Seeking Alpha

SECFilings.com's  Instablog

SECFilings.com
Send Message
SECFilings.com is a provider of SEC filings alerts and analysis, with a focus on insider transactions, hedge fund transactions, quarterly and annual reports.
My company:
SECFilings.com
My blog:
SECFilings.com
  • Why And How Guitammer Could Become The Next TiVo 0 comments
    Aug 1, 2013 11:12 AM | about stocks: GTMM, TIVO, DTV

    The late 1990s may be remembered by investors largely for its many Internet busts, but one technology unveiled at the 1999 Consumer Electronics Show has changed the way we've viewed television ever since. TiVo Inc. (NASDAQ: TIVO) unveiled its first working prototype that recorded live television and enabled users to access content on-demand. After shipping its first units in March, the company went public in September and the rest is history.

    Currently, TiVo's $1.4 billion market capitalization is driven primarily by partnerships with broadcasters like DIRECTV (NASDAQ: DTV) and Comcast Corporation (NASDAQ: CMCSA). While TiVo-owned subscriptions have been in decline, partner subscriptions have been steadily rising, accounting for a growing portion of the company's revenues. It's these partnerships with broadcasters that investors should pay closest attention to moving forward.

    TiVo's secret in attracting these broadcasters was its ability to offer differentiation and its existing installed base. Broadcasters incorporating its technology could offer consumers a unique feature not found with other television providers - a feature that many even encourage some of them to switch providers. And in the highly competitive broadcast industry, these features can mean the difference between success and failure.

    Guitammer's Broadcast Opportunity

    The Guitammer Co. (OTCBB: GTMM) is a burgeoning provider of low frequency audio transducers that add physical sensations to media broadcasts. Its Buttkicker® technology has already been installed in over 10,000 theater seats worldwide, while its Buttkicker Live!® broadcasting technology is currently being tested by several companies. And it's this potential with broadcasters that investors should carefully watch moving forward.

    According to its latest 10-Q filing:

    In 2012, field testing of our patented "ButtKicker Live!" broadcast technology took place in the first and second quarters of the year with a professional sports team. In 2013, the field testing of our patented "ButtKicker Live!" broadcast technology is beginning in the second quarter with a professional sports team.

    With TiVO's success in providing a differentiating technology for broadcasters, investors can draw many parallels to Guitammer's technology. The company's Buttkicker® is already being sold into home markets, where it's used for both gaming and home theater applications. Meanwhile, theater installations have provided a solid base of revenues and serve as an introduction to the technology for the thousands of moviegoers that experience it daily.

    Reception among consumers has been very favorable, with retailers like Amazon.com showing four- and five-star reviews for the technology. Companies like DIRECTV and Comcast may therefore begin looking at the technology as a way to differentiate their offerings from competitors. In particular, the technology could be used to add a "fourth dimension" to live sports broadcasts, giving consumers the ability to feel the rumble of the race cars or the crunch of every tackle.

    Limited Competition from Generics

    TiVo's major downfall was the adoption of generic digital video recorders ("DVRs") that provide similar services at a much cheaper price. Guitammer avoids these problems with its patent on reproducing and applying haptic vibrations in live broadcasts. In fact, generic hardware producers would be a welcome addition to the market, as they would help expand distribution of "4D" equipment at a much faster rate than the company could do on its own.

    According to the patent's abstract, it broadly covers:

    Method and apparatus for reproducing and applying reproductions of haptic vibrations that occur at a live activity to a remote video and audio viewer. In synchronism with sensing visible and audible stimuli to generate video and audio signals representing the video and audio at the activity, haptic vibrations of an object at the activity are sensed and converted to haptic vibration signals.

    The result is a potential long-term transition from a hardware technology company to a licensing company with higher profit margins and recurring revenues. Broadcasters would simply pay a licensing fee in order to utilize the haptic vibrations within their live broadcasts, while the company would collect and benefit from recurring revenues over time. Hardware sales would become secondary, as a way to enter into niche markets like gaming or theaters.

    Investment Opportunity

    Guitammer represents an attractive investment opportunity, with its market capitalization of just over $10 million. Given its existing theater installations, warm reception among users, and potential in the broadcasting market, investors would be wise to keep an eye on the stock over the coming quarters and years. A single broadcaster signing on could encourage others to do the same to remain competitive, while the firm could also make an attractive acquisition target.

    For more information, see the following resources:

    1. Company Website
    2. Investor Presentation
    3. Recent SEC Filings

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: TDM Financial is a marketing and consulting firm that specializes in creating ongoing communications strategies for public and private companies. For full disclosure please visit: secfilings.com/Disclaimer.aspx

    Themes: entertainment, television, sports Stocks: GTMM, TIVO, DTV
Back To SECFilings.com's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.