SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report
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PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 17, 1998
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MACROVISION CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 000-22023 77-0156161
(State of jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
1341 Orleans Drive
Sunnyvale, California 94089
(408) 743-8600
(Address and Telephone Number of Principal Executive Offices)
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This report on Form 8-K, including all exhibits, contains 8 pages.
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ITEM 5. OTHER EVENTS
On February 17, 1998, the Registrant acquired 247,500 shares (approximately
19.8%) of the common stock of C-Dilla, Ltd., a UK company ("C-Dilla") for a
purchase price of 2,121,212 British Pounds (approximately $3,500,000). On
February 17, 1998, the Registrant also entered into a "Software Marketing
Licence and Development Agreement," (the "Agreement") under which it has
obtained, for an initial five-year term, the world-wide exclusive license to
market in the consumer multimedia software market C-Dilla's proprietary copy
protection technology for CD-ROM and internet-delivered software products. The
Registrant paid 606,060 British Pounds (approximately $1,000,000) in up-front
license fees subject to offset against future royalties and will pay royalty
payments to C-Dilla of between 30% to 45% of revenues from sales of software
products incorporating C-Dilla's technology. In the event that the Registrant
fails to reach minimum royalty levels of $2,000,000 in year three of the
Agreement, $5,000,000 in year four, and $10,000,000 in year five, the license
becomes a non-exclusive license for the term of the Agreement. Additionally, in
connection with C-Dilla's granting of licenses for certain of its products
outside of the markets for which the Registrant has been granted rights under
the Agreement, C-Dilla will pay to the Registrant royalties of between 7.5% to
30% of revenues from such licenses. The Registrant has the option to extend the
initial term of the Agreement for an additional five year period upon payment of
an option fee of $1,000,000 and an additional license fee of $5,000,000 which
fee may be paid through future increased royalty payments.
Under the terms of the Agreement, the Registrant also agreed to develop
jointly with C-Dilla certain other proprietary copy protection technologies for
CD-ROM, DVD-ROM and other digital delivery methods. A copy of the press release
issued by the Registrant on February 17, 1998, concerning the foregoing
transactions is filed herewith as Exhibit 20 and is incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Exhibits:
Exhibit Number Description of Document
20 Press Release of the Registrant, dated February 17, 1998,
announcing the Registrant's joint marketing and development
agreement with, and equity investment in, C-Dilla.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Macrovision Corporation:
Dated: March 3, 1998 By: /s/ Victor A. Viegas
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Vice President, Finance and Administration
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit Number Description of Document
20 Press Release of the Registrant, dated February 17,
1998, announcing the Registrant's joint marketing and
development agreement with, and equity investment in,
C-Dilla.
<PAGE>
EXHIBIT 20
Tuesday February 17, 4:32 pm Eastern Time
Company Press Release
Macrovision Expands Into Copy Protection for Computer
Software Through Joint Marketing and Development
Agreement with C-Dilla, Ltd.
SUNNYVALE, Calif.--(BUSINESS WIRE)--Feb. 17, 1998--Macrovision Corporation
(NASDAQ:MVSN - news) announced today a joint Marketing and Development Agreement
with C-Dilla, Ltd. of Woodley, UK, developers of copy protection technology for
CD-ROM and Internet-delivered software products.
The agreement allows Macrovision, the leader in video copy protection
technologies, to expand its intellectual property protection business to include
computer software. The agreement gives Macrovision exclusive worldwide marketing
rights to C-Dilla's products in the consumer multimedia software market. The two
companies intend to jointly develop and market copy protection technologies to
help content owners maximize unit sales of software product distributed on
CD-ROM, DVD-ROM, and other digital delivery methods, including the Internet. In
addition to the Marketing and Development Agreement, Macrovision is purchasing a
19.8% equity position in C-Dilla.
Macrovision's entry into this market coincides with the introduction of
inexpensive CD-recording products to the Personal Computer marketplace. These
products put software and games publishing companies at greater risk to
unauthorized copying than ever before. A CD-Recorder retailing for less than
$300 is capable of copying any CD-ROM onto a blank CD-R disc that costs less
than $2.00. In addition to the copying threat already posed by professional
pirates and software hackers, inexpensive CD-recording technology will allow a
PC owner with just basic computer skills to make replicas of any CD-ROM-based
application for the price of a blank disc.
Macrovision is partnering with C-Dilla to complete the development of a suite of
software copy protection products based on C-Dilla's proprietary technologies.
C-Dilla is in the process of final beta trials with selected CD-ROM publishers
and expects to complete those trials and introduce a product to market within 6
months.
"This agreement allows Macrovision to leverage over a decade of experience in
developing and marketing copy protection solutions to the home video industry.
The need for a good copy protection solution for the CD-ROM software market
presents a near-term market opportunity we are well-positioned to address, and
represents a logical expansion of our business domain," stated John Ryan,
Chairman and CEO of Macrovision."
