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CompuServe shifts direction, closing WOW!

By Published on .

CompuServe last week made a quick about-face away from its recent consumer online initiatives, canning its family-oriented WOW! service and announcing plans to introduce a new service targeting business users.

The financially troubled company will shut down 8-month-old WOW! as of Jan. 31. Early next year it will launch CompuServe for Business and will refocus its flagship service, now dubbed CSi, toward sophisticated computer users.

NO FLAT-RATE PRICING

CompuServe also vowed not to follow its competitors America Online and Prodigy into flat-rate pricing and multimillion-dollar marketing campaigns, calling both strategies misdirected.

The moves effectively take CompuServe away from the consumer market that AOL is trying to own.

"This is all about refocusing, going back to the basics," said Scott Kauffman, VP-online services at CompuServe.

HOURLY CHARGES

Instead of following the online trend toward flat-fee, unlimited access pricing, CompuServe will charge on an hourly basis for all services.

When it launched, WOW! was one of the first aggressively priced online services at $17.95 per month.

"Flat pricing offers for unlimited access at this point in time are unprofitable," Mr. Kauffman said.

WOW! had amassed only 102,000 subscribers; current CSi membership is flat at 3.3 million.

EXPANDING IN EUROPE

CompuServe will redirect its marketing efforts toward keeping current U.S. users and expanding its reach in Europe.

The company doesn't break out marketing budgets but said in its quarterly report issued last week that it spent $169.9 million on marketing communications in the six months ended Oct. 31, compared with $64.5 million in the same period in 1995.

The WOW! shutdown means the end of CompuServe's relationship with Martin Direct, Richmond, Va., which created direct-response TV spots for the service. CompuServe will continue to work with DDB Needham Worldwide, Chicago, and Resource Marketing, Columbus, Ohio, on a project basis, Mr. Kauffman said.

Current WOW! employees are expected to transfer to other positions at CompuServe, Mr. Kauffman said.

Copyright November 1996, Crain Communications Inc.

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