Evan I. Schwartz
It's lunch time on a Friday, and I'm working up an appetite, shopping on the television. I ain't watching no infomercial: I'm wielding an 8-inch remote at a GTE mainStreet marketing center - hard by Boston's Route 128 - controlling which products appear in front of me. The interface for GTE's mainStreet interactive TV service reminds me of the announcement boards on a local community access channel: low-budget graphics with Muzak in the background. Arranged in Hollywood Squares fashion on the opening screen are nine stylized photos, each representing a category, or "world," of activities. I've chosen world Number One: shopping, represented by a ribboned package. After blowing by screens that promote a virtual bookstore, a clothing boutique, and a flower stand,
I linger at the Flying Diner specialty foods storefront, where I'm beguiled by a glistening, 9-pound, honey-glazed ham.
I've got a hankering for that ham. With a twitch of my thumb, I guarantee that this great hunk-o-hog will arrive tomorrow.
Then, all of a sudden, the screen freezes - like a PC with a memory-protection error.
This is how my bumpy cross-country tour of America's interactive television test towns began. My travels took me to corporate labs, model living environments, and real suburban sofas near cities such as Boston, Seattle, Orlando, and Washington, DC - a sampling of the places where the biggest telephone, cable, and entertainment companies have been setting up technology trial zones. I wanted to see for myself what's been billed as television's true destiny.
Perhaps, I thought, I would learn the truth about the 500-channel, all-digital, high-fiber world of the future. Will it be a happy time, bursting with "choice, control, and convenience," the mantra of every corporation getting into this business? Or will we take one look at it, snort, and go right back to reruns of Baywatch? For that matter, will it even happen? Will you want to "turn your living room into a mall," as the Time Warner brochures promise? Or are so many industries rushing to make television interactive for the same reason that dogs lick their balls - because they can?
With that thought in mind, I identified my quest: ignore the insider industry positioning and regulatory battles and get answers to the basic questions: Exactly what is interactive TV? What do people say they want from the experience, and what do they really want? What types of services will they pay for, and how much will they pay? Does interactive cable have staying power? Or will the personal computer end up with all the interactive goodies in the end? The answers to these basic questions will determine whether the New TV will be a multibillion-dollar bonanza or the biggest business boondoggle since New Coke.
The first home on the expedition is just a few miles from my digs in Boston. I arrive during prime time on a Tuesday at a two-family walk-up in Watertown, a smack-dab-in-the-middle-class community that borders Cambridge and happens to host the largest concentration of Armenians in the country. The residents, Seda and Dikran Kaligian, 29 and 33, live in a small apartment with classic movie posters on the walls and toys for their 10-month-old son on the floor. Recently, they got a call from Continental Cablevision, their cable company, which is helping GTE sell mainStreet as a premium service. "It sounded interesting, and I wanted to see what all the talk of interactive TV was about," Seda explains, handing me a cup of tea and inviting me to sit on a low-lying cloth sofa.
Turns out, the Kaligians were in the market for something interactive. They recently canceled Prodigy for their Macintosh because it was too slow. Actually, mainStreet isn't all that different. Like an online service, mainStreet ties up a phone line, this one jacked into the back of a special set-top box. The "upstream" signals from the remote travel over the phone line to GTE's central computers. Those computers then pump the programming "downstream" over GTE's fiber-optic rivers, which lead into Continental's regular coaxial cable offshoots and back into living rooms like this one. As such, the images appear much more quickly than they do on a PC with a modem - making mainStreet a kind of Prodigy with pictures.
Seda flicks on the tube and switches to mainStreet, which appears on cable channel 3. From the opening Hollywood Squares menu, we enter world Number Two: games. It's nine o'clock, the nightly time slot for MatchPlay, a multiple-choice program based on "repurposed" footage from The Joker's Wild series of the '70s. "It's so retro," Seda says. "I remember it from sick days when I was a kid." The host is none other than Jack Barry, who was portrayed in the 1994 movie Quiz Show as a conspirator in the 1950s game-show scandals. Here he is again, posing brain-bending questions such as "What was the last name of Barney, the nutty character played by Don Knotts? Was it: A) Rubble B) Fife or C) Google?" The choices flash on a graphics overlay that borders the video.
As we play, it becomes clear that the canned contestants on the tube are no match for the Kaligians. Seda points her remote while the footage automatically halts for five seconds to give home viewers time to answer. After pushing the B button, she watches a confused contestant with an ultrawide collar wager his guess: "That would be ... Google!" he blurts. "Google?" Seda laughs. "Google?!"
The Kaligians say they are happy interactive customers and will keep up their monthly subscription at US$9.95. Seda says she uses it about 30 to 45 minutes per night, part of her average four- to six-hour TV day. Occasionally, they use the system's information services, most of which resemble one of those local information kiosks in an airport terminal. Recently, for instance, the family went out to eat after previewing the menu and decor of a local restaurant on their TV. And by calling up data from the system's Mobil Travel Guide, they learned about an inn in Amherst equipped with all-important cribs. But, they say, almost all of their mainStreet time is spent playing games.
As creators of the longest running interactive TV service, GTE is finally finding out what people like the Kaligians really want. When the company first conceived mainStreet in the mid-1980s, the $20-billion telephone giant naturally thought that people yearned for an interactive Yellow Pages to find information and buy things. Market research in affluent suburbs in the late '80s confirmed that hunch, as well as a crying demand for educational services, such as electronic encyclopedias. "We held focus groups to ask people what they wanted," recalls GTE's Barlow. "Number One, they said they wanted an interactive shopping center. People saw it as a time- and labor-saving device. You come home, pay your bills, shop, get your chores done, and go on with life. But we created the service based on that, and no one watched it."
Now GTE knows not to rely on focus groups. "All of us are really two people - the person we say we are in focus groups," says Barlow, "and the real person deep inside."
With that lesson learned, GTE went back to the drawing boards and repositioned the service based on usage data. GTE saw that people were mostly paying lip service to the education, information, and time-saving features. So, the company's new infomercials and marketing pitches hardly mention those. Instead, they emphasize the fun and entertainment aspects of mainStreet - the ability to play along with game shows, compete in trivia games, predict during football season whether the quarterback will pass or run the ball, and participate in special events, such as voting for your favorite actors on Oscar night. Coming soon: betting fake money on horse races. GTE executives might not admit it now, but it looks like gambling could be their killer application. Too bad it's illegal to place bets over phone lines.
Without some new revenue source, the system may never be profitable. At the start of 1994, after 10 years of developing and testing the service, GTE set up mainStreet as a wholly owned subsidiary and has spent roughly $5 million each year over the past seven years, says Barlow. That's OK, say GTE executives. Just as long as it turns a profit sometime by the year 2003, when GTE projects that up to 60 percent of US households will have interactive TV. But that kind of reasoning begs the question: What's going to be the main draw between now and then? Will interactive games and sports be the ticket? Do people have some kind of deep, dark urge to sit on their couch and buy vowels from
It's possible. It could be that folks like the Kaligians are desperate to interact with the medium that they have been watching so passively all their lives. Perhaps there is a pent-up demand among sofa spuds to get their 15 minutes on a nightly basis. But it's also possible that this concept of "interactivity" is so superficial that after a while the novelty will fizzle. Weeks after my visit, I called the Kaligians back and asked whether they were still excited about mainStreet's interactive game shows. "We don't play as often as we used to," Seda admits.
Next stop on the tour: Redmond, Washington, where Microsoft and cable colossus Tele-Communications Inc. plan to recruit 2,000 area homes by 1996 to test their incarnation of interactive TV. Cable subscribers in the area will get interactive games, information services, movies-on-demand, and a graphical program guide to search through all this new stuff. Fiber-optic threads radiate from a new "head-end" control room on Microsoft's corporate campus and link into dozens of scattered neighborhood "node" computers, where the data switches onto coaxial cables leading into living rooms. There, Compaq PCs are emulating the set-top box's role of decompressing the video and displaying it onscreen.
