Fox Taking Interactive Plunge

Fox Television plans to debut two new interactive channels as early as the end of this quarter, a bold move that could backfire if consumer interest in interactive television continues to sour.

Fox wants to overlay these new Web-connected channels, called Fox News Extra and Fox Sports Extra, with its regular news and sports channels, Fox’s VP-enhanced programming Eric Shanks said at last week’s Consumer Electronics Show in Las Vegas.

"We will work with cable companies on getting all this interactivity through one pipe," Shanks said of his company’s plan to target MSOs, such as Cablevision Systems, as well as digital broadcast satellite providers.

Shanks, however, was cautioned on his efforts toward convergence by his colleagues and competitors at the show.

Any company that wants to blend the Internet with the television must focus on what television viewers are accustomed to, simple and reliable entertainment, they said.

"I rarely go interactive with my unit at home," said Shari Glusker, a manager of broadcast services for Microsoft, of her company’s own interactive product WebTV. "WebTV is still over dial-up. It’s a less than fabulous experience."

Many research firms are finding results similar to these industry experts. Standard Media International found 73% of U.S. adults were not interested in Internet access via the television. SRI also found the amount of people using interactive TV remained flat this year compared to the last.

"It just shows people want to sit down and vegetate," SRI’s David Tice said.

Interactive key?

Fox is hardly alone looking up the road to interactivity. Discovery Communications and Liberty Media last month said they were working on an interactive travel channel, and Showtime is offering enhanced TV to viewers 24 hours a day using Wink Communications technology.

Shanks believes Fox has found the key to trigger active television participation.

A year and a half after launching interactive television in the United Kingdom, Fox found sports and news drove people to go interactive, Shanks said.

"We are betting on things we know have worked around the world," Shanks added. "And we don’t think the United States will be any different."

On 24 hours a day, Fox Sports Extra and Fox News Extra will overlay Fox’s regular channels’ broadcast via cable or satellite. It will offer updated headlines instantaneously, a personalized sports scores or stock ticker floating across the bottom of your television, and the ability to buy tickets or merchandise via your TV set.

Lindsay Gardner, EVP-affiliate sales and marketing at Fox, said the new service would be free for operators and DBS providers. The future revenue stream will come from interactive advertising and merchandise sales, income the network will split with the operators. Fox is willing to go 50/50 with operators that supply enough bandwidth to make the new service robust, or roughly 70/30 for MSOs with weaker interactive platforms.

The question is: Will this new Fox service take off in America? Will consumers bite into convergence in general?

Not yet, says Dennis Miller, a general partner of venture capital firm Constellation Ventures. For Fox, the markets in America differ than the United Kingdom, so even these specifically targeted interactive channels may fail to generate enough interest and revenue. For TV/PC convergence in general, the American consumer just wants to keep it simple.

"I think set-top box deployment will be a critical variable in this mix," he says. Unfortunately, Americans don’t like extra boxes, especially big ones, he adds.

Nokia could face this consumer hurdle when it rolls out its new product, The Media Terminal, later this year.

The Media Terminal will provide digital video broadcast services, full Internet access and personal video recording. The company says its browser provides a smooth transition from TV to Web content, making it easy to access e-mail in your living room. It can also connect to printers, scanners, digital cameras and game pads.

Problem is, the box is big and ugly, says Gary Arlen, president of interactive research firm Arlen Communications. Gauging the success of this new product will prove difficult because nothing like it has come before, he adds.

Other products

Another interactive service showcased at the Consumer Electronics Show: Ch. 1, a private Internet convergence company, does away with the box altogether.

The company plans to provide by the end of the month one of the first interactive Internet access solutions built into the television. It will be a service that places a Web navigating line at the top of a TV screen, allowing the consumer to access the Internet at any time during a television program. It will charge $8.95 a month for a single user with an existing Internet provider or another $10 to provide dial-up service.

Ch.1 enhanced sets, due on the market as soon as this week, range from a $3,499 high-definition model to a $199 27-inch TV bundled with a three-year Internet service contract.

Fuze 3 Technologies, another Internet convergence company, takes this integration a step further. It erases any sign of the Web on the television screen altogether.

The viewer can use the remote or wireless keyboard to switch the TV screen to the Web or flip it back to the FuzeTV. The two are converged, not overlapped. All FuzeTV models include a cable-ready TV tuner and display, an embedded Web browser, e-mail application, printer port and a 56k or broadband modem.

Fuze 3 is also creating a new gadget called FuzeLink that stores advertising and program information for PC retrieval.

If this technology takes off, it makes it easier to tap into the spending habits of the couch potato, according to Warren Williams, president of Fuze 3.

This possibility to bring in money from the couch potato is what will make or break the convergence between the PC and the TV, say Larry Namer, an executive at interactive company steeplechase.

Ad agencies "are looking for new ways to connect clients to TV. It is a matter of life or death for them," he adds.