I wonder if TV.COM will be carried on ZDTV ?
Ron Reagan, Don't forget to mention me in your
cover letter when you send your resume to ZDTV
April 23, 1998
ZDTV Looks to Combine
Strengths of the Web, TV
By NICK WINGFIELD
THE WALL STREET JOURNAL
SAN FRANCISCO -- Larry Wangberg has tried interactive television
before, but it didn't click with viewers.
Twenty years ago, Mr. Wangberg joined Warner Amex Cable
Communications Inc. as a young marketing wizard and quickly rose to
become a general manager at Qube, the company's landmark
interactive-television and cable-TV trial.
In addition to a then-whopping 36-channels and pay-per-view
programming, Qube installed an unusual gadget in the homes of roughly
50,000 subscribers in Columbus, Ohio: a clunky terminal box through which
viewers could shop, participate in talk shows and take part in opinion polls.
In one use of the technology, Warner staged a "your call" football game with
two semi-pro teams in which Qube viewers used their home terminals to set
plays for one team, with a coach guiding the other.
"We lost 11-0," Mr. Wangberg says of the viewer-controlled team. So did
Qube, which flopped in the mid-'80s after its interactive services failed to
catch on.
Now, Mr. Wangberg is taking another pass at interactive TV -- and the
game is for much bigger stakes. This time, he's a cable-TV veteran and the
chief executive of ZDTV, a 24-hour-a-day cable channel devoted entirely
to computers and backed by Softbank Corp.'s Ziff-Davis, the leading U.S.
publisher of computer magazines.
Mr. Wangberg's strategy is to attract viewers by
combining a Web site with on-air programming --
with a considerable number of gimmicks thrown in.
For example, ZDTV plans to hand out free Web
video cameras to 10,000 viewers for use on call-in
shows, allow select users to commandeer a robotic
studio camera with their computer mice and -- in a
nod to Mr. Wangberg's Qube days -- let users join
real-time opinion polls. The parade of gimmicks
underscores Ziff's determination to sell ZDTV as an
interactive medium -- despite the fact that, at heart,
it's plain old television.
ZDTV executives are doing their part to hammer that message home,
promising that the fusion of Web and television -- which they call "bicasting"
-- will go beyond previous efforts to link the two. "I don't want to call them
shows or sites," says Greg Drebin, ZDTV's senior vice president of
programming. "These things are Siamese twins connected at the liver."
But can such a brainchild survive? The Internet revolution that ZDTV
celebrates threatens to upend the very idea of TV, offering radically
different models of distribution and viewership. That, in part, has led more
than one skeptic to question whether a 24-hour computer and cyberspace
channel makes sense at a time when cyberspace itself plays that role.
"Odds are a lot of these people are on the Net instead" of watching TV,
says Stewart Cheifet, who has hosted a 30-minute weekly PBS show,
"Computer Chronicles," for 15 years.
Branching Out
Despite its critics, Ziff is determined to use its fleet of well-known computer
magazines to launch itself into television. Ziff is already a titan in the
computer publishing business: According to advertising-tracking firm
Adscope, titles such as "PC Magazine" and "PC Week" helped Ziff rake in
a 25% share of advertising dollars for U.S. computer periodicals in 1997.
Throw in the proceeds from its huge trade shows, such as Comdex, and Ziff
had revenues of $1.2 billion last year.
Previous attempts by publishers to diversify from print into cable TV have
yielded mixed results, however, and Ziff's own track record isn't
encouraging.
For its first TV effort in 1994, Ziff bought weekend air-time on CNBC for a
series of shows, including a technology program and a home-shopping
show for selling computer gear. The shows were dissolved after about two
months.
Eric Hippeau, Ziff's chief executive officer, says the firm viewed that effort
as an experiment -- one he sees as a success. "We were trying to determine
[if you could] attract enough viewers to make the telephones ring," he says.
A second try at cable television -- a daily show on MSNBC called "The
Site" -- lasted longer, but was pulled off the air last year with a dismal 0.1
Nielsen rating, or about 22,000 households. Mr. Hippeau defends Ziff's
second foray into TV, too, saying the show suffered from being "nested"
between non-tech programming and from the fact that viewers couldn't tune
in at all hours.
On May 11, Ziff executives are certain, all of these previous stumbles will
be forgotten as ZDTV begins round-the-clock programming. "This will be
to computing what ESPN has become to sports and CNN to news," says
Mr. Wangberg.
