TechnoConcepts has signed a technology transfer and licensing agreement with set-top box design firm Shanghai Jinshilin Technologies Development Company.
Jinshilin will license certain Internet Protocol Television (IPTV) technology for set-top boxes (STB) and transfer purchase orders for approximately 300,000 IPTV STB's to TechnoConcepts' to be formed Chinese subsidiary. This subsidiary will begin to fulfill pending orders for approximately US$30 million worth of Jinshilin IPTV set-top boxes by the end of the year. It is expected that all current purchase orders will be filled by the fall of 2006.
As a result of collaborative efforts this past year, TechnoConcepts has licensed from Jinshilin all of its intellectual property for IPTV, Stream Media Protocol Processing, Broadcasting Software for IPTV-STB and IPTV-STB providing On-Line Family Real Time Payment Service. The operations will be conducted by China Jinshilin Techno, TechnoConcept's Chinese subsidiary which will be based in Shanghai, China. Formation of this subsidiary is pending Chinese Government approval that is expected to be received by August 1, 2005. Under the terms of the agreement, Jinshilin shall receive a licensing royalty equal to 5% of the net revenue that China Jinshilin Techno derives from the sale of IPTV set-top boxes.
TechnoConcepts will integrate certain technologies with Jinshilin's existing IPTV set-top box design and commence commercialization of the IPTV-STB product for delivery of television content via the Internet. IPTV set-top boxes provide for delivery of digital television programming received from the Internet to conventional audio/video inputs to television sets. The Company believes that future generation IPTV set-top boxes in China will support multi-protocol wireless connectivity with television, DVD players and other multi-media appliances.
China's second largest media group, The Shanghai Media Group (SMG), recently became the first television network to receive a license to send programming to home receivers via Internet protocol. SMG has been authorized to deliver to its subscribers SMG's existing twelve television channels plus programming purchased from other stations and video-on-demand content providers. The IPTV set-top box market is rapidly expanding in China, with industry analysts projecting between 60 million to 100 million units to be sold by the end of 2007.