Overall, Microsoft approaches the business of interactive TV the same way it approaches computing. It wants to set the basic software standards and supply some applications while leaving the high risk of building capital-intensive hardware and networks to others. Microsoft has constructed an experimental network for this small test. But when the time comes to roll the technology out to the masses, it will delegate that work to partners such as TCI. "We won't dig up the streets and put $10 billion into the ground," says Laura Jennings, senior director of marketing and business for Microsoft's Advanced Consumer Technology group.
Instead, Microsoft intends to make money by selling software, not only to TCI but to dozens of phone and cable companies that are sinking $10 billion or so into the ground. Microsoft is creating not just the onscreen user interface, but also the MS-DOS-type software that operates the set-top boxes. Not to mention the Microsoft Media Server that sends streams of video to thousands of those boxes, plus the software that manages the basic operations of the network. Taken together, this is known as the Microsoft Interactive Television "platform." Southwestern Bell Video Services is among the other companies that will test the platform when it strings up 47,000 homes in Richardson, Texas, starting in late 1995. At the same time it supplies basic software, of course, Microsoft is also creating content, such as PC-industry news programs, educational channels, and shopping services.
In the process, Microsoft seems to be projecting the economics of computing onto this new market, as if watching TV were an exercise in productivity akin to setting up a spreadsheet. "The TV must make the transition from a broadcast appliance to a tool," says Lowell Tuttman, a group manager under Jennings. But isn't that the most absurd of uphill battles? It's the computer that was designed as a time-saving device. Not the TV. The TV has always been a time-wasting device. It's there to entertain you, not help you get things done. GTE has already learned this lesson.
But it's not surprising that Microsoft headed down this path, especially as it and TCI have yet to supply this stuff to real people. In fact, I'm in town months before any real customers will get the technology. So, the most advanced home in the area right now is hidden inside Building 15 on the sprawling Microsoft campus. This is where many of the ideas for the upcoming test are being piloted for focus groups. On a Thursday morning, I'm accompanied by a Microsoft PR person past the reception desk, through a maze of halls, and just across the head-end control room, where we encounter a sign in the corridor that says: "The Microsoft Home. Invited Guests Only." Under the sign is a door bell.
The door is answered by a man with silver braces on his teeth and a blond crew cut. His name is Pierre de Vries, and his bio says that he was "trained as a theoretical physicist at Stellenbosch and Oxford. He worked for some years for a London venture capital firm, evaluating and managing high-tech start-up investments. He then turned to sculpture, concentrating on installation pieces that explored the relationship of people in space." This is the guy Microsoft hired to determine what normal people want to do in their living rooms at night.
The Microsoft Home, as designed by Pierre, is more like a luxury condo. Every room has a screen, from the multimedia PC in the kids nook, to the financial news tube in the office, to the recipe tablet for "cooking apps" in the kitchen, to the projection screen in the den. The overall goal is fulfilling what Pierre calls his "vision of the extended family mediated though technology."
As we sit down on the deep leather sofas in the living room, the main electronic hearth completely absorbs my field of vision. First, Pierre demonstrates the video mailbox. We view a list of pretend incoming messages on the 50-inch screen. Pierre uses his remote to select a piece of mail that was sent yesterday at 3:32 by someone named Camille Savio. A woman appears. In a slight fish-eye view, she is standing in what looks like an airport at a public videophone - looking mightily confused and explaining that she was trying to reach someone else. This is much more enjoyable than your average wrong number, I must admit. But what if junk marketers got my video mailbox number? I have a feeling I'd be seeing much more of telemarketers from MCI and Visa than I would of Cousin Teri and Aunt Gilda.
The centerpiece of this demonstration is the interactive program guide. This early version of the guide groups broadcast programming, video-on-demand, and information services into categories such as news, movies, games, live sporting events, and shopping. This guide is fairly simple and non-intrusive: 10 numbered choices appear on a transparent overlay on the bottom half of the screen. It looks like an advanced version of the setup menus for controlling volume and color on any large-screen TV. You choose the corresponding number on the remote and progress into the submenu for that category. When you choose the video-on-demand option, for instance, you see a menu of movies listed.
The point of this and of all program navigators is to transform people from aimless surfers into efficient selectors. But just like the paper TV Guide, it presupposes that you'll know what you want to watch when you see it on a menu. If you have no idea - often the case for me - you're still going to surf through all the channels.
