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Protocall Technologies is
providing retailers with an entire back catalogue of movies, software and music while
needing only space for a countertop 17-inch touch screen monitor and their TitleMatch
factory for burning DVDs
Technology
Entertainment
(PCLI.OB-OTC: BB)
Protocall Technologies Incorporated
47 Mall Drive
Commack, NY 11725-5717
Phone: 631-543-3655
Syd Dufton
President – Protocall Technologies Incorporated
President – TitleMatch Entertainment Group Inc.
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published – May 11, 2007
BIO:
Syd Dufton
President – Protocall Technologies Incorporated
President – TitleMatch Entertainment Group Inc.
Mr. Dufton has more than 17 years of experience driving aggressive growth for highly
successful consumer technology companies. He is well known in the industry for his ability
to build and lead cutting edge companies from concept to millions in annual product
revenue. Most recently, Mr. Dufton served as a Partner and Managing Director in City
Capital Partners, a venture capital investment fund focused on innovative, young privately
held technology companies. Prior to that Mr. Dufton was Vice President of Sales and
Marketing for Protocall, and was the catalyst behind many of the company's distribution
deals and product licensing agreements including Symantec, Intuit, and Corel.
Before joining Protocall, Mr. Dufton was a founder of AdvanceWork International - a
first-of-its-kind mobile distance learning technology company. He was a pioneer in the
"M-Learning" space and successfully launched five industry-leading products
worldwide, winning a 2002 USDLA Award for Excellence in Distance Learning. Formerly, Mr.
Dufton was also a principal and Vice President of Syracuse Language Systems, where he
transformed the fledgling software company into a global leader in language learning
software technology. When it was sold to Cendant, Mr. Dufton became a Vice President in
Cendant's SLS Division, and helped found the web-based Language Connect Institute. LCI was
the first New York State-certified distance EFL course accepted for college credit and was
the winner of the 1998 Milia d'Or Award for Reference and Education in Cannes, France.
Cendant Software was eventually sold to Vivendi Universal, where Mr. Dufton continued in
his role as Vice President.
Mr. Dufton is a graduate of Gettysburg College and is a US Coast Guard Licensed Captain.
He resides on the North Fork of Long Island with his wife and five children.
Company Profile:
Protocall Technologies and its wholly owned subsidiary, TitleMatch Entertainment Group
Inc., have developed a proprietary system that enables retailers to burn DVD movies and
software products on demand at their retail stores and website distribution centers. The
Company’s system expands product availability at point of sale and reduces the need
for physical inventory.
TitleMatch Entertainment recently announced a system
upgrade that includes CSS copy-protection for DVD recordable media. CSS is a digital
rights management algorithm that is required by most major movie studios, but which had
previously been unavailable in the market for DVD recordable media.
CEOCFO: Mr. Dufton, what attracted you
to Protocall and TitleMatch?
Mr. Dufton: “For me personally, I came
on board because I thought that Protocall had a fantastic technology that was not being
fully utilized. I saw a lot of opportunities in the marketplace where we could take this
technology and more fully capitalize on its unique value.”
CEOCFO:
What is the technology all about and what is using it now?
Mr. Dufton: “We are a virtual inventory
company that burns product on-demand. What that means is that you can go into a retail
store, it could even be a supermarket, grocery store or gas station that is a customer or
partner of ours and there you’ll find one of our 17-inch touch screen display
terminals, right on an end cap. On that touch screen, you can search and find every movie
ever made. You can browse through by genres, or if you know, a specific actor or movie you
are looking for, you can surf directly for that. Once you select a movie, you would then
swipe your credit card, purchase the movie and touch screen sends an order over to
our TitleMatch factory, which sits in a two-foot by three-foot section of the store. In 8
minutes, the movie is burned, the cover artwork is burned on to the DVD and the packaging
is printed and it is put into a full DVD box, and the retailer will bring you your
purchased movie. Therefore, we give the opportunity for retailers with not a lot of space
to have an entire movie line and we also offer the opportunity for larger retailers to
have an entire back catalogue of movies that they could never before have on the
shelves.”
CEOCFO:
In the world of concerns with copywriting, pirating, licensing etc., how are you able to
do that?
Mr. Dufton: “What we launched at the
Consumer Electronics Show two weeks back was the first on-demand movie system that has the
CSS copy protection built into it. What that means is when you buy a movie off a shelf as
you do at any retail store now; it has a copy protection called CSS on it. It keeps people
from taking that movie and being able to make multiple copies of it. That copy protection,
which is required by most Hollywood movie studios, was not available for on-demand movies
and it just was ratified and announced at CES. We teamed up with Sonic Solutions (NASDAQ:
SNIC) and Macrovision Corporation, and we used their technology within our system, so we
actually now have the full copy protection and an extra level of protection called
RipGuard so it makes our system live up to Hollywood standards.”
CEOCFO:
How are you able to have access to any and every movie?
Mr. Dufton: “That is what we are doing
now; we have purchased some of our own films. We have purchased the rights to a library
from a company called UAV Corporation (UAV Entertainment). Currently we purchased over 500
films ourselves. I have our folks out in the field negotiating now with content owners. We
just signed a deal with Bollywood Group, which is a company that is working with us on
recruiting films produced in India. We have another one with a Japanese Anime company. We
have been in talks with the large studios for over a year now and they were actually at
CES to see our system work. We are now in negotiation with most of those studios to
actually get their content to put on our system.”
