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Strong Global IPTV Sales and VOD Momentum Lead SkyStream to Second Consecutive Quarter of Profitability

SUNNYVALE, Calif., Oct. 31, 2005 — Privately-held SkyStream, a leader in IP video delivery, today announced that it had strong new customer wins in its third fiscal quarter (Q3) of 2005, including more than 10 new telco customers in the U.S., EMEA and APAC regions, and increased demand for zBand, SkyStream’s content delivery software.

The company also announced that in Q3 2005 it has achieved profitability for the second consecutive quarter, and on a year-to-date EBITDA basis. Company officials attribute SkyStream’s profitability in the third quarter to growth in global telco equipment sales, expansion of existing customer deployments and adoption of new MPEG-4 AVC encoding and transcoding technologies.

“We experienced continuing strong new customer sales and improved our operational efficiency in the third quarter–we were able to lower operating costs and increase gross margins,” said Joe Geesman, SkyStream’s chief financial officer. “We are extremely pleased that we were able to sustain profit momentum from the second quarter–our first profitable quarter–into this one.”

SkyStream announced that more than 10 telephone companies in the U.S., Europe and mainland China selected its Mediaplex and iPlex video headend systems for MPEG-2 and MPEG-4 AVC deployments in the third quarter, and existing telco customers purchased additional headend equipment. SkyStream was the only U.S. company powering China’s first IPTV deployment, SiTV in Shanghai, which uses SkyStream’s Mediaplex video headend (see previous company announcement on 9/26/05.)

Shipments of zBand software in July also exceeded the company’s expectations–more than 30 customers have now purchased SkyStream’s content delivery platform for offering PUSH video on demand services, movies-on-demand, distance learning, distributed storage, and business TV. The company also experienced strong demand from the federal government through a reseller for satellite equipment for military and disaster relief purposes.

“Our balanced strategy of targeting multiple markets and geographies has allowed us to drive consistent growth,” said Jim Olson, president and CEO of SkyStream. “We have witnessed solid growth across our enterprise, government, telco and satellite product lines. Meanwhile, media companies and large enterprise accounts continue to show interest in our content delivery software.”

SkyStream first achieved profitability during the second quarter, two quarters ahead of the company’s forecast. Mr. Olson attributes the momentum to the company’s technology leadership and the flexibility of its headend solutions.

“MPEG-4 stalled the IPTV market for a while, as telcos upgraded their networks and waited for set-top boxes, but our leadership in delivering the industry’s first MPEG-4 AVC transcoder last quarter eased our customers’ transition from MPEG-2 and gave them the confidence to move forward with their deployments,” he said. “We’ve proven to our customers that they can retain 90 percent of their investment in their MPEG-2 Mediaplex video headend while moving to more advanced compression like SkyStream’s MPEG-4. Our platform is just that flexible.”

About SkyStream
SkyStream provides IP video delivery platforms that enable service providers to transform their business by offering IPTV and MPEG-4 Video Services. SkyStream’s products lower opex and capex costs by 40 percent to 50 percent, optimize video delivery over any last mile network, and include zBand content delivery software, Mediaplex-20 and iPlex switched digital video headends and the Source Media Router series of IP encapsulation solutions. SkyStream is the fastest-growing provider of IP video solutions with more than 300 customers. SkyStream’s Web site can be found on the Internet at

Megan O’Reilly-Lewis
Phone: +1 408-616-3394

Jonathan Bass
A&R Partners for SkyStream
Phone: +1 650-762-2822

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