Rande...Interactive TV
This is a trend that I'm following right now but besides GMST, I'm looking for new players in this field like IATV, WINK...
If you know any potential SAM, please share them with us. Thank you.
TV is being transformed from a one-way, passive broadcast medium into a two-way, interactive medium for delivering entertainment, information, communication and commerce-related services to the mass market. In our view, consumers will increasingly use their TVs, digital set-top boxes, satellite boxes, VCRs, PCs, cable modems and telephones to achieve a level of connectivity that is virtually non-existent in the home today. In other words, we believe the TV platform will make convergence a meaningful reality for Main Street America. Gemstar International Group (GMST) and TV Guide (TVIGA) are especially well positioned to benefit from this change through their interactive program guide (IPG) technology. IPGs are essentially a combination browser, search engine and portal for TV. They will also provide a return path from the television set and a critical link between TV and the Internet. We expect IPGs to develop into a multi-billion dollar advertising and e-commerce platform over the next several years.
Briefing.com: Interactive TV services seem ripe for explosive growth. Can you discuss some of the trends in this industry and how interactive TV could potentially change how consumers use their TVs, and which stocks will benefit from this change?
John Corcoran: The most important trend is that television itself is being transformed from a one-way, passive broadcast medium to a two-way, interactive medium for delivering entertainment, information, communication and commerce-related services. As a result, demand for interactivity/connectivity over the TV platform should increase dramatically in the near term. From our perspective, the true promise of convergence is increased efficiency, greater ease of use, lower cost and higher customer satisfaction. We believe interactive TV services can take steps out of the process of obtaining information, shopping, communicating with others and attracting customers. At the same time, these services shift a meaningful level of control from the programmer, program distributor and advertiser to the consumer-thereby turning him into a combination viewer, reader, Internet surfer and shopper at the press of a button. The end result is greater efficiency and ease of use, lower cost and higher satisfaction, which should ultimately drive penetration of these services.
Consumers currently use TVs, PCs and telephones for different purposes, at different times of the day and often in different rooms of the house. Practical issues such as distance from the screen, picture resolution, privacy, ease of use and lean back/lean forward mode suggest that none of these devices will replace the others. Simply put, it is not a zero-sum game. TVs are better for watching video. PCs are better for surfing the Internet, creating documents and conducting research. Telephones are better for real-time, point-to-point voice communications. However, we are convinced that some of the functionality of each device will be ported to the others, and we expect consumers to expand how they use each device-especially the TV. We also believe there will be a central location in many homes (e.g., the primary television) where consumers can easily access the functionality of TVs, PCs and telephones. In the near term, we expect television to become one of the major delivery platforms to the home for Internet access, e-mail, e-shopping, IPGs, interactive advertising, online gaming, chat, data-enhanced broadcasts, personalized TV, channel hyperlinking, IP telephony and video-on-demand.
Briefing.com: What are your top picks in this sector?
John Corcoran: Our top picks are currently Gemstar (GMST) and TV Guide (TVGIA), which we rate Strong Buys. We believe the merger of these companies will close on schedule in 2Q00 without material modification by the Justice Department. The combined entity will have an outstanding management team, world-class technologies, a broad patent portfolio and a major position in the fast-growing IPG space. In our view, the IPG will eventually become as ubiquitous as the remote control and we expect it to be the tool of choice that consumers use to manage the intersection of television, the Internet, IP telephony and a host of interactive services delivered into the home. TV Guide is currently trading at a 20% discount to its value if the merger had closed on February 3. Accordingly, we believe the preferred way to play Gemstar today is through TV Guide.
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