The Microcap Speculator submits: Mobile video is hot, and is expected to explode over the next 12-18 months. For the past month I have considered ways to play this trend, focusing mainly on licensors of wireless video streaming technology like On2 Technologies (ticker: ONT) and NeoMagic Corp. (ticker: NMGC), as well as communications chip companies.
Perhaps I was looking in the wrong place. Rather than bet on competing technologies, why not pursue the one industry that emerges a winner with every technological advance? That's right: pornography. Cable TV, satellite, VCR's, internet, broadband, you name it, the porn industry excels at using technology to separate perverts from their money. Porn operators now have their sights set on mobile video and if history is any guide they will be wildly successful.
The obvious pick in this arena is Playboy (ticker: PLA), but I think a small Spanish company called Private Media Group (ticker: PRVT) is also interesting. On the surface, Private's numbers don't look all that hot. For the first 9 months of 2005, the company reported breakeven numbers. It also trades at a price/sales ratio that is well above what I like to see, but the company's prospects for the coming year seem much brighter. PRVT invested a lot of money last year into expanding its content library, which should drive future revenues.
More importantly, Private Media is positioning itself as a leader in XXX mobile content. The company intends to leverage its large European customer base into wireless sales, and just signed a partnership to deliver mobile video to the Asian market. I'm still investigating the stock, but so far PRVT looks like a good bet if the mobile video market explodes.
DISCLOSURE: I have no position in PRVT, PLA, ONT or NMGC. Not a recommendation to buy or sell any security. For informational and educational purposes only.
PRVT 1-Yr Price Performance: