SIGNUPABOUTBW_CONTENTSBW_+!DAILY_BRIEFINGSEARCHCONTACT_US


Return to main story


POINTCAST: A PIONEER ON TREACHEROUS GROUND

With Internet fever cooling among investors, the euphoric performance of browser pioneer Netscape Communications Corp. at its initial public stock offering is now a faint memory. It's understandable, then, that plenty of investors are licking their chops waiting for an IPO from PointCast Inc., the pioneer of Webcasting.

This phenom, however, will find it tough to match Netscape. The advertisers and media companies that are critical to the startup's success are providing mixed reviews. And a fast-moving pack of rivals is already plotting to outflank PointCast. Says Nova Spivack, executive vice-president for EarthWeb, a New York Web-site developer testing rival technologies: ''The barbarians are at the gate.''

Even though stock analysts say it's not yet profitable, the 5-year-old company is expected to go public as early as May. Analysts had been expecting the offering as early as last year, but the IPO market soured, and a hefty private placement last summer made an IPO unnecessary. And PointCast officials say they want to hire a chief financial officer before going to market. Whatever the timing, the company has a big stake to redeem: $48 million to date from venture capitalists, publishing partners such as Times Mirror and Knight-Ridder, and technology companies like Compaq Computer and Adobe Systems. Netscape had raised only $36 million at the same stage.

''WE'RE THE FIRST.'' To provide its investors with a big return, the Santa Clara (Calif.) company will have to keep up its momentum. Last year, some 1.7 million people downloaded the free software for receiving customized news and entertainment via a personal-computer screen saver. And Chief Executive Christopher R. Hassett, 34, an engineer who formerly worked at Adobe Systems Inc. and Digital Equipment Corp., is pushing an ambitious strategy. ''We are defining a new medium,'' he says. ''We're the first broadcast network on the Internet.''

Advertising sales, PointCast's main source of revenue, are growing fast. In January, the company boasted four dozen advertisers, double the number it had four months earlier. Each pays $10,000 to $50,000--up to five times more than a year ago--for 30-second ads running all month. PointCast also shares revenues from two dozen more companies advertising on PointCast ''channels'' run by Cable News Network, CMP Publications Inc., and others. All told, PointCast had $3 million in fourth-quarter ad sales.

Moreover, an agreement in December with Microsoft Corp. could vastly expand the number of PointCast's viewers--and its appeal to advertisers. Microsoft will distribute PointCast software with every copy of Windows and give the PointCast Network a prominent place on the forthcoming Windows 97 desktop.

The competition is shying away from building a network--and that could give them an edge. Most provide just software and help companies create their own Web ''channels.'' This may appeal to companies that are wary of letting PointCast take in the ad money for what they see as their audience. The Weather Channel is trying BackWeb Technologies, NETdelivery, and IFusion Com, but not PointCast. Netscape is incorporating Webcasting features from another software-only company, Marimba Inc., into its software. Says Marc L. Andreessen, Netscape senior vice-president for technology: ''PointCast is going to get squeezed completely out of existence.''

Nonsense, retorts Hassett, who says no media company has jumped ship yet. But the deciding vote will be cast by advertisers. When Sharper Image, an upscale catalog retailer, signed up for the PointCast service, it got a response that is typical of many PointCast partners. Joshua Tretakoff, manager of alternative media, says people who viewed the 30-second animated ads bought products 10 times more often than other consumers. But Tretakoff pulled the ads anyway. Even though the Webcasting audience is growing fast, ''there's too few people on the Web,'' he says. For PointCast, prime time may be a while in coming.

By Robert D. Hof in San Mateo, Calif.


Return to main story


SIGNUPABOUTBW_CONTENTSBW_+!DAILY_BRIEFINGSEARCHCONTACT_US


Updated June 15, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.
Terms of Use