Hello fellow Macrovision followers:
Having worked at Macrovision for 2 years, I can give some insight on
the company.
Macrovision generates 95% of their revenue from a single process
which is applied to VHS tapes. This process adds some signals to the
video format, which on play back will interfere with the VHS record
function, but normally does not interfere with television viewing.
Hence, it allows tapes to be somewhat copy protected from the casual
user with a VHS recorder.
Macrovision has a number of other copy protection businesses, one
DVD copy protection, is directly related to their VHS copy protection
process; and others are related to another scrambling process. These
other businesses generate a very small percent of revenue.
The VHS copy protection business has gross margins of around 93%,
very good; the process is patented, and they have no significant competition. They have net revenues of around 5 million/yr
from it; and total revenues of something less than 20 million/yr.
Macrovision's revenue for the forseeable future will be based solely
on the number of VHS consumer players in the market. The fewer
VHS players there are, the less valuable their pocess is to the
movie studios.
If DVD players take off to replace 30% of VHS players in homes, then
Macrovision revenue will fall steeply. If DVD players reach 15% of
user penetration and holds, then Macrovisions revenue will be at
a maximum. Why? Because the DVD consortium has adopted Macrovision
VHS copy protection as part of the DVD standard, and DVD player
machines will place the Macrovision process in the video output signal
to prevent VHS copies of the DVD content. Whenever a DVD disc includes copy protection, the consortium allows Macrovision to collect a penny or two.
Recently Hambrecht issued a strong buy for Macrovision, but this
buy signal was probably more related to Hambrecht's desire to sell
Macrovision stock and earn your money. |
