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January 26, 1999 RECOMMENDATION:BUY Agreement Ensures Access to Virtually 100% of US Cable Subscribers
Recent Developments ACTV, Inc. ("ACTV") and Scientific-Atlanta, Inc. ("SA") announced today that an agreement had been reached whereby ACTV digital programming technology would be available on SA's Explorer( 2000 advanced digital set-top boxes. We believe this is a very significant corporate milestone for ACTV, as it represents validation of ACTV's technology by a second leading producer of digital set-top cable boxes (ACTV has an agreement with General Instrument, the other major manufacturer), and ensures access to ACTV software technology in virtually the entire US cable subscriber base. We reiterate our BUY recommendation on ACTV common stock by investors tolerant of the risks associated with micro-cap and small-cap equity investments. Digital Set-top Box Market in the US: SA and General Instrument ("GI"), with which ACTV already has a similar agreement, currently represent 100% of the US digital set-top box market. Although we expect others to eventually offer digital set-top boxes, we believe SA and GI will dominate the market for the foreseeable future. SA has received purchase orders or commitments for the Explorer 2000 product from 14 cable operators representing more than 16 million cable subscribers, including TimeWarner, Cox, Comcast, Aldephia, Rogers and Videotron. SA is aggressively marketing its Explorer 2000 digital boxes, and we refer the reader to SA's corporate website at www.SciAtl.com for a series of recent announcement pertaining to deployment of the Explorer 2000. ACTV/SA Agreement: SA has established the CreativEdge( program to encourage third-parties to develop applications that work on the Explorer platform. ACTV engineers will work with SA staff to port the ACTV software technology to the Explorer platform. ACTV's patented programming technology will be integrated into the Explorer platform, and will be made available both on new installations of the Explorer 2000, and be downloadable to the Explorer 2000 installed base. ACTV Background: ACTV, Inc. ("ACTV") is developing innovative,
patented software technology, and managing relationships with leading
programming and distribution entities, that we feel position the Company
to capitalize on the opportunities arising from the convergence of the
Internet and digital cable TV -- the broadband cable infrastructure.
The first application of Individualized Television is the sports
entertainment market, and the first application of HyperTV is the
on-line education market. As the cable operators deploy the next generation
of digital cable boxes throughout their networks, the Internet and broadband
cable infrastructures will converge, as will the potential applications
of ACTV's technologies. We believe the potential applications for Individualized
Television and HyperTV are very broad, and include interactive
advertising, electronic commerce and a host of enhanced, interactive entertainment
programming. Companies like General Instrument and Scientific-Atlanta are adding manufacturing capacity to produce digital cable boxes as fast as possible. Cable companies like TCI, Cox and Comcast are rushing to deploy these digital cable boxes throughout their cable networks. AT&T is acquiring TCI to gain access to TCI's broadband cable distribution into homes (incidentally, this ensures the upgrading of TCI cable network to fully digital, which, in turn, will force other cable operators to upgrade their systems). And AOL is spending time and money in Washington, D.C. to make sure they have equal access to that broad cable infrastructure. What's it all about? We believe these companies, and others, are jockeying to get ownership, control or access to the cable entering your home. As the infrastructure is deployed, companies will offer a wide range of products, services and programming through that cable, including Internet access, telephony, and enriched entertainment programming. This latter category, the enriched entertainment programming, will include interactivity with the television, combined video and Internet information, viewer-defined programming and advertising, and virtual environments for learning and shopping. Question: With respect to the question of HDTV, or higher-definition television, are you going to watch more TV because the picture is bigger, or "more blue," or a bit clearer? We don't think so. Question: Are you going to watch more TV because the broadband cable network provides for "multi-casting," or the ability to bombard the homes with 500 channels instead of 60? Again, we don't think multi-casting represents the real value in the broadband cable infrastructure. Answer: We believe the real value in the broadband cable infrastructure -- value for viewers, programmers, distribution companies and advertisers -- will be in the provision of enriched home entertainment programming and services. ACTV has cleverly positioned itself to capitalize on these trends, with unique patented software technologies, content and tools for programmers and educators, and with strategic alliances and partners who stand to gain economically from the deployment of ACTV's technology. I) Proprietary, Enabling Software Technology -- Individualized Television and HyperTV
II) World Class Corporate Alliances and Customers
III) Compelling Valuation -- Follow the Smart Money
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