Gemstar, Wink Form ITV Link
Gemstar-TV Guide International plans to integrate Wink Communications’ interactive services onto a digital set-top box running its interactive programming guide in the second half of this year, a deal that will significantly strengthen both parties if cable operators use the two together.
The agreement, to be announced today, will integrate Wink’s interactive services with Gemstar’s IPG on Motorola/General Instruments’ DCT 2000 set-top box, which currently can’t run both interactive applications. The deal allows Gemstar to offer such interactive services as t-commerce and could give Wink access to a huge group of potential new viewers. As the predominant IPG, Gemstar reaches 6 million digital subscribers to date.
“Gemstar gets some cool stuff finally, and Wink gets to burst into the mainstream,” says Keith Kennebeck, an analyst at consulting and research firm The Strategis Group. Each company needs the other to improve and succeed, he adds.
While the deal will remove existing blocks to running Wink simultaneously with Gemstar’s IPG, it ultimately falls into the cable operators’ lap as to whether they want Wink at all.
Gemstar’s contracts with operators will remain the same, a Gemstar source explains. The deal just allows cable operators to use Wink along with Gemstar’s IPG if they so desire.
If cable operators choose to do so, Wink will “immediately gain access to several million digital cable households representing the lion’s share of the digital cable television market,” says Maggie Wilderotter, Wink’s president/CEO. “This agreement is a watershed event for Wink.”
Wilderotter’s right. IPGs are the one interactive source that a majority of digital cable users or direct broadcast satellite consumers use the most, according to a study released by the Cable & Telecommunications Association for Marketing.
Cable operators, however, still need to sign contracts, Gruntal & Co. equity analyst Catherine Skelly points out.
“It’s not like Wink is going to be embedded into 6 million set-tops,” she says. “These kind of ITV announcements are made all the time. I think they call them Barney agreements, where interactive companies say `We love you, and you love us. So let’s all work together.”‘
She says the announcement is positive overall, “but it’s not necessarily going to change any [earnings] estimates.”
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