Sony Corp has extended its license with consumer electronics application developer Gemstar International Group Ltd, and is upping the per unit fee paid for VCR Plus by 30% as part of a seven year extended license agreement. Gemstar demonstrates the value of patenting a simple algorithm, VCR Plus, which enables consumers to program video recorders with a single numerical sequence. The company launched the system in 1990, and now licenses it to 45 consumer electronics manufactures worldwide – giving it a monopoly in the small market. Now Gemstar is developing other systems such as electronic program guides for TV’s and digital set-top boxes on the back of revenues from consumer electronics manufacturers. Gemstar was named hot stock at the Hambrecht & Quist 1998 technology conference, due nearly entirely the value of holding a software monopoly, in the fourth quarter ended March 31 was $42m and net income was $19.5m. H&Q predicts that Gemstar earnings will jump 46% next year.
