Ready or not, cable companies move ahead

Of all the new technologies, digital interactive television is probably the easiest for the consumer to grasp and has the most immediate potential for acceptance. It is also the most difficult to achieve, given that today’s broadcast and cable systems are set up for one-way, highly non-interactive, “spoon-feed and swallow” program consumption, and that the digital video-compression technologies that serve as its foundation are still emerging.

But the “Interactive Television” panelists at Digital World are convinced the old TV model will lose its grip as interactive TV systems move out of the “test bed” stage and are designed and implemented nationwide.

Best known to date is the Time Warner, 150-channel system that’s being set up in Queens, NY. At Digital World, Viacom International president Ed Horowitz outlined Viacom’s plan for a one-gigahertz, fiber-optic-based, two-way cable network that’s being installed in Castro Valley, CA, a bedroom community near San Francisco. And phone company GTE’s “home of the future” project is continuing to investigate and make new I-TV services available to its fiber-wired customers in Cerritos, CA.

A variety of different applications fit under the “interactive TV” umbrella. Today, a rudimentary form of interactive TV — the use of a telephone in conjunction with programming — is already quite lucrative (see Vol. 1, No. 12, p. 6). But the vision that these panelists have of I-TV is far more sophisticated, at least technically, than dialing a 900-number to have a fake diamond ring or a “golden oldies” compact disc delivered to the consumer’s door.

OFFERING A PACKAGE OF INTERACTIVE SERVICES

Diana Gagnon Hawkins of Interactive Associates, a longtime interactive television expert, says the critical component to I-TV’s success is to provide viewers with the most variety possible.

That’s because they aren’t about to pay extra for a new set-top box — “a very big expenditure” for the cable provider, said Hawkins — that just gives them one new service. A new, digitally capable box has to provide a platform for a number of different applications and revenue streams.

Today, the big winner would be pay-per-view movies, also known as “video on demand.” The I-TV metaphor also allows for an entire new range of services supporting pay-per-view.

This new “home cinema” will absolutely require “smart-search” features — vital when hundreds of movies are being delivered across a mind-boggling 150 channels. Smart-search features can help viewers find movies by subject, favorite actor or director, or just about any other criteria, as well as provide canned reviews by Siskel and Ebert or their functional equivalents.

COUCH POTATOING RAISED TO FINE ART

Such services would raise “couch potatoing” to a fine art. Anyone familiar with computers can easily imagine asking a database for all the movies released within the last six months that earned the highest possible reviews from their critics of choice. Next they would select a film from the list and have it piped immediately down the cable to their TV without setting foot inside a video rental store.

It’s already possible to link such a service to a favorite pizza parlor or other “we deliver” restaurant, and order dinner at the same time as the movie is ordered. How about requesting that the movie begin 15 minutes after dinner arrives to allow enough time to give the guy a tip and get back to the sofa?

In the same way, an intelligent TV guide will guide viewers through regular cable television programming. Searches by actor, calendar, time slot, etc., will help TV-watching become a custom, selectable experience.

In addition, says Hawkins, TV shopping will be much more advanced than what the Home Shopping Network can offer today. Clothes, music, cosmetics and other personal items will be available via simple on-screen selections, presented to viewers based on their personal profiles.

“Pay-per-play” video games are likely to come down the pipe, as well as new versions of “Jeopardy” and golf, and even music videos (pick your camera angle). It’s this variety that will sell viewers on I-TV, says Hawkins, not one hit application, even movies. Waiting for a hit is “crazy. What is the one TV show that makes television a success?” she asks. “It depends on who you ask.”

STOP TALKING TECHNOLOGY

Mark Dillon of GTE Imagitrek, a division of GTE Corp. in Carlsbad, CA, devoted to tracking and implementing new technologies, says I-TV is the “most exciting application I’ve worked on in the past year.” And it is applications, not technology, where Dillon believes energy should be focused.

So Imagitrek, which has worked on such pioneering applications as the Verbum Interactive CD-ROM-based magazine, asked Philips to beef up its CD-I multimedia player to serve as a special platform for interactive TV applications.

No baseball cards. Instead of making a prototypical baseball application, GTE started working with a “Discovery”-type channel concept that provides access to interactive articles from the World Book encyclopedia.

The CD-I box is hooked to the TV and “knows” what you’re watching. Select a button on the screen that controls a screen overlay and more information will become available, spun off the CD-I disc onto the TV screen.

He believes such a system may “dull [viewers'] addiction to the remote by adding value,” though some questioners — including Viacom’s Horowitz — state bluntly that the insertion of video overlays in the home is a violation of copyrights.

Real-time market research. Dillon says the service will be installed after October 1, 1992, in Cerritos, CA, site of GTE’s fiber-optic-wired “home of the future” project. No decisions have yet been made as to whether cable companies will provide the beefed up CD-I box to consumers or whether the consumers would have to buy it themselves. An informal audience poll showed that only one-third of Digital World attendees would pay $500 for such a box, half would pay $250, but almost everyone would pay $10 a month for it.

