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Technology Stocks : MACROVISION -- Ignore unavailable to you. Want to Upgrade?

To: Matt who wrote (41)	4/7/1998 12:22:00 AM
From: A.J. Mullen	Read Replies (1) \| Respond to of 201

Matt, thanks for the warning preface to your last post. I'm more interested in your first post. Why do you say that MVSN maxes its profits at 15% penetration of DVD because they earn a fixed sum for every protected DVD sold. Is that not also true for every protected VHS tape sold? If so, the either MVSN makes more from a VHS tape, or from a DVD. In the first case, MVSN is better off if DVD flops, and in the second case, the faster DVD replaces tape the better. My second question is technical. I understand the concept behind VHS is to introduce small errors to the recording that are unnoticeable in one pass, but on repeated passes they become intolerable. To do this, the errors have to be such that they multiply. I thought for VHS tapes, the process exploited some quirk in the design of the recorders. I doubt that route is open in digital recorders. They could have been designed explicitly to introduce such errors, but if they were, then there would be no patents available to MVSN. If the recorders were all designed to do this, then this would have been part of the agreement b/n the leading players to bring Hollywood, etc. along and the coding would be open to all selling original recorded material. MVSN sells protection to Murdock's BSky satellite broadcast system in the UK. This can be 'ordinary cryptography.' Is it? Thanks - AJ>

To: Matt who wrote (41)	4/13/1998 11:48:00 AM
From: lindend	Respond to of 201

>>but be forewarned that I am an ex-employee>> Thanks for this warning. However, my main question is are your objective? All companies have problems, but one must determine if they are true, if they are isolated, or if they are pervasive. >>Anyway, this company is overstaffed by about 50%>> What do you mean by overstaffed? If they are working in divisions that aren't currently making money, but are expected to in the future, then this is actually prudent. I would be bailing out of this stock if they were cash cowing it, staffing only for the analog business and not looking for expansion. >>This company missed the DVX standard>> What is this? Do you mean DiVX? If so, there is CONSIDERABLE debate about whether this technology will be successful. Even if it is, MVSN actually gets higher revenue per DiVX than OpenDVD, so its a win-win. >>Now the company is having to spend close to 4 million to gain technology licenses and patents that allow it to create the equivalent of a DVX standard for copy protected deployment of video disk in special venues.>> You are assuming a zero-sum game. IMHO, OpenDVD will be where the real volumes are, and OpenDVDis designed by a consortium which uses the Copy Protection Technical Working Group(CPTWG) to determine digital/analog copy protection. The CPTWG picked MVSN analog protection in the first rev, and is evaluating MVSN and other digital watermarking technologies in the 2nd round, so how have they missed the boat on this one? BTW, CPTWG is bigger than just DVD. If MVSN technology is chosen, it will apply to all digital media. >>This company values patents above all else, yet none of their business managers (aside from VHS copy protection) understood the patents system, or how to search for patents related to a particular business model. As a result, patent searches went through the patent attorney, who (aside from VHS copy protection) had to perform patent searches against business models that he was not familiar with.>> I would guess that 99.9999% of managers in all companies can't search for patents and depend on patent lawyers to do this for them (at least this is my experience with many big/mid-sized high tech companies). Now the real issue this the quality of the patent lawyers, which I can't comment on without inside info which you seem to have.