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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: wopr1 who wrote (22629)	4/13/2000 1:44:00 AM
From: Mike Buckley	Respond to of 54805

wopr, Looks like the writers are expecting one heck of a class 5 tornado to hit sometime in the future to arrive at a 100% average over 5 years. Does that seems right? You probably haven't read the highly detailed reports I've read showing how some analysts have arrived at their projections. The driving force of the expectations is massively increasing advertising and e-commerce revenue that will drive profit margins much, much higher over the years. Further, it seems that the business model they use turns "our" version on its head. It was my understanding that "we" were focusing on the proprietary EPG tech as the main source of $$, and the Godzilla ads were just the icing on the cake. Everybody needs to arrive at their own conclusion, but everyone I'm in touch with who has really studied the potential sources of revenue and their respective margins feels that the proprietary EPG is the "lock" that ensures the much more profitable revenue derived from e-commerce and advertising. In this folder we focus on the EPG because that is the source of revenue directly related to the Gorilla in Gemstar, but the real money will be made in Gemstar the Godzilla in my opinion. There's some guy named Stew who tends to occasionally drop by who to the best of my understanding shares that opinion with me. Over the years we've had our enjoyable disagreements regarding Gemstar, but not on that particular point. :) --Mike Buckley

To: wopr1 who wrote (22629)	4/13/2000 5:11:00 AM
From: NY Stew	Respond to of 54805

wopr1, Further, it seems that the business model they use turns "our" version on its head. It was my understanding that "we" were focusing on the proprietary EPG tech as the main source of $$, and the Godzilla ads were just the icing on the cake. I believe that the point being made by Alan Gould of GKM is that the advertising revenue alone will be substantial. MS pays a one time ~$9 per unit royalty fee (no unit fee for Win98 or upgraded Windows versions) and AOL will pay Gemstar a monthly sub fee of between $5-$10 annualized for AOL TV. Other box and TV makers pay somewheres between $5-$20 per unit depending upon it being analog/digital and the recurring revenue splits. These fees are not insignificant but vary depending upon the needs of the licensee as negotiated. Americast, for example, does not pay a unit royalty but yields Gemstar 80-90% of the recurring revenues. Regards Stew