Consumers Start Slow Walk Down Information Highway
THE next generation of information technology will roar through the office long before it gets to the home. That is what most experts assume. But a number of companies are working to hook consumers into the high-speed information superhighway.
Their vision sounds compelling: pizza orders via TV, video-conversations with Grandma. But will it work? "There's been so much hype lately and so many people positioning," says Patrick Ferrell, president of Infotainment World, which publishes a leading video-game magazine. But a mass consumer market for the information superhighway is at least five years away, he adds.
Do not tell that to Dave Lehman, president of TV Answer here in suburban Washington, D.C. "We believe that we are the lowest cost, lowest power network in the world," he says. "With that, we think we are going to drive it all the way down to the family unit."
TV Answer is expected to make its debut by early next year. It will allow homeowners to buy a box letting them respond to what they see on television. They could order a product after seeing an ad (provided the sponsor had signed on with TV Answer); do their banking electronically; or answer questions posed by an educational show.
Sega, the computer-game maker, is starting a game service called the Sega Channel. It will allow subscribers to the service to play hundreds of Sega games via cable television. Only subscribers to Tele-Communications Inc. and Time Warner can use the service. But Mr. Ferrell calls it "the first step in the direction of making the television more interactive and having entertainment per se on demand."
THE problem with these strategies is that consumers are not ready for them, several experts say. "There are no revolutions in consumer products; there are evolutions," says Michael Wheeler, senior vice president of new media for NBC. The network has announced its own on-demand service for video and audio news, but it is specifically targeted at business.
"The reality is that there have been at least 100 multimedia trials over the last 20 years," adds Bruce Sidran, vice president and executive director of First Cities, an information-access project of the Microelectronics and Computer Technologies Corporation in Austin, Texas. "There's scant historical evidence that people care about this at all."
What makes the consumer market so tantalizing is its size. And there are some indications, at least, that information-on-demand will attract consumers if it is properly packaged.
For years, Hilton Hotels offered its guests scheduled movies for an extra fee. One ran early in the evening; another late at night. Guests in 7 percent of the occupied rooms tuned in. In February, Hilton installed a new system, making dozens of movies available whenever the guests want. Viewership has almost tripled to 18 percent. "It has been a tremendous boon in terms of revenue and customer satisfaction," says Dennis Koci, Hilton vice president of staff services. The system, called On Command Video, a lso lets guests check out and review their bill electronically - a feature that especially pleases business travelers.
The system is hardly high-tech. Each hotel runs a bank of video cassette recorders with movies installed and a switch connecting the right movie to the room. Popular titles are installed in more than one machine. The technology exists to replace the bank of VCRs with a satellite feed, but "our engineers say it's way too expensive right now," says Susan Pitts, vice president of venture management and development at Comsat Video Enterprises. Comsat is the majority owner of On Command Video.
When LodgeNet Entertainment Corporation tried to roll out a test system where movies started every 15 or 30 minutes, consumers did not bite. "The on-demand ... is the best way to go," says Tim Flynn, LodgeNet's president and chief executive officer. The Sioux Falls, S.D., company has also signed an exclusive agreement to market an interactive game service.