Microsoft has a solution for this, too. Instead of searching endlessly, Pierre figures that it would be interesting if the system had some built-in serendipity. To this end, a service called the Reactor presents nine random cartoon icons, arranged on the screen in the ever popular Hollywood Squares style. The viewer uses the remote to select three of them, such as a baseball, a globe, or a church. We picked the gun, lips, and elephant icons. The system then searches for a program that has these three elements in common. We ended up with the Sharon Stone movie Sliver. What does an elephant have to do with this? No one can explain. Then we picked a guitar, a beach ball, and the Swiss flag. This time, we got a 10,000 Maniacs video. "Maybe people in the band are from Switzerland," Pierre guesses. Actually, they're from Jamestown, New York. But no matter. "It just reacts," he adds. "It's supposed to surprise you!" What surprised me is that he believes people would want to watch a program selected pretty much at random. Pierre may just be trying too hard on this one.
In fact, Microsoft seems to be over-intellectualizing TV, in the hope that the software giant can break 50 years of viewing habits and change why people watch. "People have a money budget and a time budget," begins Thomas Wong, Microsoft's advanced consumer technology research manager. "And people are willing to pay to save time," he adds. Thus, he says, they will use interactive TV to rent movies; shop for food, clothing, and household items; attend college and self-improvement classes; and get all kinds of information - all without having to leave their couch for time-consuming trips. That, he says, is what people in focus groups and surveys say they'll do.
I don't think so. The reality, it seems after my first two expeditions into interactive TV land, is that people don't care very much about saving time when they turn on the tube. The average American watches between four and five hours every day, according to Nielsen statistics. If they were so pressed for time, where did they get these extra hours in the first place? People watch television for an entirely different reason: to feel that they are part of something larger than their own lives. Why else would so many people know so much about characters in Cicily, Alaska, and the Melrose Place apartment complex without learning the names of their real neighbors? TV watchers seek out characters and stories with which to identify. It's a deep psychological fix that can't be explained in economic terms. They also turn it on for company, as background noise. And who needs interactive background noise? Hardcopy will do just fine.
It's not surprising that Microsoft doesn't grasp this. So many executives from Bill Gates on down simply don't watch much tube. Instead, everyone here seems obsessed with cramming as much as they can into their ultrasqueezed schedules. On the rare clear and sunny day of my visit, I watched as 4, 5, and 6 p.m. rolled by: almost all the cars in the Microsoft parking lots remained in place. Isn't it time to go home? One employee tells me he nearly kills himself on Tuesdays to finish work and race home to watch his favorite show, Frasier, by 9 p.m. So many workers here make so much money and have so little time that requests for a pay cut in exchange for a less demanding job are all too common. These people want to buy back a piece of their lives. And they mistakenly think everyone else is like them. Which goes a long way toward explaining why Microsoft is hell-bent on misapplying advanced technology to solve problems that, for most people, don't exist.
Now it's on to the northwest suburbs of Orlando, Florida. The local economy here is built on fantasy, making it the perfect test zone for Time Warner Cable. On a sunny Thursday afternoon, I drive in my rental car up to Time Warner's Home of the 21st Century, a big white house that makes the Microsoft Home look like a yurt. Created as an idea house by Time Warner's own Southern Living magazine, this $700,000 dwelling is a high-tech jewel box perched at the edge of a newly sprung subdivision. I walk inside, meet up with Tammy Lindsay, the Time Warner PR person, and begin showing myself around while she makes a phone call. As I ascend the stairs, I innocently walk into the home office, where a television spouting a canned demo passes off this remark to me: "Feel like a trip to the mall, but don't have the energy? Try the interactive mall!" I'm insulted. Do I appear so worn out that I couldn't even hop in my car and drive a few miles to satisfy my overwhelming urge to shop?
But as Lindsay shows me around and I peer with her into the future of television, I learn not to take it personally. At last count, she tells me, there were 13 TVs here, each desperately seeking something to do. The TV in the master bathroom, after all, is as big as the one I have in my living room. This is more like a media theme park than a house. In fact, Time Warner advertises this as a tourist attraction and charges the public $5 just to come inside and look around. Topping it all off is the fact that Lindsay is a former tour guide for Walt Disney World.
