ADVICE on CABLE: BEST AVOID DIGITAL RAZZLE DAZZLE
[An interesting perspective on "lazy interactivity."]
August 24, 1998
Electronic Media via NewsEdge Corporation : Digital
technology and souped up cable set-tops will open the
doors to all kinds of fancy possibilities, from online
banking to interactive games to video telephony. But
cable operators and content companies might do well to
stick to the basics and resist the temptation to try and
dazzle the audience with ''gee whiz'' applications.
''To succeed on television, an interactive application
needs to work for viewers who have a remote in one
hand and a beer in the other,'' said Josh Bernoff, a
technology analyst at Forrester Research, Cambridge,
Mass. Mr. Bernoff calls the phenomenon ''lazy
interactivity.''
''You have to design it for people with short attention
spans that need immediate gratification,'' he said.
After a number of false starts and failed promises,
interactive television has begun to take root in a handful
of communities.
Grand experiments, such as Time Warner's defunct Full
Service Network, misfired in part because they were too
expensive and too far ahead of the digital curve.
With the expected arrival by next year of millions of
beefed up set-tops, cable operators can begin to make
more concrete plans for the new technology. The boxes,
priced at between $125 and $300 each, carry sufficient
power to perform a wide variety of functions.
Most of the heavy processing is handled by servers at
the system headend, at a cost of around $50,000, making
the entree to interactivity a relatively inexpensive
prospect for larger cable operators.
Several companies have divulged distribution
agreements with various cable systems in the past two
weeks, each announcement touting the bright future for
interactive television.
Doing deals
WorldGate reported that 8 percent of eligible customers
had signed up for its e-mail and Web browsing service,
available at about $5 per month for cable customers of
Charter Communications in St. Louis. The cable
company said the figure was about four times what it
had expected.
''It is doing absolutely terrific. We thought the take rate
would be 2 or 3 percent; right now it's about 8,'' said
Jerry Kent, CEO at Charter.
ICTV, which offers Internet access and CD-ROM games
over cable TV, has started signing up customers in St.
Joseph, Mo. The service is priced at about $10 per
month.
Source Media, whose Interactive Channel combines
Internet access with a package of local content, signed a
systemwide deal last month with Insight
Communications, which will ultimately offer the service
to some 500,000 customers.
''This is not a test,'' said Tim Peters, Source Media CEO.
''It's a real launch on [Insight's] digital tier, a commercial
launch on its systems.''
The distinction between ''test'' and ''launch'' is
significant in the constant bickering that goes on among
interactive competitors.
''They're a company trying to transform themselves to
copy us,'' said WorldGate Chief Financial Officer David
Dill of rival Source Media.
''Their technology has some flaws in it, and we don't
know of any consumer who is using it,'' Mr. Dill added.
Source Media holds a number of patents on the delivery
of audio, video and data delivered to a receiving
appliance, such as a television set or PC. Last spring the
company sued WorldGate, claiming it had infringed
upon those patents when it launched its St. Louis
service. The suit and a counter suit filed by WorldGate
remain tied up in court.
Show them the money
Whatever the outcome of corporate quarrels, cable
operators relish the thought of finally seeing some
revenue from the new services.
Analysts see excellent potential, especially in the area of
interactive advertising. Viewers watch an automobile ad,
for example, could ''click here'' for more information, or
arrange a call from their local dealer. Cable operators
would collect a small fee for each inquiry, much as Web
pages generate from banner ads.
WorldGate plans to launch trials of such a service in at
least two markets later this year. Known as ''channel
hyperlinking,'' it permits viewers to glean information on
advertised products and lets advertisers hone in on
those specific customers who exhibit an interest.
''Operators are going to make a lot of money on this. It's
the Holy Grail of advertising,'' said Mr. Dill.
It is not yet clear which company, if any, will emerge the
winner in the interactive race. Microsoft Corp.'s WebTV,
although not Internet-based, has already signed up more
than 400,000 customers. However, WebTV requires a
separate receiver, which costs about $200, and must be
connected to a telephone line. Monthly fees average
about $25.
Another company, CableSoft, provides local content,
Yellow Pages and restaurant reviews on demand, and
free of charge to customers of MediaOne in Jacksonville,
Fla. CableSoft has announced launches on TCI systems
in Pittsburgh and Hartford, Conn.
Forrester Research projects interactive television will
reach up to 10 million cable customers in the United
States by 2002.
<<Electronic Media -- 08-17-98, p. 3>>
[Copyright 1998, Crain Communications]
|