‘TV WITH A STEERING WHEEL’

Viacom’s Horowitz made it clear that, as all have suspected, cable has wasted no time developing and implementing its own view of interactive TV. The wholeness of his vision, especially his plans for Viacom’s Castro Valley fiber site, signals a sea change in the state of the art. He calls it “TV with a steering wheel.”

Creating the package. There are, however, some significant gating factors to widespread adoption of I-TV. So far, says Horowitz, the industry hasn’t been very successful at coming up with authoring tools that allow the creative community to “push the envelope” on TV programming (certainly a viewpoint echoed by many of the artists who attended Digital World this year).

What Viacom needs, he says, are tools that go beyond the “thermonuclear war” between Apple, IBM and Microsoft and work on all authoring platforms.

Another mind shift must occur in the “package creation” side of the business. I-TV poses an entirely new paradigm for package creators who are accustomed to one massive problem set, that of coming up with a “package” of 24 hours of programming per day.” Packaging interactive services will be an enormously difficult and expensive process,” he says. It will require conceptualizing not “single-cartridge, single-user” applications, but as Diana Hawkins suggested, a continuum of services.

Moving the package. Delivering I-TV requires “a long-distance transportation company,” as well as transition to a regional transport company. There are presently no standards, though as phone and cable systems become more interoperable, says Horowitz, some thought should be given to whether the same protocols should be used to get to the local cable system as are used for long-distance transport.

What Viacom wants is a standard transport system onto which it can hook different kinds of specialized services. Although it’s interesting to think of compression as a kind of standard network application, Horowitz says that a standard compression algorithm for digital video may be what pushes I-TV over the top.

“Then the ability to invite new players into the box or switch business exists for the cable community,” he says. “Up until now, we haven’t done a very good job of working with the consumer electronics business and we’ve done nothing with the phone company. In the next 12 to 24 months, a digital transportation standard will be established, and we’ll be able to harness the benefits of digital transmission within the telecommunications or the telephone industry.”

Competing with the telcos. Still, there must be a physical medium to transport digital video, and replacing today’s coaxial cable trunk lines (the lines into the home) with fiber “opens up a new world,” says Horowitz. A gigahertz of bandwidth, which is what fiber can provide, can deliver 150 analog channels, or more than 600 digitally compressed channels, to 500 homes.

Horowitz also clearly sees cable moving beyond its role as a television provider. In recent conversations with chairmen Bill Gates of Microsoft and John Sculley of Apple Computer, he asked them why they continued to design networks to work with the phone system — capable of 56 kilobits of speed — when they could get 10 megabits with cable, a way to achieve direct connectivity without incurring the expense of a phone call.

THEY’VE GOT IT COVERED

Viacom obviously intends to cover all facets of the I-TV market like a blanket. A new multifunction consumer device or set-top converter, first mentioned by Imagitrek’s Dillon, is something Viacom is now trying to define. It will connect with a VCR, tell consumers what’s on TV, hook to a computer, and include telecommunications capabilities.

In addition, Viacom intends to be a leading producer and distributor of interactive entertainment, via its “creative work force, programming trademarks, audience access and ongoing capital investment in programming” such as MTV and Nickelodeon, its animation and movie libraries and other enterprises. It already controls “enough [satellite] capacity to do anything people would ever dream of, and owns a giant cable operation as well as radio stations.

Viacom has also converted its Castro Valley cable system into a tabula rasa — “an environment where technology isn’t the limiting factor” — where 17,500 homes are connected to a gigahertz, two-way network with so much extra bandwidth that Horowitz says some of the fibers may be used for telephone services.

In addition, Viacom will offer network nodes to outside companies such as IBM, Apple and Microsoft. “We’ll help subsidize the cost of their ideas,” Horowitz says.

Such a system is a perfect place for Viacom to do market research. Pay-per-view is a no-brainer, as is an electronic program guide. Horowitz is fairly certain that consumers won’t pay for anything that’s more expensive than a VCR, around $350 retail, but doesn’t know whether the company will offer it as a subsidized purchase or a monthly rental. “Five hundred dollars is way too expensive if you want a broadly distributed consumer service,” he says.

HOW DESPERATE ARE WE?

Horowitz closed his talk by saying that I-TV is all about entertainment, whether what’s being piped into the home is information or movies. “It had better be fun or they won’t use it,” he says.

It’s easy for anyone to see the truth in that statement, but still there is something disquieting about the seemingly universal need to make everything “fun” for consumers. In addition, I-TV poses a number of serious privacy concerns that no I-TV supporter, anywhere, at any time, volunteers to address. Is it just assumed that because someone has an interactive system in his home, he is agreeing to a carte blanche surveillance of his viewing, shopping, and gaming habits? If the cable system is indeed enabled as a telephone, will there be regulatory restraints in place that keep cable operators and advertisers from watching and recording whom he calls?

Certainly the concept of interactive TV is a powerful and exciting one, and many hold out great hope that it can resurrect the dying institution of television. But as large, influential companies like Viacom move forward with I-TV, industry and consumers alike must make sure that I-TV doesn’t create a scenario even more insidious in its own way than what the passive, couch-potato model hath wrought until now. We cannot be that desperate.

Denise Caruso