The most unwelcome site is a TV in the kitchen that presents Alfred the (Annoying) Electronic Butler, a talking, bespectacled cartoon face who does a bad imitation of an English house steward. Next to his face is a menu of tasks you can program Alfred to do throughout the day. "Chip, chip, cheerio! Wake up and smell the coffee!" he blurts each morning from above the oven. Alfred then customizes each of the home's seven electronic zones with its own mode of climate, security, and media. At night, Alfred can be preset to appear while the master of the house may be scarfing down milk and cookies. Choose "bedtime" from the TV's onscreen menu, and Alfred dims the lights, turns down the music, activates the alarms, and says: "Good night, sleep tight, don't let the bedbugs bite. And don't forget to brush!" Lindsay thinks he's just adorable. I have to suppress an unsettling urge to strangle this computer-generated image.
Maybe I can relax a bit in the den, where the world of Time Warner's Full Service Network awaits. I sit down in a soft reclining chair, while Lindsay picks up a sleek remote that looks like it was designed by Braun. She points it at a set-top box that resembles one of the early, ugly IBM PC clones. The first image to appear onscreen is the Carousel, a 3-D merry-go-round image that she spins using the round, blue directional key on the remote. Ten different categories of interactive services are represented on the Carousel's graphical panels. Shopping, for instance, is symbolized by a green paper bag and a red-ribboned straw hat.
Everything on the system can be personalized. If your name, for instance, is Tammy, you can make a custom Tammy's News about, say, mutual funds, golf, and computers - while blocking out news of foreign affairs and Congress. You can create a hot list of your favorite movies for repeat viewing.
Sterile, high-tech cocoons such as this are made possible by an ultrafast network operating behind the scenes. When customers on couches use their remotes to request movies, news, and product information their signals are sent to their set-top terminals and then travel through coaxial cables leading from their home to a "node" stationed in the neighborhood. That computer converts it to laser light and transmits it to the Network Operations Center in a office park a few towns away. Once there, racks of black demodulators sort the data into radio and laser signals and zap them over to an AT&T network switch. The switch sorts the signals and routes them to the appropriate spot on one of 16 Silicon Graphics servers. The appropriate video on those drives is pumped back over the fiber-optic threads to the neighborhood nodes and to the set-top terminals, which decompress the video for display on the TV. All of the above takes place in a half second. And the whole process is a closed system, meaning the only content to appear are programs that Time Warner decides to create or license.
Let's see what Time Warner's idea of real people think of all this. At the time of my visit, less than 55 real homes are outposts for the company's Full Service Network. Many of those are clustered off the sidewalk-free streets of the Wekiva subdivision, located a couple miles from where Alfred the electronic butler resides. Fifty years ago, this area was a wooded hunting preserve with dirt roads. Then came suburbia and the Magic Kingdom. This is where the Willards live.
You know the Willards. This is the media-coached family whose members tell people like me how much they can't live without the Full Service Network. Karl Willard, 43, a financial planner, his wife Susan, 39, a homemaker, and their kids, Jaclyn, 14, and Brad, 12, have hosted so many reporters and camera crews since getting the system last December that the family keeps a scrapbook and a video collection of appearances. For the Willards at least, the promise of interactive TV has already been fulfilled. Seems that whenever they watch it, they appear on it.
Oddly enough, Mr. Willard hints that he's already tired of the Carousel. "You can bypass it," he shows me, pushing buttons on his remote. "If you know that you want to get to movies, you punch 98, and you just go." Then, he hands the remote over to Brad, who switches to a college basketball game and sits emotionless in a blue leather chair. As a photographer from The New York Times takes 30 minutes to set up his equipment in the living room, Brad doesn't interact with the TV. He just watches the game.
Mrs. Willard swears that the interactive shopping features ease her daily burdens. Once, when she broke some glasses in the kitchen, she cruised the virtual Crate and Barrel store to order some more. Things cost about the same as they do in a real store, not including express mail charges. To me, all this seems about the same as a catalog, except you have to put up with these extraneous graphics.