Ziff's third TV effort will be backed with big money: The firm has predicted
it will spend $100 million to get the channel off the ground. Analysts and
competitors believe the costs could prove significantly higher, but they note
that Ziff has a deep-pocketed corporate parent -- Japanese high-tech
conglomerate Softbank -- that says it's willing to sustain heavy losses to
make the channel work. (Technically, ZDTV is being funded by MAC Inc.,
the largest shareholder in Softbank. Ziff, though, has the option through the
end of 1998 to purchase MAC's interest in ZDTV, and analysts expect it to
do so using part of the proceeds from an initial public offering, which is
imminent.)
The Love Boat
If ZDTV has any doubts, a tour of its spacious San Francisco headquarters
doesn't reveal them. Most of ZDTV's more than 200 workers are housed in
a sprawling building -- called the Love Boat by the staff -- formerly used by
the fashion industry for showcasing designers' wares. The workers type
away at keyboards in glass-walled offices or circulate throughout the long
corridors spiraling from a cavernous central atrium. Across that atrium, in a
large aquarium-like room filled with people, Web-site editors and television
producers are working elbow-to-elbow in an orchestrated attempt to
coordinate content.
Blocks away, at the ZDTV television studios, the atmosphere is more
chaotic. Portable toilets stand outside; inside, construction workers in hard
hats are scrambling to install walls and designers are racing to put the
finishing touches on studio sets. In one corner of the studio, a team of
technicians huddle around a Silicon Graphics workstation as an actor in a
full-body "data suit" shuffles around on stage; together, actor and machine
will create a virtual character who will eventually host one of ZDTV's
shows.
In less than three weeks, ZDTV will begin producing 30 hours of original
programming a week (like other 24-hour cable channels, it will recycle
programming throughout the day). For the most part, the show concepts are
fully fleshed-out. For Mr. Drebin, a former MTV programmer in charge of
bringing some pizzazz to ZDTV's efforts, that's a fact that provides a bit of
calm amid the urgency.
When ZDTV launches, viewers can expect a heavy
dose of talk-oriented shows, including two call-in
programs aimed at users stranded by corrupted data
files, malfunctioning monitors and other glitches.
"Silicon Spin," a prime-time talk show hosted by
veteran technology commentator John Dvorak, will pit
a roundtable of high-tech pundits against each other on
the issue of the day -- a format Mr. Drebin describes
as " 'The McLaughlin Group' meets 'Politically
Incorrect.' "
Other shows have a rather different focus. "Digital Avenue," a high-tech
shopping show that will air four times a day, will consist of technology firms
demonstrating their products during five-minute paid-for slots. That's a
formula that seems destined for drawing fire, though Mr. Drebin insists
ZDTV won't be a mouthpiece for the high-tech industry.
"We are its biggest supporter and its biggest critic," he says.
The TV programs will relentlessly promote the ZDTV Web site, where
users can browse more in-depth technical features, news and product
reviews. It's a strategy that's become common at multi-pronged media
operations like ESPN and CNET, and one Web publishers say has led to
remarkable increases in site traffic.
Looking for the 'Sweet Spot'
Although ZDTV is aiming its programming at the estimated 45% of U.S.
households with computers, Mr. Drebin admits ZDTV is still wrestling with
exactly what audience it will attract and that "we're not going to appeal to
everyone." Generally speaking, ZDTV executives say their audience falls
into a "sweet spot" somewhere between hard-core technical users and
techno-novices, though Ziff hopes such trends as sub-$1000 personal
computers will bring fresh recruits to ZDTV.
If ZDTV's target audience is one question, the channel's distribution is an
even more pressing one: After all, no channel can find an audience without
distribution, and newcomers often must fight for years to get carriage on big
systems that can deliver a sizable number of viewers. Most analog cable
systems are already jam-packed with channels, and the conversion to
higher-capacity digital systems is proceeding slowly. Meanwhile, space is
also getting tight on direct-broadcast satellite services like DirecTV, a
distribution option ZDTV says it's been exploring.
So far, ZDTV has announced only four cable distributors that will carry its
programming at launch, including operators in Las Vegas, Detroit, Virginia,
North Carolina, Maryland and Georgia. Mr. Wangberg says the channel is
in "active discussions" with the top 25 operators, and Tele-Communications
Inc., acknowledges it's talking to ZDTV about carrying the channel.
Still, ZDTV has told advertisers that they shouldn't expect to reach more
than 5 million households by the end of this year and 8 million by the end of
1999 -- figures well short of the 15 million homes considered a minimum for
a viable cable operation.
