Google, I know you’re so busy with everyone offering you a nice Googlish girl to bring home to Mountain View. Rumors have swirled about matches with DoubleClick, Omniture, and even little Riya. But Google, have I got a match for you! She’s a little old for your tastes, but she loves watching television. I hear you’ve been watching a lot of TV too lately, haven’t you?
I’ve been wondering about Gemstar-TV Guide International as a potential match for Google since the news broke about TVGuide.com launching its own video search tool, dubbed Project Stingray, which will index clips and full-length videos from TV, movie, and entertainment sites, and then use editors to help organize it. This new incarnation of the TV Guide brand might just be a shot at one more revenue stream, or it might have something much bigger in mind.
Gemstar, a “global media and technology company,” had a wild ride during the dot-com boom, with its share price reaching nearly $100 in 2000 (by comparison, that’s far higher than levels reached by Sun Microsystems and Cisco, and only slightly lower than Yahoo’s peak); Gemstar has traded at under $5 for the past two years. Its $1.8 billion market capitalization is a shade lower than DoubleClick’s reported $2 billion valuation, and right in line with what a certain company paid for YouTube.
TV Guide’s brand extends to magazines, a Web site, and interactive program guides (IPGs). Its main competition on the web is Yahoo TV, which signed a deal to license Gemstar-TV Guide’s IPGs in September 2006. According to Quantcast traffic data, TVGuide.com attracts 1.9 million visitors a month (ranked 665 of all sites) to TV.Yahoo.com’s 3.3 million visitors (ranked 300, if it was its own site rather than a subdomain). Zap2it attracts nearly 1 million visitors monthly, ranking 1,536.
Now TVGuide.com aims to cut through the clutter of consumer-generated media and organize high quality online video. TV Guide will monetize the searches, but it won’t serve up any video itself. According to Multichannel News, Project Stingray indexed 72,000 clips as of last week, compared to Google Video’s index of 26.7 million.
Looking at the pieces together, you’ve got a media and technology company that’s expanding its online presence by developing new ways to index and categorize online video content. If only there was a technology company continually denying it’s also a media company that’s salivating over online video.
Why Google Needs Gemstar
Of Gemstar-TV Guide’s $571 million in revenues in 2006, $115 million came from TV Guide Interactive -- which licenses its IPGs to cable and satellite providers -- and $107 million came from its Consumer Electronics business that licenses IPGs to others. This $222 million wouldn’t be a major revenue stream for Google; the more than $300 million from the TV Guide Channel, TVG Network, and TV Guide magazine is a bit more enticing.
Yet consider how Gemstar packages its TV Guide Data Solutions: “TV Guide Data Solutions, the premier provider of television guidance information data, servicing more that 100 million customers per week in print, on-screen, through IPG and EPG Guides, as well as online products. We offer comprehensive, accurate entertainment information to all types of media and business customers.” That’s a foothold in the television world Google doesn’t have yet. It brings to mind all the speculation, fueled largely in 2005, that Google or Yahoo would buy TiVo. John Fortt wrote a post on Business 2.0’s blog network in December that Google should buy TiVo, practically give away the service, and use it to get more mileage out of both its ad targeting and YouTube.
TiVo, with its narrower business focus, seems like an easier fit for the Googleplex. Yet Gemstar, with all of $10 million in revenue last year from TV Guide Online, might be more open to reinventing itself.
Would Google acquire Gemstar-TV Guide? Probably not. Should Google? Even that’s a maybe. But “TV Guide – powered by Google” does have a nice ring to it, to the point where it almost feels inevitable.
And Google, really, this one’s special. She won’t go home to just anyone who makes an offer, unlike some of those others you’ve been spotted inviting to Mountain View. To get a catch like this, you should be so lucky.