The development of interactive TV is starting to take shape, with the new industry making the strangest of bedfellows.
A panel here at annual media conference Intermedia — featuring QVC Network Inc. chairman Barry Diller, Tele-Communications Inc. CEO John Malone, Apple Computer Inc. chairman John Sculley and Microsoft Inc. chairman Bill Gates — led listeners to believe that a standard is emerging for cable, computers and telephones to communicate with each other.
Also clear from the panel session is that such easy interaction would likely make CD-ROM, the 5-inch compact disc that can hold images, text and sound, a less important medium than many had thought.
Since all the panelists’ businesses involve sending information over a network today, each contended that multimedia — or interactive TV — will be available to consumers starting three years from now on seamless infrastructure.
By consensus, it appears the cable industry is leading the way: because of its desire to first bring digital TV and its enormous channel capacity, and then interactivity, to the nation’s 60 million subscribers. According to Malone, the nation’s largest cablecaster will have fiber optic cable to neighborhoods in three years.
Getting there, however, means some new partnerships and new understandings of advertising and programming.
“We’re banging into businesses we don’t understand, making decisions on strategies we don’t fully understand either,” Malone admitted.
His various cable investments serve some 14 million subscribers. Offering set-top boxes to customers that can decompress digital signals alone, he noted, will cost more than $ 300 million.
With that kind of capability, existing programming will have tremendous flexibility and will pose some interesting challenges to marketing. According to Diller, QVC viewers will likely see on-demand shopping.
“It’s the evolution of the beast,” he said. On QVC, “Retailing is an impulse buy and isn’t efficient.”
As a result, Diller indicated, QVC is moving toward scheduling times for certain products to make it easier to shop with more planning. This, he hinted, will mean developing more creative ways to promote more expensive items than costume jewelry.
Already, Diller is experimenting with selling high-end fashions from Saks Fifth Avenue.
To make it easier for Diller’s subscribers to make purchases, cable companies like TCI are wrestling with adding telephone service through the cable box.
Luckily, the telcos and cablecasters appear to agree on a common standard for that to occur. Called asynchronous transfer mode, or ATM, it will permit video, text or voice to be sent along the same fiber optic line that carries cable.
Gates’s Microsoft is writing software for TCI and others, in hopes of creating a standard similar to its pervasive DOS and Windows programs for personal computers.
But Hollywood can relax for the moment — Silicon Valley isn’t going on a buying binge snapping up entertainment companies or cable franchises. Gates, a billionaire, could simply buy into cable or even a studio, but he isn’t inclined.
“We’re not going to own cable systems,” he said. “Pay-per-view is good, but we don’t know anything about it. Likewise,” he added, nodding at Diller, “with shopping.”