"The first three priorities are carriage, carriage, carriage," says Larry
Gerbrandt, a cable-industry analyst with Paul Kagan Associates. "It doesn't
matter how good a program you have if no one can see it."
What About the Net?
ZDTV's challenges finding carriage bring up a question that its target
audience might well ask: What about the Internet?
After all, as Mr. Wangberg fights to cut carriage deals with cable operators,
the Internet is changing many rules of the media-distribution game. The
relative ease with which Web publishers can set up shop on-line has quickly
given their sites an audience that can rival the viewership for niche cable
channels. On the Web, for example, Ziff has quickly built a hugely popular
network of sites -- collectively known as ZDNet -- into a destination visited
by more than 3.6 million unique visitors a month, according to Media
Metrix. Although Ziff won't discuss costs associated with the launch of
ZDNet, analysts believe those Web viewers were much cheaper to come
by than TV viewers because of the relatively low start-up costs of Web
publishing.
"Webcasting" Ziff's video live over the Net would be a cheap, easy way for
Ziff to get its TV programming out to more viewers, but the company says
that isn't an option. Mr. Drebin says ZDTV doesn't want to risk ticking off
its cable partners, who might feel threatened by a freely available Internet
broadcast that poaches paying subscribers from them.
But some competitors think Ziff's money would be better spent on the Web
than on TV. As chief executive of CNET Inc. -- Ziff's closest rival in tech
television and on the Internet -- Halsey Minor once talked about starting his
own all-computer cable channel. But today, he says, he wouldn't dream of
it. Instead, CNET produces four weekly computer-oriented TV shows on
broadly available cable channels like USA Network and the Sci-Fi
Channel, as well as a number of popular, technology-focused Web sites.
"The Web has short-circuited our need to do a 24-hour-a-day cable
channel," says Mr. Minor, adding that given cable-TV's current distribution,
"the economics don't work."
"Launching anything in this environment," he says, "is like flushing money
down the toilet."
Risks and Rewards
Still, Ziff thinks the financial opportunity justifies the risks it's taking. Cable
programmers' share of the advertising market, estimated by Paul Kagan
Associates at around $4.8 billion in 1997, dwarfs the roughly $500 million
spent on Internet advertising that same year -- and Ziff aims to get an oar in
both ad streams. (Subscription fees are the other principal revenue stream
for cable programmers, but analysts don't expect ZDTV to see such fees
for years, and believe that the company will initially pay for carriage -- a
common arrangement for new programmers. Ziff declines to comment on
the terms of its relationships with cable operators.)
Ziff believes its ad opportunities will increase in the years to come, and that
a techno-savvy TV audience will be an excellent calling card for high-tech
advertisers rolling out ever-more-elaborate ad campaigns. In the meantime,
other advertisers say ZDTV is pricing its ad rates appropriately considering
the limited reach of the channel. "We're paying for what we got," says
Chuck Bachrach, an executive vice president at Rubin Postaer and
Associates based in Santa Monica, Calif., which bought commercials on
ZDTV on behalf of Charles Schwab. "If there are only three people
watching, we pay for three people."
If and when it finds sizable cable distribution, ZDTV may face another
question: As viewers become more sophisticated about computers and the
Internet, will more of them simply go on-line for tech news and information?
There are already signs that computer users are forsaking TV time for
Internet time: In a Harris poll of 345 computer users commissioned by
Business Week last year, 48% of Internet users said their on-line activities
were beginning to eat into their time in front of the TV set.
But by the time television viewers begin defecting to the Internet in
significant numbers, the line between the two media may be completely
blurred anyway, thanks to WebTV and other PC-TV hybrids. Mr.
Wangberg points out that ZDTV can not only document the ballyhooed
convergence of TVs and computers, but also help catalyze it with its own
interactive and video operations. Eventually, he believes, the technology
necessary to deliver and receive merged TV and Web offerings will be
commonplace. For now, ZDTV will add interactive frills to its conventional
video programming where practical.
"It's still TV -- we can't lose sight of that," says Mr. Wangberg. "But we can
enhance it."
And enhance it ZDTV surely will. Among its efforts to fuse Web with
television programming will be a button on its Web site that lets users listen
in on a "streamed" Internet audio broadcast of the intercom in the ZDTV
director's booth. Mr. Drebin says the television directors will have to get
used to the loss of privacy.
"They just have to watch their language," he says. |