Mrs. Willard seems especially excited about the forthcoming ShopperVision feature. The Willards have already seen demos of the service, in which the viewer's cartoon grocery cart appears onscreen. Using the remote, you push your cart down the virtual aisle, zoom in on graphical product packages such as Captain Crunch boxes, read the nutrition labels, and twitch if you want that product in your cart. Push a few more buttons, and you can ring up your purchases for same-day delivery to your doorstep. This seems terribly dehumanizing. It would put an end to thousands of years of human history in which eats have been gathered in a real marketplace filled with people. What's more, the economics are out of whack. The grocery business runs on 1 percent net margins. That allows little room for supermarkets to invest in elaborate electronic shopping services in which they have to render 3-D graphics for every product on their shelves. And even Mrs. Willard says she definitely doesn't want someone else picking out her tomatoes and melons.
Even the system's video-on-demand service seems unconvincing - at least at this stage. The Willards say they no longer visit their town's 16,000-title video store. But the Time Warner system offers only 60 movies now, with plans to bring that up to a whopping 150 by year end.
Mr. Willard insists that the new technology improves their quality of life. "We're a busy family," he says. Brad plays soccer. Jaclyn is a cheerleader. All members of the household say they watch TV only about two hours per day. This makes the time they do spend watching more productive, he says. "I definitely like to save time so I can get on to something that is enjoyable," Mr. Willard adds. "We're only on this earth for so long." He compares this system to the advent of the microwave oven. "I would literally fight them if they tried to take it away."
Yeah, but how much will he pay? Time Warner is now asking customers to pay $2.95 per movie. Given that the Willards are probably among the most enthusiastic customers Time Warner will find, it seems reasonable to ask for their price. Mr. Willard says he wouldn't mind spending $75 to $80 per month on the system, a figure that Time Warner executives say could be typical. "We were paying that already in monthly spending on cable, plus movie rentals and videogames for the kids."
Will that be enough for Time Warner? Analysts estimate that the set-top terminals, custom built by Silicon Graphics and Scientific Atlanta, cost upward of $3,000 each. Then there's the sleek new remote-control units, the system's HP DeskJet 550C color printers for printing coupons, and the Atari Jaguar unit. Not to mention the elaborate network operations center at Time Warner's offices. Add this up and the cost easily tops $5,000 per home for the 4,000 households that will have all this stuff when the test is in full swing, according to analysts and published reports.
Recouping investment on such networks won't be easy. This is why Tom Feige, the president of the Full Service Network, says, "There has to be more revenue than just the Willards's $80." Feige began his career selling cable subscriptions door-to-door in 1978. He's the man with a plan to supply 85 percent of Time Warner's 9 million subscribers with the network by 1998 and the one who must figure out how this system will eventually make money for the company. He won't comment on reports of how much all this is costing Time Warner. But he says: "We think the expense is worthwhile because it lets us climb a steep learning curve. We'll be finding out what people like and why."
"We've run lots of numbers," Feige adds, "and we're very comfortable that we'll be making a good return." Besides, he says, the costs will eventually come down. He expects the set-top boxes to sell for less than $500 in two years.
His business model relies heavily on interactive advertising. He predicts that people will want to interact with ads for information-intensive products like cars and pharmaceuticals. But at this point there's no solid evidence that large numbers of people want to interact with TV ads or shop this way. The $4 billion video-shopping and infomerical industry has been successful because tantalizing videos of beautiful models create demand. Some people think QVC is entertaining. Besides, the cable industry has never been very successful in attracting regular ads. Less than 20 percent of its revenue comes from advertisements, whereas the broadcast industry gets nearly 100 percent of its revenue this way. Feige acknowledges this and admits that no one knows for sure whether these ad concepts will work. He says simply that he's now in the phase of "understanding the market research."
The last stop on the tour is Fairfax County, Virginia, the county with the highest median household income in the United States. It's a land of lawyers, lobbyists, and high-tech workers living in edge cities built from scratch in the 1980s. Peering out from the trees lining the highway are rows of gleaming office towers emblazoned with meaningless corporate names, like Cordant and Visix. "Everything you see has been built in the last five years," the taxi driver told me on my way from Dulles Airport. This is Bell Atlantic's interactive TV test zone.
