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Holiday DVD Sales Spur Macrovision Earnings

28 Feb, 2005 By: Erik Gruenwedel

Strong volume DVD sales — including previously viewed material — during the holidays helped Macrovision post fourth quarter (ended Dec. 31, 2004) earnings of $15.8 million, or 31 cents per diluted share, compared to $7.9 million, or 16 cents per share, during the same period last year.

Revenue for the Santa Clara, Calif.-based digital rights management software manufacturer was $59.5 million, compared to $39.8 million the prior year.

DVD copy-protection software accounted for 61 percent of the company's $182 million 2004 revenue.

“For the fourth quarter, we continue to see our DVD copy protection as the dominant part of our video business,” said Bill Krepick, president and CEO, in a call with investors.

In the quarter, Macrovision negotiated multiyear contracts with Universal Studio Home Entertainment and HBO Home Video for full copy protection of their DVD and VHS products.

That said, Krepick admitted two significant DVD holiday releases were not protected by Macrovision technology.

He said increased threats from ripper software and file sharing have resulted in some studios opting away from Macrovision's conventional analog protection software, which impacted negatively on average royalties.

He said the company is supporting in-house trials with a number of studio customers regarding recently introduced RipGuard [anti-ripping DVD] and Hawkeye [anti-file sharing] services.

“We are taking a conservative view of our [copy-protection software opportunities] in 2005,” Krepick said. “We believe RipGuard and Hawkeye will gain traction slowly in the first half of the year.”

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