Business Week April 5th edition
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Putting More TV on the PC
Convergence alert! As the cable-TV industry races headlong onto the Internet, the folks doing business there are eagerly moving toward TV Land. The latest sign: Internet powerhouse Yahoo! Inc. is negotiating to acquire Broadcast.com Inc., the leading provider of audio and video programming on the Web. The talks, which could lead to an inked deal soon, have boosted Broadcast.com's market capitalization by almost $1 billion. Meanwhile, Snap, a Net portal site co-owned by NBC (NBC) and CNET Inc. (CNET), has announced a service devoted to offering so-called rich media: video, audio, or animation.
At the same time, the cable-TV-based At Home (ATHM) Network Internet service provider is figuring out how to offer an array of multimedia programming through Excite Inc. (XCIT), the portal it bought in January. America Online Inc. (AOL) is doing the same with its service. Even chipmaker Intel Corp. (INTC) is getting into the act. It's spending $300 million to promote the new Pentium III chip as a way to enjoy a richer Net experience. ''The Internet is going to be more similar to a broadcast medium,'' predicts Internet analyst Paul Noglows at Hambrecht & Quist.
IN BITS. Whether it's radio talk shows, televised sporting events, or video clips of potential travel destinations, Internet companies plan to be there. ''There have been a lot of signs that show that rich media have finally arrived,'' says Halsey M. Minor, CEO of CNET. ''The market is real now.''
That's not to say that the Internet will be broadcasting Ally McBeal anytime soon. But a growing number of cybersurfers are opting for a little bit of audio and video--mainly in
one-to-five-minute tidbits--along with their Web pages. In December, 1998, more than 19 million home-PC users viewed some form of streaming audio or video--live or pre-recorded snippets that are played as they come across the Net--according to researcher Media Metrix Inc. That compares with 10 million just a year earlier. An estimated 14 million people have connections to the Internet at their workplaces that are fast enough to carry sophisticated moving images and sounds.
Sights and sounds on the Net would be a lot more popular if the cable companies--or their
telephone rivals--had the right wiring. Right now, most people don't have the digital plumbing to get a smooth stream of multimedia content. Researcher Dataquest Inc. predicts that less than two million users in the U.S. will have high-speed Net access this year. ''We're not yet seeing huge demand for video streaming in the home,'' says Bruce R. Ryon, chief technology analyst at Media Metrix. ''What's really going to be more of a factor in help- ing growth will be the pipe itself.''
Web companies are sure the demand for multimedia is there now. Just look at the crush of people who logged on in February to see the Victoria's Secret fashion show. Yahoo! Chairman and CEO Timothy A. Koogle, who declines comment on talks with Broadcast.com, says users, advertisers, and online merchants all want TV-like content and services. He says Web surfers who set up their own home pages at GeoCities (GCTY), a company that Yahoo! (YHOO) bought in January, would lap up multimedia options. ''They all want extended features,'' says Koogle.
Advertisers are particularly eager to put TV-like spots on Web sites. A March survey
conducted by At Home Network on rich-media advertising found that users recalled seeing multimedia ads 34% more than they recalled ads that were more like billboards. If Web companies can make such offerings more commonplace, couch potatoes could soon be trading in the clicker for the mouse. |