Since my last visit to the company's "digital factory" in Reston, Virginia (see "Align and Conquer," Wired 3.02, page 110), Bell Atlantic's joint video venture with Nynex and Pacific Telesis Group has been busy: its agent, Michael Ovitz, recruited former CBS programming chief Howard Stringer to run the company, now known as Tele-TV. In addition, the company began rolling out its Stargazer service. At the time of this visit, the service was just recently installed into the homes of 50 "friendly users," meaning people from other Bell Atlantic divisions. This first phase of the test was soon to include 1,000 real paying people as well. The overall point is to gauge whether there is enough demand for new video services to justify Bell Atlantic's five-year plan to build an $11 billion broadband infrastructure.
Like the GTE mainStreet service, this one requires a telephone line. Unlike mainStreet, however, you can still use that line to get phone calls while watching. This service doesn't displace your basic cable service, but adds to it: it requires a second set-top box. Using a technology called ADSL (asymmetrical digital subscriber line), Bell Atlantic channels digital video over the phone lines at speeds of 1.5 megabits per second, allowing for picture quality about the same as regular cable. The upstream signals race back to Reston, where they trigger videos from nCube supercomputers. This technology allows viewers to receive only one program at a time. Starting in 1996, the company plans to supplement the current network with fiber or wireless technology so it can supply multichannel cable service. That's when the battle to kick the traditional cable companies out of homes will take place, according to Bell Atlantic.
My main destination on this trip is the town of McLean. A Washington suburb with quiet, tree-lined streets, McLean is one of the older towns of Fairfax. It's a Tuesday afternoon, and I'm accompanied by Bell Atlantic spokesperson Ginger Fisk. We drive up to the colonial home of Kristen Snoots, a 33-year-old single mother who directs a department in Bell Atlantic's consumer services group. When Kristen was growing up in the area, she was allowed to watch only a half-hour of TV per day. Usually, she chose I Love Lucy. Now, she's similarly strict with the TV allowance for her dark-haired, 5 1Ú2-year-old daughter Meagan. "I'm a bit of a control freak," Kristen admits.
After chatting in the living room, we walk downstairs into the den to watch the TV rigged up with the Stargazer service. Meagan skips down the steps after us brandishing a tray of Oreos. I sit down as Kristen turns on the tube. The opening Stargazer screen has four major categories: Entertainment, Learning and Lifestyles, Kids Zone, and Marketplace, a shopping service that doesn't work yet. Like all the other interactive TV services, each category has a stylized graphical icon. The interface reminds me of the sharp colorful screens of a multimedia reference title. Choose any category, and you get a submenu, again with several different choices.
Kristen enters the family's four-digit PIN so we can order some shows, which would range in price from 49 cents for short cartoons to $4.49 for recent feature movies - if the Snoots were paying. Currently, there's a total of nearly 700 videos to choose from. Kristen likes the concept of a PIN and may even set up a separate one for Meagan with a limit on what she can watch and how much she can spend on these videos each month. "I like to control the service," she says. She doesn't want her daughter watching too much TV and wants her to watch only what's appropriate for her age.
She hands me the remote. I choose Entertainment. From the submenu, which also offers four categories, I pick an icon labeled TV Favorites - Talk. The screen lists the first six titles in an alphabetical inventory of 34 highly rated reruns of various Geraldos, Donahues, Sally Jessys, and the like. I position the cursor at the bottom of the screen on a forward-arrow icon. When I press the remote's enter button, the next six-video segment of the list appears. Meagan is playing in the other end of the room when Kristen and I spot a listing for a program entitled "Donahue - Addicted to Making Home Sex Videos." "Is this OK?" I ask. Kristen glances over at Meagan, who is not paying attention, then nods her head.
It strikes me that adult programming will do very well on this type of a service. With pay-per-view services such as this, you no longer have to worry about running into someone you know at the video store while checking out a copy of I Like It Like That. Most of the fare on the Bell Atlantic service is family-oriented. But the sexiest programs are going gangbusters, says Fisk, the PR person. The most popular movie this month, she adds, has been Belle Epoque, which is listed under the Movies - Drama submenu. For many current releases, you can watch a short preview before buying. Just select the title from the menu and position the cursor on the "preview" icon on the screen. I do that to find out that this French feature is about a soldier who returns from battle only to face the "dilemma" of four voluptuous young women wanting his body.
