FULL SERVICE NETWORK DELAY PLEASES ADVERTISERS

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Time Warner blamed technological hurdles for delaying the roll-out of its interactive TV system but bowed to advertiser concerns with the move.

Time Warner last week said it would postpone introduction of the ambitious Full Service Network in Orlando until the fourth quarter. The trial was slated to start April 1, but there were growing signs in recent weeks the media company was falling behind schedule.

The delay is necessary to "allow additional refinements of the underlying system software and the set-top terminal," Time Warner said in a statement. The company insists its plan to wire 4,000 homes by yearend remains in place.

Silicon Graphics is developing operating software for the trial; Scientific-Atlanta is assembling the TV set-top boxes.

Advertisers and suppliers said they would rather Time Warner push the test back than move forward with an inferior product just to be the first one out of the gate. They said they didn't view the decision as a major setback in the drive to develop and introduce a broad range of interactive TV services.

Test advertisers were also said to have been increasingly concerned that Time Warner was going to initially deliver only limited services, providing little value to marketers paying $200,000 apiece to participate.

"We really thought they were moving faster than possible, that the timetable was too optimistic from the beginning," said Michael Drexler, president of Bozell's BJK&E Media unit in New York. Bozell is believed to have several clients in the test, notably Chrysler Corp.

"With such high stakes involved for them and their advertisers, it's a lot better that they take the time they need to figure out how to get this on track," he said. "We don't want any false steps."

Mr. Drexler said Bozell clients remain "absolutely committed" to the test.

Ford Motor Co. had earlier made the decision not to participate in the first phase of the Orlando test because of concerns about return on investment.

"The whole electronic superhighway structure is going to be a very slow-moving process," said Bob Mancini, senior VP-director of media services at Ford agency J. Walter Thompson USA, Detroit. "I think [Time Warner] is trying to proceed with very marked caution so when they do come to market, they'll have something where they can hold their head high."

Gary Arlen, president of consultancy Arlen Communications, said Time Warner's "false step" won't derail development of the information superhighway but could make advertisers and suppliers more skittish.

"There are a lot of people who'd rather be followers than pioneers. This thing is incredibly big and complex and, most importantly, unproven," Mr. Arlen said.

One Time Warner partner said the delay gives all suppliers, programmers and advertisers time to fine-tune their offerings.

"It's a relief because it buys us more time to enhance the product even more," said Sandy Goldman, president of ShopperVision, which plans to offer home grocery and drugstore shopping services in Orlando. "We're going to go on as soon as we're ready."

Debra Aho contributed to this story.

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