More Bone Crushing Competition FOR SRCM....
INTERACTIVE TV
A Swiss startup tries to awaken a long-dormant market.
By Kendall Riding
The Red Herring magazine
October 1998
redherring.com
Peter Ohnemus, CEO of Fantastic, is a confident guy. He'd have to be to try to crack the notoriously elusive market for broadcast multimedia. But he seems certain that his company will succeed where interactive TV has failed so far.
Based in Zug, Switzerland, two-year-old Fantastic has developed a line of software for creating and broadcasting multimedia content to PCs and set-top boxes via satellite, DSL, or cable modem. The company has made an early dent in the European market. Luxembourg-based Astra, the largest European satellite TV broadcaster, began offering services in July using Fantastic's technology; Deutsche Telekom will begin providing Fantastic-based services to corporations this fall and to consumers in early 1999. And with the backing of multinational investors--including Deutsche Telekom, the Reuters Group, Intel, and the Japanese venture firm JAFCo--Fantastic is ready to jump into the U.S. market this fall. The question is whether the U.S. market is ready for Fantastic.
Fantastic has developed three software products: a content management and distribution tool for service providers, which works with existing conditional-access and billing systems; a content development tool for creating and packaging broadband multimedia channels and scheduling broadcast time; and a specialized browser that lets users pick and choose among channels. These products make up a system with which content providers (like Reuters) can create customized services (like news or financial channels) that service providers (like Deutsche Telekom) can then broadcast. Users can switch between interactive and passive viewing modes.
U.S. analysts are still somewhat skeptical that a market exists for Fantastic's products. "We've already got broadcast multimedia," says Joe Bartlett, a Yankee Group analyst. "It's called television."
Fantastic's goals can't help but bring to mind the repeated failures of interactive television--a service that, despite substantial efforts from media titans like Time Warner, has yet to take root in the United States. Microsoft's WebTV division continues to hold the dominant position in the interactive TV services market, but even it had less than 500,000 customers as of April. And in May, NetChannel, WebTV's biggest competitor, was forced to close its doors, having signed up only 10,000 subscribers. NetChannel sold its core technology to America Online.
Fantastic's CEO is undeterred by the slumbering U.S. market. He says that interactive television's failure to deliver thus far doesn't mean that other forms of broadband multimedia won't succeed. "Fantastic is playing with all the big boys," boasts Mr. Ohnemus. "And we're going to be big."
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