IQ News: A Question Of Convergence

Ballyhooed Internet/TV merger still has the media mystified. It's been one year since Microsoft decided to buy WebTV Networks in a deal that, at the time, was heralded as the shot heard 'round the convergence world. But that hasn't ensured that WebTV, which delivers Internet access via set-top box to TV, will be the dominant delivery platform for the convergence of TV and Internet programming. As another evolution in the convergence story, Intel and Microsoft last week announced the two companies will integrate Intel's Intercast software, which delivers TV signals to PC monitors, with WebTV for Windows 98. Other companies in the mix, such as WorldGate Communications, would have Microsoft and Intel's convergence plans derailed by offering an Internet/television hybrid through standard cable. WorldGate rolls out its service in St. Louis on May 1. And the cable operator-backed Home Network, one of many cable-modem initiatives, is slowly building its subscriber base, with 50,000 subscribers reported at the end of last year. The situation is currently creating headaches for TV programmers and advertisers. For media such as the broadcast networks, the challenge is to not only produce something capable of being received via a variety of different technologies, but also to make hybrid Internet/TV content compelling enough to please a potentially vast, wired audience. But, with so many hurdles still to be cleared, advertisers aren't yet committing marketing dollars to what remains an untested branch of digital media. Still, with the potential that millions of eyeballs will one day spend quality time tuned into converged media, some media and advertisers are already feeling compelled to create converged content. "Here's the thing that may haunt the networks," says Alan Brody, founder of e:TV World, an Internet TV convergence conference. "They're acting defensively. They have the game to lose. It's unclear what they have to win. They've seen red ink in Web sites. There has got to be a dreaded fear of what it costs to develop this programming. It ain't cheap." NBC has been the most active of the broadcast networks. The Peacock Network is hoping to cover all its bases by forming content for interactive TV company Wink Communications, Intel's Intercast, InterVu, a video service on the Internet, and a new broadcast PC product being launched by Microsoft. "Our intent is not to make a bet as to what will win," says Edmond Sanctis, senior vice president and general manager, NBC Digital Productions, a unit of NBC Interactive. "It's to figure out what users and advertisers want and extend that across platforms that make sense. It's get in the game and be early in terms of testing opportunities for programming and new revenue streams." Intercast, for example, is one platform where NBC has learned about what does and doesn't work. Viewers are meant to watch TV and at the same time digest whatever is coming across Web pages that are transmitted through the VBI (vertical blanking interval) signal. So far, sports and financial programming seem to be desirable when the supplemental Web pages are statistics or information that function as background. NBC Intercast programming has included the NFL, the NBA, and the 1996 Atlanta Olympics; sister unit CNBC Intercast tracks investments and customizes news and financial information and portfolios. But the problem arises with entertainment programming. NBC, for example, has experimented with Homicide: Life on the Street and The Tonight Show with Jay Leno. "Entertainment is harder," Sanctis says. "If you've got a powerful story going on and you want to add a layer of value there, it's more challenging. how do I add a layer that doesn't distract you?" NBC has to some extent solved its own dilemma by making its online programming a spinoff, rather than running it simultaneously with its TV programs. NBC.com's spin-off shows, The Pretender Adventure and Homicide's Second Shift, allow users to solve mysteries and cases and interact with characters from the shows. It's a sort of convergence that, given the relative availability of Internet access, has made the Web a safe place for advertisers to explore new advertising forms. Pontiac integrated its Grand Am into one segment of Second Shift. Also on NBC.com, Levi's and NBC produced an online extension of the former's "They Go On" $90 million TV campaign that involved the same characters from TV. For Intercast, advertiser EDS (Electronic Data Systems) ran a smart commercial where related text and graphics for the ad were embedded in the VBI. On the whole, however, NBC's Intercast programming hasn't been advertiser-supported because, though commercially available, NBC doesn't know the size of its audience. "Unless there's an audience it's pointless," says Scott Heiferman, chief executive officer and president of i-traffic, which devises online media plans for advertisers. WebTV and the Home Network seem closer than any content companies to successfully chasing ad dollars for convergence. WebTV charts 300,000 subscribers and has developed advertising for Columbia TriStar, General Motors, Honda, Volvo, British Airways, Colgate-Palmolive and N2K. Home has advertiser involvement from Clorox, Lipton, Procter & Gamble and General Motors. David Hamlin, associate manager of new media technologies for Clorox, has been experimenting with testing out online commerce through Home for Brita water filters. The objective for Brita is to see if consumers are interested in ordering replacement filters online and generate money without alienating retailers. "There isn't any hesitancy on our end to invest in convergence technology," Hamlin says. "But we're still trying to prove any investment will move a bottle of bleach at the end of the day." Heiferman envisions convergence for advertisers meaning more interaction with consumers. "You'll see an ad for a car and if you are enabled to do so through the hardware, you'll get a message that says press the blue button to get more info on the VW bug," he says. "And then some email will pop in your box and you can learn more about the VW bug that'll feed into getting a test drive, price quote or buying a car. Who will enable that interactivity to happen, I don't know. But convergence is not about you taking a break from TV to play the Tide stain game." Only those serious about converging need apply.

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IQ News: A Question Of Convergence

Anya Sacharow

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Anya Sacharow