Hello friends, love the thread. **IATV** is my candidate for PRINCE. The following article tells the story:
Interactive TV is getting smarter ....(must read!!!)
yahoo.cnet.com
Interactive TV is getting smarter
By Jim Davis
Staff Writer, CNET News.com
December 27, 1999, 1:05 p.m. PT
update Big buck initial public offerings, big mergers and big technology introductions all helped mark 1999 as a significant year for the interactive television industry, although the industry has yet to fully deliver on its promise.
Until recently, television hadn't changed much over the last several decades. But the push of digital technologies into a formerly analog world changed that in 1999. From digital high-definition television to digital video recorders, technology is forcing companies already involved with broadcasting and receiving TV signals to reinvent themselves and roll out new services, or have start-ups like digital VCR specialist Tivo take their thunder.
In 1999, "slow moving industries--TV and cable--awoke to the world of the Internet and figured out it was not a fad," said Dave Limp, senior vice president of corporate development for Liberate Technologies, which has seen its stock price explode in recent weeks. "We also saw another change: the providers of technology moved out of the research project phase and into the delivery phase," he said.
Information appliances--devices that access the Internet but do not perform all the functions of a computer--have been hyped for the last couple of years, but "we're actually seeing these things coming to market, which is new and exciting," said Kevin Hause, an analyst for International Data Corp..
Nonetheless, as Hause and others pointed out, the industry just started rolling in. Which technologies and companies thrive, and which fail, will likely be the next big issue.
Be your own network boss
The TV year kicked off last January at the Consumer Electronics Show in Las Vegas when TiVo and Replay Networks introduced their digital VCR-like services. Both companies basically let a consumer act like the head of a network, deciding when and what to watch by recording shows to a massive hard disk drive. Consumers can pause and rewind live television by recording video streams to the device's hard drive.
TiVo, in particular, stood out because its product reached the retail market and the company went public--all in 1999. But aside from the speed at which developments at TiVo occurred, bigger changes still loom for broadcasters and cable programmers. Quote Snapshot
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"The changes coming to the TV business because of TiVo-like technology are incredibly massive," said Jim Barton, co-founder and chief technology officer of TiVo. "You are just seeing the tip of the iceberg."
While hyperbole about a technology forcing changes in businesses isn't unusual in an industry noted for exaggerated claims, Barton's comments may contain a kernel of truth, analysts say.
Earlier this year, several major television and cable networks formed a coalition designed to make sure Tivo, Replay and similar companies pay licensing fees on the grounds that the devices they manufacture modify copyrighted material. The coalition argued the technology could allow these companies to insert their own commercials in place of network ones.
What's more, if enough of the devices are sold to create a large installed user base, the whole notion of ad sales at the networks may be turned upside down. Not only will there no longer be a prime time slot where networks can charge premium prices for ads placed with the top shows, but revenue may come instead from new forms of targeted advertising, including more product placement ads and sponsored shows that are featured in portal-like "showcases" on the TV's program guide.
TiVo has locked up a variety of strategic alliances. The company already has deals with Sony, Philips, America Online and satellite television provider DirecTV, as well as content partnerships with media companies such as NBC, CBS and Disney. To boot, TiVo has investments from most of its partners. These companies are simply being pragmatic, according to TiVo.
"With a potential threat, the best thing to do is invest in them.[Content providers such as broadcasters] recognize that there is going to be change in our industry," so they have invested in us, Barton observed. "It's a way to be on the edge of developments rather than watch the parade go by."
That parade could be a long one: IDC is predicting 10 million of the devices will be sold in 2004. The only thing that might rain on TiVo or Replay's parade is potential competition from video-on-demand equipment vendors that are looking at adding broadcast recording functions to their products.
Set-top madness
Companies making set-top boxes and game consoles ramped up efforts to inject a little adrenaline into the TV this year. In the rush to establish a foothold in the market for interactive TV services delivered via a computer-like attachment, the market saw both consolidation and new entrants.
For example: Motorola sells cable modems, processors and other communications products, and had been looking for a new growth market to sell to. Motorola settled on set-top box maker General Instrument, the largest cable equipment supplier in the United States, as a way to do that. Motorola purchased GI for $11 billion, a deal that was quickly followed by Sony's $1 billion-dollar deal to supply Cablevision of New York with up to 3 million set-top boxes.