"Infotech estimates that the current worldwide population of 167 million CD-ROM
drives will grow to a combined DVD-ROM and CD-ROM installed base of 378 million
by the year 2000. In the past Macrovision has been successful at developing and
introducing copy protection technologies to protect videos distributed on
cassettes, DVDs, and pay-per-view networks. By teaming with C-Dilla on both the
marketing and technical side, we will strive to repeat that success in the
multimedia software market."
Peter Newman, C-Dilla's CEO, commented that, "previous software copy protection
systems failed because they were either inconvenient for the user or were easily
circumvented, or both. C-Dilla's products employ proprietary authentication and
encryption technology that provide a high level of security against illicit
replication but most importantly do not interfere with the end user's enjoyment
of the product. In order to ensure that our technology is compatible with CD-ROM
manufacturing standards, we have worked with two industry leaders, Doug Carson
Associates (DCA) and Philips Electronics."
"We knew that our customers would be concerned about compatibility with Red Book
and Yellow Book CD-ROM standards, so we obtained Philips' approval for the
design principles for producing CD-ROMs. DCA, the leading supplier of control
software for the Laser Beam Recorders used to manufacture CD-ROMs, has made
available C-Dilla's copy protection software in its latest mastering software."
Infotech estimates that consumer software publishers sold 400 million units of
CD-ROM software titles in the U.S. alone in 1996. According to Infotech, the
proliferation of sub-$1,000 multimedia PC's is expected to increase the annual
sales volume of CD-ROM titles in the U.S. to 1.2 billion units by the year 2000.
UBS Securities estimates that the PC entertainment category is growing at an
annual rate of 25% worldwide.
This growth is driven by the increasing multimedia capabilities of desktop
computers provided by 3-D graphics, video, surround sound, and other
technologies which make PC games more entertaining and realistic.
As part of the Marketing and Development Agreement, Macrovision and C-Dilla plan
to develop a disc authentication technology for use in future DVD video players.
When combined with digital watermarking, disc authentication can provide a more
complete copy protection solution for the next generation of standalone DVD
players. Macrovision recently announced an agreement with Digimarc of Portland,
Ore. to develop digital video watermarking technology for use in DVD and other
digital video platforms.
About C-Dilla
C-Dilla, a privately held company founded in 1991, has 34 employees and is a
recognized leader in rights management software for high value-added information
and software publishers. The company's current line of security and rights
management products are marketed worldwide to over 150 software and data
publishers such as Autodesk, Lotus Development UK, Pitney Bowes, British
Telecom, and the Financial Times.
C-Dilla's rights management software includes multi-track unlocking capability,
"try before you buy," and metered usage capability. C-Dilla also markets secure
products for the Internet and the Electronic Software Distribution market.
C-Dilla plans to open a San Francisco Bay area sales office this year to
distribute its current products into the North American market.
About Macrovision
Macrovision Corporation is the leader in copy protection technologies used by
Hollywood studios and other rights owners worldwide to deter unauthorized VCR
copying of prerecorded videocassettes, DVDs (digital versatile discs) and
digital cable/satellite PPV programs. Macrovision's technology has been applied
to over 2 billion cassettes since its market introduction in 1985.
The company offers products and services for the home video, pay-per-view,
cable, satellite, theatrical, and corporate communications market. Macrovision
is based in Sunnyvale, Calif. with subsidiaries in London and Tokyo.
All statements contained herein, as well as oral statements that may be made by
Macrovision or by officers, directors or employees of Macrovision acting on
Macrovision's behalf, that are not statements of historical fact, constitute
"forward-looking statements" and are made pursuant to the Safe-Harbor provisions
of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that could cause the actual results of Macrovision to be
materially different from the historical results or from any future results
expressed or implied by such forward-looking statements.
Risks associated with Macrovision's Marketing and Development Agreement with and
investment in C-Dilla, include, but are not limited to: the companies may be
unsuccessful, or incur significant delays, in their attempts to develop
technology that inhibits copying of CD-ROM, DVD and/or other software materials;
any such technology that is developed may not gain market acceptance or
sufficient sales at a sufficient price to be commercially viable; no patents
have issued to either of the companies for any such technology, and the
companies' claims to intellectual property rights to such technologies may be
challenged, invalidated or circumvented; C-Dilla has worked in the past with
other companies that may have or claim certain rights in or to such technologies
that could restrict Macrovision's rights; any technologies that are developed
can be expected to encounter competition from technologies that are now, or in
the future may be, marketed or developed by others; the emergence of new
industry standards for computers or computer software or the introduction of new
technologies or products could render any technology that the companies develop
obsolete; Macrovision's equity investment in C-Dilla may decline in value or
become worthless.
Additional risks and uncertainties are outlined in Macrovision's Registration
statement on Form SB2 and in its reports on Form 10QSB. Macrovision is not
obligated to revise or update any forward-looking statements in order to reflect
events or circumstances that may arise after the date of this release.
