Tuesday, April 17, 2007

Back To The Future...Valuation

With MIPTV and NAB both happening at the same time it's fun trying to keep up with the hype as major companies try to outdo each other.

It all reminds me of 1999 in the dotcom era. The same idiotic media coverage, the same bunch of jonny-come-latelies lying their way into clients' hearts and minds and startups with their smoke and mirrors. The same hype all around. And the same spate of announcements about non-existent or repackaged technologies that make the major companies look as if they're really addressed this market (almost without exception, they haven't) and the minor companies as they have a piece of a market they neither know, understand or have experience of.

The only thing that isn't there is market valuation. Narrowstep (especially, disclosure: unfortunately for me) and Roo, the only listed companies, continue to be grossly undervalued against some of the private deals going through (albeit reasonably valued, perhaps, against utilities...). Albeit the media companies such as Jump TV have done OK.

Investors are far more cautious than they once were, but could their caution may be misplaced?

The reality surely is that value is out there for the handful of companies that have established a reputation in this market. RTL announced today they were on the acquisitions trail and there is a total dearth of companies that are worth buying. Akamai and Comcast have already made their moves with Nine Systems and theplatform. Sony has bought some dogs with TVTV and Grouper. News International have put a toe into the water with Roo and Brightcove are in comfortable company with Hearst and IAC.

I have to ask what Cisco are going to do - they have great technology in this area, but, as ever, they're weak on deliverables since they have no real software systems capabilities in the video market.

And what about all the other major telcos ? AT&T, BT and Swisscom are clearly buying third party technologies from Microsoft. Indeed, the current strategy seems to be to buy in. So, is it worth acquiring, growing your own, or just buying in? Adding a video to a website is easy and cheap. Deploying an IPTV solution is relatively easy and expensive. Deploying video across multiple platforms supporting dynamic business models such as advertising (let's even say dynamic advertising), PPV, VOD, subscription, ecommerce, etc... is a lot tougher. Especially with TV quality content.

In fact, I'd estimate that Narrowstep is the only company in the world that can do this since theplatform were sold to Comcast. Surely that's worth something ? (Full disclosure: I am a major shareholder in Narrowstep Inc - NRWS).

1 comment:

Amit Chokshi said...

I believe NRWS is grossly undervalued as well Iolo but the market is probably focused on the massive insider selling which has occured at NRWS through the 424s. I am a shareholder and am disappointed that insiders have decided to sell significant parts of their holdings recently close to NRWS all time lows.