CEOCFO:
You are in the process of adding movie titles; what about software”
Mr. Dufton: “We have been burning
software on demand for about 4 years now, so that is where this whole company started. We
are currently in CompUSA, Inc. We have over 1200 titles from all of the big software
publishers, over 200 publishers, and we burn a software product just like the movie, in 4
minutes in a retail store. We had the software and it was great and the system works
flawlessly, however, the retailers were saying software is fine, but we need movies, audio
books, and other things beyond software. What we have been doing is waiting for this copy
protection to be available so that we can begin to use of system for burning DVDs on
demand.”
CEOCFO:
It appears you have an almost limitless opportunity - you can burn almost anything!
Mr. Dufton: “Anything on an optical
media. Eventually our second generation system will have no DVDs at all. It will be more
like a docking station where you would take your digital phone, your smart phone or iPod
(Apple Inc. – NASDAQ: AAPL) , or MD3 player and just bring it to the docking station,
click it in and you would pick the music you want, the audio books or whatever and it
would be downloaded directly to your device. There would be no need for the DVD or CD at
all.”
CEOCFO:
You offer a system that the retailers would love; tell us about the advantages for the
consumer.
Mr. Dufton: “The retailers love this
because it takes up so much less space and gives us the entire back catalogue of movies.
What it allows for the customers is the chance to be able to purchase these movies. You
could find them now if you went off on the internet and did some long searches, but if you
go into your local drug store, we could have them all there for you and you could click
and have it burnt and ready in 8 minutes. It gives more choice to the consumers and it
puts them in more control; we can even burn television shows on our system. Right now if
you want to see certain TV shows, you have to purchase the entire season, such as
Seinfeld’s 6th season or the Simpsons 8th season. However, with
our system, we are going to have individual shows listed; it is kind of like a menu of all
the different shows and you can customize and make your own mix. It gives the customer
more control over the content they are purchasing.”
CEOCFO:
What is the revenue model?
Mr. Dufton: “It depends on the store
itself. The larger retailers already have relationships with the major movie studios and
we are an integrator, so we make a transaction fee on every movie that is burnt. There are
also service charges for maintenance of systems that are in the stores. That is the fee
and the business model there. For the smaller type retailers, the gas stations and truck
stops, we will handle the whole relationship with Hollywood for them, and pick their SKU
assortment and put all the licenses together. It is a bit of a different model.”
CEOCFO:
How do you plan on rolling it out, who are your first target markets and what do we see
two or three years down the line?
Mr. Dufton: “At CES we met with a lot
of larger retailers; a lot of the big name people, but also some non traditional type
avenues and I think that is where we are going to see this first. You are going to see it
in smaller drug stores, supermarkets, and places where you normally have not seen movies
or only 4 or 5 movies. We think that by Q4 of this year, you will be seeing applications
in the field and 2008 is going to be the big year for this technology.”
CEOCFO:
What is the financial picture at Protocall?
Mr. Dufton: “The financial picture is
looking better and better everyday. We have revenues coming in now; we just had a good
quarter for the 4th Quarter of 2006 and you are going to see that increasing.
We built a distribution infrastructure here where we are not only a retail model, but also
an e-Tail model. We can take this content and sell it through the internet with the same
theory of virtual inventory, but applied through the e-Tail model, so you are going to be
seeing some revenue coming out of that as well. Therefore, we feel good about 2007 in
general.”
CEOCFO:
What are the barriers to entry for other companies that may want to enter the market and
compete with you?
Mr. Dufton: “The barrier to entry is
the backend or in other words everything that happens behind the scenes. We are not a
kiosk company per se, that is just the face that it takes on in a retail store. It is
managing the backend of the system that we have four years of experience with and the
virtual inventory. It is also managing the licensing of the content, preparing the content
for digital media, tracking the sale, all of the encryption technology and the copy
protection issues on the backend. That is the hard part and what we have put over $30
million into; the building of the system and now it is ready for primetime. It is ready to
rollout, now that we have the copy protection, the movies will be on the system.
Therefore, things are looking well for us.”
CEOCFO:
Why should potential investors be interested and what should they know about Protocall and
TitleMatch that does not jump off the page?
Mr. Dufton: “First, I think the stock
is very undervalued. What people are going to see is that download to burn is going to be
a trend going forward in the next 2 to 3 years. You are already seeing movies being
downloaded to personal devices and onto people’s PCs, and you are seeing this
Blockbuster Inc. (NYSE: BBI) and Netflix (NASDAQ: NFLX) battle over downloading and
rentals. We play a piece in this puzzle, so I think over the next few years, the trend is
going to be towards this downloadable strategy. However, the main thing to understand is
that DVDs are not going away; in fact you are going to see them grow over the next few
years. This is because most folks still do not want to download a movie to their computer
and watch it on a PC; they really want to view the movie from a DVD. Therefore, we fill
that gap between the small section of the market that is downloading directly to a
computer, and the rest of the masses that still want to get this large amount of content
but do not want to download it, and would rather have it burnt to a DVD. That is going to
be the trend going forward and we fit perfectly in that.”
CEOCFO:
What do you see as the challenges to accomplishing your goal and how are you ready?
Mr. Dufton: “The biggest challenges are
dealing with the studios out in Hollywood and it has been a year-and-a-half where we have
taken them through this process. It all started on paper, on a presentation of what the
technology is going to look like. It all came to a head a CES where all the major studios
got to actually see it working and blessed it, so now it does have the copy protection. It
is getting the top-level content onto the systems and that is going to be our biggest
challenge going forward, which is what we are working on now.”
CEOCFO:
Final thoughts for our readers?
Mr. Dufton: “I think TitleMatch is
positioned in a very good space going forward and you are going to hear a lot of great
things about the company and a lot of great partnerships.”
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