USNews&World report 3/13/00 ....
With thanks to Magic212 of the IATV board....the article below should be interesting to many CHTR stockholders as well....The part in bold is my doing....
KLP
Message 13184451
A boob tube with brains, High-tech heavies battle to bring smart TV to your living room
usnews.com
Business & Technology 3/13/00
By Dori Jones Yang
For 50 years, the experience of watching television has changed little. Yes, remote control,
cable, and VCRs have provided more convenience and choices. But TV viewing remains a
passive, lean-back activity, just as it was when Milton Berle ruled the airwaves.
All that's about to change. Beginning this year, you will have the option of leaning forward
with the remote and interacting with a TV set that lets you watch what you like, whenever
you like. The new devices will let you play along with Jeopardy!, print out Martha Stewart
recipes, and get basketball statistics during the game. It will be possible to pause live TV as you
would a VCR, replay controversial umpire calls, and fast-forward over the commercials. You'll
also be able to check stocks, buy a CD, or exchange comments with cyberpals as you watch. In
short, the boob tube is getting smart.
Techies and Hollywood types have been predicting the fusion of TVs and PCs for more than a
decade. But now the technology is finally available, prices are nearly affordable, and cable
companies are scrambling to get these products to your living room. By next year, you or
someone you know will probably get some of these services. By the end of 2005, 55 percent of
U.S. households will have them, according to Forrester Research. "There was a time when
interactive TV was an if," says Mitchell Kertzman, CEO of Liberate Technologies. "It's now a
question of when."
Good definition. First, some definitions. Today, industry honchos differentiate between
interactive TV, Internet TV, and personalized TV. In the future, all these services will probably
be integrated together in one powerful, set-top box. For now, though, different companies have
specialized in each.
Interactive TV lets viewers interact with the show they're watching, clicking remote-control
buttons to play along with a game show, request information on a product, or choose a different
camera angle. Such services have taken off in Europe, where the leaders are France's Canal+
and Silicon Valley-based OpenTV. They use broadcast signals, not the Internet.
Internet TV lets viewers use their TV screen to reach the Internet and reformats Web pages to
be readable on a TV. But it requires a keyboard, and most sites look cluttered on a TV screen.
WebTV Networks was the pioneer and now offers the service to more than a million viewers.
Liberate's product also connects TVs to the Web.
Personalized TV or personal video recorders (PVRs) let viewers pause, rewind, and replay live
TV, as well as record shows. TiVo and ReplayTV offer stand-alone boxes. They're pricey because
they include hard drives and encoding chips. But the services may one day be part of high-end,
digital-cable, set-top boxes and satellite receivers.
Already, these separate categories are starting to converge. The major players are scrambling
to form alliances so that they can offer all three flavors of smart TV. "When you pick up the
remote control, you should be able to use any of these services," says Jan Steenkamp, CEO of
OpenTV.
So far, most consumers don't know what they're missing. "They aren't clamoring for it yet,"
says Sean Badding, vice president of business development at the Carmel Group, a research
firm. But once they see it, they love it. "It's a cult feeling, like the Mac in the early '80s," says
Mike Ramsay, TiVo's chief executive. "It grabs people's imagination."
On the surface, most of the players seem to be tiny start-ups: TiVo and ReplayTV, both founded
in 1997, launched their products last spring. WebTV, Liberate, and OpenTV began in 1994
and 1995. All five operate within a 15-mile stretch of Highway 101 in Silicon Valley. Three
have gone public in the past six months; one will soon.
But behind the scenes, it's a battle of giants. Microsoft bought WebTV in 1997, and Bill Gates
has championed it. Liberate began as a division of Oracle, merged with a Netscape spinoff, and
still takes guidance from Oracle CEO Larry Ellison, a board member. OpenTV was founded by
Thomson Multimedia and Sun Microsystems, which owns 13 percent and has a board seat.
