SkyStream Networks Secures $44 Million

SkyStream Networks (www.skystream.com) announced that it has closed a $44 million fourth round of funding. The company focuses on building the hardware and software necessary to link terrestrial broadband networks with broadcast bandwidth from satellite and digital television.

This round of funding was led by Integral Capital Partners and included investments from venture firms such as Amerindo Investment Advisors, Crosslink Capital, IVP, Mayfield, Norwest Venture Partners and WestBridge Ventures, as well as AOL Time Warner Investments and Shaw Ventures. Shaw Communications is a large Canadian company providing broadband connectivity and digital cable to consumers, as well as a large interest in direct-to-home satellite connectivity and various telecommunications companies.

This financing round of $44 million increases the total investment by the venture and corporate community to more than $70 million in SkyStream. Participants in the previous rounds — IVP, Mayfield, and Norwest Venture Partners — all increased their investment in this round.

According to Clint Chao, VP of marketing and business development, linking the two completely disparate infrastructures presents many opportunities to more efficiently leverage existing infrastructure. "The investors all have strategic interests behind them," states Chao.

"SkyStream's vision of enhancing broadband services through a robust network infrastructure is important to the integration of the Internet, traditional broadcast, and digital cable network services,'' said Richard Bressler, chief executive officer of AOL Time Warner Investments in a statement.

SkyStream states that it will use the funds to fuel its growth and enhance its networking hardware platforms, including its core offering Source Media Router family, and its recently introduced zBand Internet Content Distribution Software. Chao states that the Source Media Router encapsulates IP-based content at its point of origin in an MPEG transport stream for delivery over satellite bandwidth to its end destination, such as an ISP POP, where it is received by SkyStream's Edge Media Router and sent over terrestrial bandwidth to the end user.

The hybrid broadcast and land-based network allows for more efficient distribution and increased scalability. "You can add more locations for distribution without having to worry about building out the network," adds Chao.

Chao states that SkyStream is currently focusing on three markets or "edges," which are the Service Provider Edge, Enterprise Edge, and Consumer Edge. SkyStream works with iBeam, Edgix and Loral Cyberstar among others, in the service provider market. The company is also providing infrastructure for iBlast's network, and so may eventually help broadcast bandwidth reach into the consumer's home.

"Television has an enviable footprint," adds Chao.

Chao foresees more efficient distribution renewing Hollywood's interest in the Internet as a distribution mechanism and the creation of more quality content for the Internet. Chao adds that SkyStream's software product, zBand Internet Content Distribution Software, is designed to allow broadcasters to create a revenue stream through the creation of new Internet channels that will appear much like television stations.

"If we do our job right, the people won't know how they are receiving the content," states Chao.