The potential stakes of the interactive television market apparently provided more than enough reason to lure Sony back to the TV business and Motorola into the game for the first time. Forrester Research is forecasting that interactive TV services will generate $11 billion in advertising, $7 billion in commerce, and $2 billion in subscription revenues by 2004.
In addition to jumping into the cable set-top market, Sony also began talking about plans for the successor to its wildly successful PlayStation game console. Those plans could eventually translate into a competition for consumer dollars against the PC. Initially, Sony envisions its gaming console as a device that can download games from the Internet. Later, analysts expect Sony to use its considerable clout in the movie and music businesses to offer PlayStation users the ability to purchase and download multimedia content such as movies.
Not to be outdone by Sony's plans, Sega Enterprises is attempting a comeback on the back of the Dreamcast console's successful launch. The device, which includes a modem, could eventually offer interactive services to a wider consumer audience in the United States. E-commerce activities are already ramping up in Japan, where there is talk of offering stock trading services on the Dreamcast system. The game console could even overtake the PC there in terms of influence and development activity because few consumers there own PCs that are connected to the Internet.
Not to be outdone, Microsoft is developing its own game console platform, which will likely look a lot like a PC that's targeted at a more limited range of functions. The degree to which Microsoft is apparently willing to take on companies that it partners with in other areas, such as Sega and Sony, speaks to the serious money being spent in the game market.
Dot com mania hits interactive TV
Perhaps the most widely used yardstick of a technology or market's potential is the initial public offering, or IPO. The lure of interactive television--where viewers can respond to advertising and buy the promoted product without picking up the phone-seems to have become the buzzword du jour in California's Silicon Valley. A number of companies delivered investors a promise to provide technology for interactive TV, and scored big in the financial markets.
Liberate Technologies, which struggled as Network Computer, officially reinvented itself this year as a provider of software for information appliances and went public, proving to investors that it was not going down with the sinking ship of the NC.
So far this year, Liberate's shares have risen over 1100 percent from their initial offering price as the company scored new deals and began shipping products to customers, generating new sources of revenue.
Limp said that Liberate's initial success is part good fortune, and part hard work. Several things came into place for the company, including an improved digital infrastructure that includes upgraded cable plants and digital set-top boxes coming into consumer's homes, he said.
Meanwhile, other companies such as Wink, Worldgate, OpenTV and Be also went public and have seen some significant gains in their stock price--again, based on optimism that interactive TV services will soon become a widespread phenomenon.
Wink has gained almost 38 percent in December alone, and has climbed from an opening price of around 21 to 60.25 in trading today. Worldgate started out of the gate at around 15 a share and is now trading at 45.81; the stock has gained 40 percent this month alone.
OpenTV, which counts Sun Microsystems and America Online among its investors, set its opening share price at 20 and traded as high as 94 before sliding back almost 20 percent in December to 62. The company is already valued at 2.7 billion.
Another lesser-known company, ACTV, has seen its shares rise 74.5 percent this month to 38.06. The company, which makes software for interactive TV, said General Instrument invested $5 million in its Digital ADCO subsidiary. The subsidiary provides software designed to target TV advertising to consumer households via software running on digital .
Even Be, purveyor of the Be operating system that was once courted by Apple Computer, went public and has risen on news of a deal with Compaq to license its information appliance software and rumors of a takeover from around 6 a share to as much as 39 per share. The stock is currently trading at 22.31 after a significant sell-off in the last two days of trading, but the price still gained 55 percent this month alone.
Related news stories
• TiVo files for IPO, teams with Sony September 8, 1999
• How will Motorola change cable market? September 15, 1999
• Sony in $1 billion deal for TV set-top boxes September 16, 1999
• Media firms back Replay in battle against TiVo August 18, 1999
• Sony looks to a future beyond PCs November 15, 1999
• Be, Compaq in software licensing agreement December 20, 1999
• Liberate surges as loss widens, splits stock December 21, 1999
• Video on demand may trouble digital video recording upstarts December 22, 1999 |
