Jeff, my pick is IATV
May 07, 1999
Daniel Henderson is an individual investor and an Internet Financial Connection reader. He provides the following commentary on ACTV (IATV 14 3/8). Below is his write up.
With the stockmarket seeming a little out of control, whether on the upside or the downside, as seen by the recent tech selloff. It's nice to find a company that holds all of the optimistic hopes people are giving the .com companies, as well as a realistic chance to become the next Microsoft. I say a realistic chance because this is a speculative stock, and from the very nature of the name it is mere speculation that this company will become extremely profitable. The company I am talking about is ACTV (NASDAQ: IATV).
These guys are on the frontline of Internet TV convergence. They have the backing of John Malone's Liberty Media, which currently owns 5% of the company with an option to extend that to 25% in the next 5 years. They are also backed by General Instruments, Oracle, Sun Microsystems, AT & T, soon to be renamed Ma Cable, as well as Billionaire media mogul Rupert Murdoch.
For me, finding a stock I feel comfortable investing in is a process, as it should be for all investors. I look for a company that has a product that has great potential to create revenue. ACTV wants to be "the" software you use in all of your TV/Internet applications. Forget WebTV, that technology is ancient. What ACTV wants to do, with the help of their 13 patents on Internet convergence, is make surfing the web and watching TV a synonymous activity.
Let me give you three examples:
Gameshows: You're watching Jeopardy, you meet the contestants as they are introduced, Alex makes a little idle chatter and the game is off. You pull your wireless keyboard to your lap as contestant one picks a category, the question is given and contestants one, two and three race to hit the buzzer first to answer the question, in the form of a question of course. At the same time home viewers type furiously to be the first to pose their answer. All while racing against millions of other ACTV viewers to attain a separate prize for the home viewers, a prize being offered by a paid ACTV sponsor. This sponsor is also just one click of a keypad from sending you to their homepage. With each question asked, remember there are tons of question in Jeopardy, a new sponsor offers a prize. Viewers compete but they also digest the names of the sponsors, promoting brand awareness. Let's say only a third of the viewers go to the sponsor's homepage, but imagine how many more hits this would generate for the sponsor. And as with the Internet now, TV convergence will be all about the number of hits each advertisement produces. Revenue, revenue, revenue.
In essence this is a push technology
Sporting Events: Imagine watching a football game, lets say next year's Raiders/Minnesota game, where the hype is already starting to spread about the Charles Woodson/Randy Moss showdown. Well, through a traditional broadcast you would follow the game, being led around by the camera crew and the producers of the game. But with ACTV's patented Individualized TV you'll be able to zoom that camera in to follow the Woodson/Moss showdown every step of the way. And if you miss the big play because you're watching Moss fake like he's going to receive a pass while at the same time Minnesota's runningback Robert Smith breaks it down the sideline for a screaming touchdown, no problem. Just pick up the ACTV remote and rewind, pick the camera angle you want and watch the replay as many times as you want, all during a live broadcast. Regardless if the network you are watching wants to replay it or not. With each replay a sponsor's name appears, with each camera angle another sponsor. Perhaps a sleeper defensive player catches Smith right before he crosses into the endzone and you don't recognize his name. Using the ACTV remote again you pull up the players name, statistics, where he is from and perhaps even his favorite hobby. Throughout it all you are receiving individualized advertisements geared for not just generic pro football fans, but pro football fans of either the Raiders or the Vikings based on the sex, income and age of the viewer. Again let me repeat the mantra: Revenue, revenue, revenue.
Television Shows: Let's say you're watching Buffy the Vampire Slayer and you hear a great song but don't know who performs it. Just as you ponder running to your computer to look it up, an advertisement for the band performing the song appears at the bottom of your screen. This is an example of what ACTV's patented Hyper TV allows. In essence this is a push technology, where advertisers can push advertisements from the Internet onto your screen. Coupled with ACTV's patented Wolzien Process, which is a pull technology created by Media Analyst Tom Wolzien, where viewers can pull information from the internet onto their screen, there is a lot of room for you guessed it, revenue. Simply put lets say CDNow (Nasdaq: CDNW), a popular online music vendor, pushes their advertisement to the viewer concerning the band they just heard on Buffy. With pull technology the viewer can now click the advertisement pulling them to the webpage allowing them to make an online transaction to buy the music CD. All from the comfort of their own home.
With this being said it is hard not to say that ACTV's future is golden. With AT & T's forthcoming purchase of Media One, the world's largest broadband communication company, ACTV's future seems even more promising, because through AT & T's support of ACTV and the acquisition of Media One this gives ACTV even more cable subscribers to offer their software. In the end it is up to the rational investor to do their own due diligence on the company and come to their own conclusion. Whatever the choice remember this is a long term company, don't expect record breaking revenues next week, or even next year. Good luck to all.
(There is a thread that discusses IATV on SI. Click here to go there.)
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