with one of Alcatel-Lucent's existing clients. So we're hoping that that it will be delivered on schedule.

[itvt]: Now that you are part of Alcatel-Lucent, what do you feel are the challenges facing you?

Waite: The challenges are huge. I think the aspirations we have are excellent, and I think a lot of the work--the strategic work that's being done with regards to delivery of content on multiple platforms--is really good. But the chance of not being able to deliver on that is always high. I mean it's a massive software technology undertaking, and there's always a risk that you never quite get there, that you never quite deploy what it is that you've promised to the clients. So while, from what I understand, the commitment is 110% and they've got guys working on it constantly and it's looking good so far, you always know that it might take longer than you thought, or it might end up being not quite what you originally envisioned it to be.

Another challenge facing us is that, as part of a large company, we're now dependent on all the other links in the chain delivering in a timely manner. In our seven years of running Tamblin, we were always in complete control of our product, when it was being built, what it did, when it was going to be ready, and so forth. So while being part of a larger company obviously gives us some huge advantages, we're also now dependent on the ability of other divisions within the company to successfully implement their projects.

And then there are also challenges related to the specific projects that we're doing within Alcatel-Lucent--particularly challenges related to our work on interactive, personalized and targeted advertising. One of the things we're aware of at the moment is that we are pushing the boundaries of people's understanding of what personalized and interactive advertising is. So we are developing products and systems right now that we think meet the requirements of the market, but obviously there's a risk that we don't quite get it right--that the brands are maybe looking for something slightly different. Of course, we're working very closely with brands, ad agencies, and broadcasters, and they're constantly giving us feedback and helping us understand what their requirements are going to be going forward. But there's always that risk that you don't quite get it right, or you have to rethink something, or that working across different geographical regions means that your product or service works well in once place and doesn't work in another. What works in the US doesn't necessarily work in Europe or China or Taiwan. So we have to be adaptable, and I think the systems that Alcatel-Lucent are looking to build are about as adaptable as you can imagine today. But obviously you're limited by what you know today, and the market could always change dramatically. However, at the end of the day we're going to give it a go, and try and deliver exactly the product that the market is looking for.

[itvt]: Can you say specifically what you're currently working on in the "interactive, personalized and targeted advertising" space?

Waite: As you can imagine, this is a huge piece of work. The intention is to be able to give content creators and advertisers a new set of capabilities to quantify the experiences they create and to react in real time to viewer feedback. We want to empower these people to extend their use of data to target and personalize the experience. This will be an integrated approach, such that the templates we develop will automatically incorporate the personalization and targeting capabilities of the backend. We want to take targeting and personalization to the next level, so that not only the video content is personalized but also the interactive experience--across multiple platforms and devices. Alcatel-Lucent's end-to-end IPTV solutions certainly give us a head start in delivering this capability, and I'm excited about what we'll be able to offer in the coming years on mobile and the Web.

[itvt]: You've been in the interactive TV industry a lot longer than most people. What's your view of the current state of the industry?

Waite: Yes, I've been directly involved in the UK interactive TV industry since 1998--and a lot has happened in that time. I would say the UK industry has certainly plateaued in recent years. Operators such as Sky and Virgin have concentrated on other areas of their business, such as broadband, PVR's and PC downloads. However, the ITV industry has remained, and has continued to prove itself a viable revenue-generator. But it's the introduction of IP to TV that has the industry buzzing again. By adding a broadband connection to the back of a set-top box, you suddenly have a totally different consumer proposition. To realize how important IP is to television, you only have to look at Sky: their investment in broadband is extensive and it's all about them diversifying while ensuring the future of their satellite business. And then there's BT, who have launched an IPTV service into a highly competitive marketplace. IP, of course, finally allows us to deliver a targeted personalized viewing experience across multiple devices. So these days it's IPTV that gets me out of bed in the morning--and remember, it's not just about what IP based television can do on a set-top box; it's also about what it can do on the PC and the mobile phone.

URL: Alcatel-Lucent

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