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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Mike Buckley who wrote (35895)12/3/2000 1:53:21 AM
From: Mike Buckley  Read Replies (2) of 54805
 
Andy,

In my previous post I realize that I read too fast and didn't notice that you asked about ad revenue. I answered your question as if you had asked about IPG licensing revenue.

Gemstar's ad revenue is a Godzilla Game, not a Gorilla Game. Because its growth doesn't have the implications of control over the value chain that a Gorilla Game has, I'd want the ad reevenue to grow far faster and on a larger base of numbers before I get really excited. An example of that is that right now the ad revenue is blowing through the roof when expressed in growth, but the dollars are still relatively small.

I also won't be surprised to see if Gemstar's ad revenue grows in fits and starts and more fits and restarts. I won't be disappointed if it doesn't grow in a linear fashion the way Yahoo!'s and AOL's has grown. That's because eventually Gemstar will be helping to bring in a new age of highly targeted advertising. Consumers need to get used to it and advertisers need to get used to how to use it effectively. And Gemstar will need to gradually learn how to charge for it. That's a three-way combination of inventing how to sell the wheel in the rapidly approaching new era of targeted advertising that will eventually replace healthy sums of blanket advertising.

Gemstar's real strength is rooted in the IPG for two reasons. The first is that control over the IPG value chain will be immense if everything plays out as I suspect. The second is that, though the ad revenue is what really excites me, ya can't have an ad if ya don't sell the IPG on which the advertising real estate is found.

--Mike Buckley
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