GTE DRESSES UP MAINSTREET IN DRIVE FOR SUBSCRIBERS

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GTE Corp.'s mainStreet, one of the oldest interactive TV systems, is brushing up its image.

MainStreet, long criticized as a clunky, still picture-based reference tool, has 4,000 paying subscribers on two cable systems near Boston and San Diego after starting a rollout last summer. GTE is giving the system "hipper" graphics and adding a raft of new, transaction-oriented services. Even the name is changing.

The goal, in essence, is to differentiate mainStreet from Main Street-the product that began testing in Newton, Mass., in 1988 and Cerritos, Calif., two years later. In those markets, GTE offered a variety of services, from video on demand to an interactive mall, neither of which are available on mainStreet today.

"When we first came out as a test, the words information superhighway hadn't been coined yet," said Robert Regan, mainStreet's senior VP-programming, who joined the company earlier this year from Interactive Network.

MainStreet's lofty goal is to roll out to 10 million homes by 2000, although it now reaches just 120,000 potential subscribers on Continental Cablevision in the Boston area and Daniels Cablevision in California.

What's changed in six years? MainStreet is starting to transform to a more approachable service. While still targeting family users, the service is replacing a Main Street-style studio backlot with an electronic video wall for host segments.

GTE still offers games-like NTN Communications' QB1 play-along football-and an on-demand encyclopedia, news and stock-market information, the latter being the most popular feature of the service.

But GTE next month is adding interactive versions of four game shows, including "The Joker's Wild" and "Press Your Luck." MainStreet subscribers can tally their own responses and compare them with other real-time players.

GTE also is scouting for interactive "personalities" to host "Insomniac Cafe," a late-night chat show. And GTE expects to add health and fitness programming, including on-demand reference material.

The add-ons won't cost subscribers more than the $9.95 a month they pay now for the dedicated cable channel, which uses a special remote control and cable box to transmit signals back to the service using phone lines. But they will likely help mainStreet acquire more subscribers, as will a new infomercial and cable TV spots-handled in-house-that promote the service.

Despite the changes, mainStreet has yet to make money, and some observers believe profitability won't come any time soon.

"Until the price of the set-top boxes comes down to the point where cable operators can foot the bill, it's going to be really hard for them to roll out any further," said Derek Baine, associate analyst at Paul Kagan Associates, Carmel, Calif. By the time that happens, Mr. Baine added, "they're going to have a lot more competition."

In the meantime, GTE is adding transaction-based shopping, including Flyin' Diner, offering mail-order foodstuffs from several catalog vendors, and a "Best of Boston" video restaurant guide that eventually expects to sell paid advertising.

New transactional services may also encourage cable distribution agreements, since system operators receive half of monthly fees and roughly 5% of transactional sales in exchange for handling billing, sales and customer service for mainStreet subscribers.

"If we were going to make money on this, we had to be able to charge for it," said Tom Grieb, VP-general manager, recalling feedback from earlier tests. "People are willing to shop on this system, but they're not willing to pay [only] to shop on it. "

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