Wed, Sep 06, 2000 - Page 17 News List

GigaMedia, Yahoo ink deal

INTERNET The Taiwan broadband Internet service provider has signed an agreement with Yahoo, paving the way for their cooperation in providing CDs, movies, documentaries, audio books and music concerts online

By Dan Nystedt  /  STAFF REPORTER

GigaMedia (和信超媒體), the nation's top provider of high speed broadband Internet access and Yahoo agreed to establish and develop a broadband Web site in Taiwan featuring multimedia entertainment content available only to GigaMedia subscribers at www.gigigaga.com.

The new site will make use of Yahoo's existing broadband services, including programs from over 500 radio stations, 65 television stations and cable networks, CDs, movies, documentaries, audio books and music concerts.

The companies will also work to develop corporate broadband services such as Webcast press conferences, trade shows, stockholder meetings, training sessions and distance learning.

"This cooperation with Yahoo offers our subscribers more broadband content choices, which we expect to further drive up our subscriber growth," said GigaMedia CEO, Raymond Chang (張瑞展).

He said the two companies would finalize a revenue sharing agreement for the Web site at a later date and, further, he expects the company to reach its goal of 200,000 subscribers by the end of 2001, despite having around 35,000 currently.

Koo's Group (和信集團) Chairman Chester Koo (辜啟允), said the agreement between Gigamedia, a member of the Koo's Group, and Yahoo represented his company's clear commitment to expand its online presence.

He said the broadband agreement would position the group for the next generation of Internet use, high speed multimedia services, while the group's mobile phone service provider, KG Telecom (和信電), would continue making headway into wireless Web services. KG Telecom announced the opening of its GPRS mobile Internet service yesterday at a separate press conference.

But one analyst who requested anonymity said GigaMedia might have been forced into an "unfavorable" revenue sharing agreement with Yahoo due to fallout from the NASDAQ dotcom stock implosion that sent GigaMedia's share price from an opening day high of US$88 -- a market valuation of US$4.5 billion at the time -- down to around US$10 per share today.

With the value of the stock beaten down, GigaMedia had to negotiate from a weak position, he said.

Goldman Sachs analyst Rajeev Gupta, however, brushed aside such comments, calling the deal "nothing other than positive for GigaMedia" because of the involvement of Internet powerhouse Yahoo.

"Yahoo brings with it international recognition and high quality broadband sites and services," said Gupta. "They already provide content to [Yahoo subsidiary] Broadcast.com."

He pointed out that Yahoo has both broadband content -- a database of movies and music -- and the necessary equipment to deliver the product. The partnership with GigaMedia opens Yahoo to a Taiwanese audience, as GigaMedia has the ability to provide broadband Internet services to over 70 percent of Taiwan through an existing infrastructure of cable TV lines.

The popularity of broadband Internet has grown quickly across Asia, according to Gupta, principally in places where the price for service is very low. "In Korea, broadband adoption is very very strong, and why? Because prices are very low, so people adopt the service," he said.

He said GigaMedia's plan is to draw new subscribers by offering high quality broadband content and services, instead of lowering prices. It is a business plan he calls "very smart."

Lower priced broadband services might, however, be forthcoming with the addition of three new fixed-line telecommunications companies next year. In a bid to encourage competition in the local telecom market, the government sold three new licenses last year.

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