The press release announcing Viewpoint Corp.’s licensing deal with America Online was little more than an inch deep, but the revenue potential for the 3D media company is a mile wide.
New York-based Viewpoint, which specializes in 3D, Flash animation and rich media marketing tools, has signed a multi-year, multi-million dollar licensing and distribution agreement with the heavyweight Internet service provider.
Terms of the arrangement were not released, but AOL, which is also an investor in Viewpoint, is expected to bake Viewpoint’s Media Player and its into its upcoming 7.0 client set to roll out later this year. The Media Player features integrated playback of interactive 3D images, Flash animation, 2D “Zoomviews,” and panoramas of video and audio.
As AOL prepares to unveil its MusicNet music subscription service this fall, along with other souped-up digital media and entertainment features such as Radio@AOL, there could be plenty of uses for the Viewpoint media tools beyond the 30 million subscribers about to become exposed to Media Player.
Paul Kadin, executive vice president of business development for Viewpoint, called the license with AOL enormous, “certainly the most important deal we’ve ever done to date.”
He said the significance of the media player’s use across the AOL network will become more clear over the next several months as AOL unveils its use of the product. “Consumers all over Internet will be seeing (rich media) content using Viewpoint Technology because of this deal,” he said.
Beyond its signature 3D software, Viewpoint’s specialty has been the development of its Media Player, which incorporates rich media features on one platform so that the user doesn’t have to conduct separate plug-in downloads for each feature. The AOL license, for example, offers rich media plaback wrapped in an XML envelope and rendered “windowlessly” or without separate windows that accompany a rich media file.
That means the files can interact with other content on an HTML page or external database, he said. Also, the newer versions of the plug-ins are automatically updated after the initial download.
With the AOL deal in hand, Viewpoint has passed a milestone of sorts in its quest to get the player in as wide a distribution as possible.
But given the losses that Viewpoint has been taking in its quest to promote and market its Media Player, the AOL deal is also seen as keeping investors satisfied that Viewpoint is on plan to reach breakeven, especially as it prepares to release its second quarter earnings this week.
During the first quarter, for example, Viewpoint declared a net loss of $12 million, or 32 cents per share, on revenues of $2.7 million. During the first quarter of 2001, the company lost $16.5 million, or 51 cents per share, on revenues of $162,000.
Amortization of goodwill due to past acquisitions leaped from $38,000 during the first quarter of 2000 to $4.1 million during this year’s first quarter. Sales and marketing costs jumped by 300 percent from $1.1 million to $4.6 million during the same time frame.
Other Viewpoint investors include Computer Associates and Adobe, with which it has strategic arrangements.
