Good reflective post Cuse and I agree with you on the dilemma...

Good reflective post Cuse and I agree with you on the dilemma they have with the upgrade.
The Head-End is a dedicated rack unit of servers and consoles placed in a totally secure and locked down room in KL that has cameras on it from various angles monitoring it 24 x 7.

Why? well thats the standard of security enforced by Hollywood/Vubiquity over their content being handled by anyone. Otherwise the Ops guys, the janitor or someone could dock a device into the racked configuration and copy content out as an act of piracy. It happens apparently.

The OTT industry is expensive and has the typical I.T. business model in it of charging licences for software based on the volumetrics of usage through the service. Alot of money will go on licences for DRM, encryption, transcoding etc and no doubt server hardware will be upgraded so its not a bottleneck, and the hardware is probably near replacement time(average every 3 years) anyway.

IMO TV2U can do much of the work themselves via Liaqat overseeing a pool of engineers both internal and from the companies like Verimatrix and Akamai installing upgrades etc. In fact I believe this is the nature of their Akamai "deal" with it being a reseller agreement, for either TV2U to use themselves in their own upgrades, and for say customers like Toomai if and when they would have TV2U build them their own OTT service.

IMO TV2U would procure the hardware and software kit at a discount which they would keep part of themselves. I expect the term sheet will have built-in margin of 30% for services and up to 20% for hardware, but that profit will in turn be needed to procure additional licences or kit to fund the upgrade beyond the $1 million being provided.

No doubt one activity at IBC was TV2U running to vendor stalls with their Toomai term sheet and trying to screw down vendors for the best possible deal on the software and hardware items. Trade show specials do exist even in this industry, with vendors under pressure to close out deals to justify the big spend for being at IBC with expensive booths.