Egged on by the computer industry, cable TV operators are poised to spend billions of dollars to equip their networks for a new, interactive breed of television.
Much of the spending will be on an advanced converter box being designed with help from Microsoft, Sun Microsystems and other computer industry heavyweights. The box, which will let TV viewers surf the Internet, play arcade-style video games, pay bills and even hold video conferences, was in the spotlight at the cable industry’s recent national convention in Atlanta.
The question is, do people really want to do that on their TVs?
Industry insiders say consumers crave more of what television gives them today: movies, sports and other video entertainment. People also might be willing to pay for the ability to send and receive electronic mail on their TV sets. How the public will respond to other services is anybody’s guess.
Nevertheless, the cable industry is starting to deploy thousands of the boxes, and millions more are on order–in part because some executives believe they have to offer interactive services to find out what people will buy. While many cable operators are moving cautiously, top executives at Tele-Communications Inc., the nation’s largest, say they plan to put at least one interactive box in every customer’s home over the next several years, starting in 1999.
If the industry keeps its pledge, over the next three to four years the new boxes could bring consumers an open window to the Internet, a ready supply of community information, a larger and more convenient source of entertainment, even alternative telephone service. They could also bring more of the cable industry’s least popular feature: higher prices for unwanted services, delivered at glacial pace with insufficient customer support.
Cable operators and telephone companies both launched high-profile experiments with interactivity a few years ago, but discovered that the high costs made the services impractical–a stutter-step that led to a backlash on Wall Street.
This time, however, some of the largest cable operators are moving ahead with tests and real deployment of interactive services, even though they say they’re not sure what the public wants.
Top names in the computer industry have urged the cable companies on, arguing that high-capacity cable networks are ideally suited for interactive and “multimedia” programming.
The advanced boxes are expected to work much as today’s converters do, with viewers using their remote controls to call up conventional TV programs or interactive services. Although services like e-mail may require a wireless keyboard, most of the interactive functions are expected to work with the push of a button.
For example, viewers might use their remotes to display a menu of services on their TV screens, then with a series of clicks launch an interactive music service, pick the style of music, choose a music video and order a CD.
The industry’s last major foray into interactivity came about five years ago, when Time Warner, Bell Atlantic and others built pioneering two-way networks for video on demand, electronic commerce and other advanced services. These trials quickly demonstrated that the technology wasn’t ready–let alone the public.
Since then, the Internet metamorphosed from a stuffy research forum into a vivid electronic billboard, newsstand and shopping mall. The trove of material developed for the Internet could help boost the appeal of interactive TV.
The Internet has yet to reach most homes, however, and it’s far from clear whether people want the World Wide Web beamed onto their TVs. The demand for devices that allow people to view the Internet on TV is still being tested, with some critics arguing that Web sites are too static to match the swirl of energy and motion people expect from TV.
The most popular service, Microsoft’s WebTV, has garnered roughly 325,000 subscribers nationwide since its introduction in 1996. Its chief competitor, NetChannel of South San Francisco, recently ended its service for lack of subscribers.
PowerTV, TCI, set-top box manufacturer General Instrument and Source Media, a provider of interactive services, commissioned a survey earlier this year to explore what kind of interactivity people might want. The survey, which polled 600 cable subscribers, found that the likely market for such services was less than a fourth of the viewers–not exactly a craze, but stronger than demand for Cinemax or Showtime.
The survey found no single “killer application.” Instead, it suggested a package of the six services that generated the most interest: music video and CD previews, continuous news updates, Internet access, health reference materials, games, and shopping. It also found that consumers were willing to pay more for categories where there was a potential for them to do something, not just get information.
Two other tidbits from the survey revealed that viewers may not be ready to stray far from traditional TV. The proposed service that drew the most enthusiasm would allow viewers to watch one show while videotaping another–hardly a leap into the future. Almost three-quarters of viewers surveyed also wanted interactive services confined to a separate channel, not layered over their regular TV programs.