To cool things down, I hand the remote over to Meagan. Standing in front of the TV, she chooses Kids Zone, which is broken down into Movies, Fun Fair, Let's Explore, and Story Place. While munching on her Oreos, she chooses Movies and scrolls down a menu of offerings until she sees "Rainbow Bright and the Star Stealers," a rather interesting cartoon story about a heroic horse with a multicolored mane. She's already watched the movie four times in the past 10 days. That would cost $1.49 a shot, if the Snoots were paying.
I ask Meagan for her candid assessment of the service. She scrunches up her face in deep thought and then shouts: "Best TV ever!" But Kristen is not sure she'll keep the service when Bell Atlantic starts charging for it - it depends on the price. She says she's not a big TV watcher, averaging only about an hour per day. They don't even have cable, to begin with, and they rent only about three videos per month. But, recently, she says she's "sworn off" the video store, after returning a copy of Auntie Mame so late it cost her $44 in late fees. On average, she says she was spending $16 to $18 on late fees per movie. Video-on-demand appeals to her mainly for that reason. Indeed, the video rental industry is known to get about 30 percent of its revenue from late fees. But still, Kristen is worried that Meagan likes Stargazer a bit too much. "Why do I want something that will increase her TV usage?" Kristen says. "That's not an objective of mine."
Later in the afternoon, I'm back at the digital factory in Reston, talking with Bell Atlantic business director Kent Libbey about how this service will turn a profit. He expects that most or all of the $15 per month that consumers in the target market currently spend on video rentals and premium channels will shift to the Stargazer service. But he, too, says the business model won't work without interactive advertising. He is negotiating with consumer goods companies and ad agencies to determine whether they will pay extra to "direct their message" to particular viewers "and get a response back." He also expects that the price consumers pay for programming will be a function of how many ads they are willing to accept as interruptions or enhancements to the shows they watch. One possibility is to offer credits for customers to participate in direct marketing. For example, viewers would use their remotes to answer personal questions about life insurance, beer, or cosmetics in return for a free movie.
What if this new advertising model doesn't work? What if people just want to watch their videos and be left alone? If that's the case, Libbey says, "We might have to adjust the size and scope of the offering." In other words, Bell Atlantic might have to scale back its plans.
At the end of my tour, I'm weary, bleary, and burdened with stacks of press kits. All the technology and test markets are blurring together in my mind. It's no longer a mystery to me why everyone in this business has essentially the same vague business model. The net affect of all the alliances that have been written up in The Wall Street Journal for the past three years is this: everyone is in cahoots with everyone else. Bell Atlantic is collaborating with Microsoft. Microsoft is in bed with TCI. TCI works with U S West. U S West has an investment in Time Warner. Time Warner is aligned with AT&T. AT&T has done deals with GTE. And so on. They visit each other's trial zones, attend the same conferences, buy the same market research.
Mainly, I was struck by the common threads running through all the tests. All these corporations have the same top-down view of how they can force a change in people's entrenched viewing habits. They all project how revenue will shift from other industries, such as retailing, into their own. They all can demonstrate how their central computers can keep track of every click viewers make. And they all pine for the day when people sell out their communities for the sake of a more convenient way to shop. Meanwhile, none of these companies are doing much about making their systems compatible with each other's. "It's as if we had to create different commercials for each channel," says Judy Black, who chaired a technology committee for the American Association of Advertising Agencies. "That's just not going to fly." And they're not doing much about making them truly two-way. Or about opening up their networks - à la the Internet - so consumers can be producers, creating their own programming and distributing their own videos.
By the time I return to my own living room, I am sure that I don't want anything to do with this. I do not want to shop for socks. I don't want a smart set-top box. I do not want a 9-pound ham. I'll just stay the spud I am. I just want to plop down on the sofa, turn on the entertainment, tune out my higher brain functions, and exercise my constitutional right to stare vacantly at the tube, resting assured that interactive television is still little more than an oxymoron.
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