Meanwhile, America Online has partnered with Liberate, TiVo, and DirecTV, the leading U.S.
satellite-TV operator, and plans to offer E-mail, chat rooms, and instant messaging on its TV
service this summer. So the biggest names in technology have a lot riding on what Forrester
analyst Josh Bernoff calls "the next wave of the Internet commerce gold rush."
Ultimately, consumers won't choose the winners in this race. Cable operators will. Once your
local cable company gets a broadband cable and a set-top box into your home, it will start
offering you more and more services?at first free, then later for a fee. "Our goal is to do
development and testing in 2000 and begin deployment in 2001," says Braxton Jarratt,
director of interactive services at Cox Communications, which has teamed up with Liberate.
Getting the dish. In the meantime, the satellite-TV operators are far more aggressive. EchoStar
already offers WebTV on its DISH network and has signed agreements with OpenTV as well.
DirecTV is working with Liberate. But while satellite companies must use the humble phone
line to dial to the Web, cable will offer a powerful always-on, two-way connection.
Britain and France are far ahead of the United States in interactive TV. OpenTV and France's
Canal+ each have more than 5 million subscribers for interactive TV services. Rupert
Murdoch's British Sky Broadcasting, for instance, lets viewers see sports statistics, enter
contests, and click on interactive ads using OpenTV technology. Europeans have agreed on a
standard, while U.S. companies are still hashing one out.
Once TVs go digital, broadcasters and advertisers will have to change the way they make
money. Things like Internet banner ads and interactive contests will have to make up for losses
in traditional TV ads. Free TV may shrink. And programs and ads will target smaller, more
motivated audiences. "The business model hasn't been fully defined. Who's going to pay for
what?" asks Gary Arlen, president of Arlen Communications, a research company.
But Forrester predicts a pot of gold at the end of the rainbow: some $11 billion in new types of
advertising and $7 billion in interactive TV impulse buys by 2004. TV will just have to be
smart enough to make a profit for all these players.
TV: Interactive, Internet ready, and personalized
The initial fusion of TVs and PCs has created a confusing array of choices.
WebTV
Internet TV: Provides Internet access on TV; recently added pause, record functions as well as
interactive TV.
Cost: $22/month for Internet service; $25/month for full interactive service; box costs $200.
Alliances: EchoStar, AT&T Cable, Philips, and Thomson.
Prospects: The leader in Web access; the only company that offers all three services.
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Liberate
Internet TV: Software platform that allows network operators to offer Internet access via TV.
Soon available with AOL TV.
Cost: Cable & Wireless and US West include it as a service to existing customers.
Alliances: Oracle, AOL, Sun, Sony, Sega, General Instrument, Comcast, Cox, and others.
Prospects: Web access, open standards, works on any operating system.
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OpenTV
InteractiveTV: Software that allows network operators to offer interactive TV; may offer
Internet and recording.
Cost: BSkyB, France's TPS, and EchoStar offer service free.
Alliances: AOL, General Instrument, Liberty Digital, News Corp., Time Warner, Shaw
Communications.
Prospects: No Web access yet, but a leader in interactive TV. Mainly in Europe.
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TiVo
Personalized TV: Allows pause and rewind of live TV and easy recording of shows you select.
Working with AOL TV.
Cost: $400 for 14-hour recording device, $700 for 30 hours. Plus $10/month for listing service.
Alliances: AOL, DirecTV, Philips, Sony, NBC, Showtime, and Viacom's Blockbuster.
Prospects: No. 1 in personal video recorders. Can be taught your preferences.
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ReplayTV
Personalized TV: Allows pause, rewind, and fast forward of live TV, also recording of shows you
select.
Cost: $600 for 20-hour device. No monthly fee.
Alliances: Time Warner, Disney, NBC, EchoStar, Matsushita, Sharp, and Kleiner Perkins.
Prospects: Playing catch-up to TiVo; goes to the mass market this year.
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