If You Can't Sell Them, Lease Them

Interactive Network Tries Out a New Tack

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Interactive Network enters its fourth market next week with a dramatic new marketing strategy designed to boost the play-along service's lagging subscriber base.

Interactive Network on April 5 will unveil an advertising and direct marketing campaign in South Bend, Ind., that gives consumers the option of leasing its control units. Previously, subscribers had to fork over $250 to $300 to purchase hardware, plus pay a monthly subscription fee.

The strategy, if successful, will be expanded to other Interactive Network markets-Chicago, San Francisco and Sacramento, Calif.-and nationwide as the service rolls out this fall. The lease option could ultimately replace retail sales of control units in outlets such as Sears, Roebuck & Co. and Circuit City.

But while the leasing approach may initially bump up subscriber totals, it doesn't address the issue of keeping users from growing bored with Interactive Network's programming, which includes predicting football plays as they happen and answering game show questions.

The marketing campaign is the first work from Kobs & Draft, Chicago, which won the estimated $8 million consolidated account earlier this month. Interactive Network previously used several agencies, including Goldberg Moser O'Neill, San Francisco.

Kobs and Interactive Network spent two days last week hammering out strategy at Interactive Network headquarters in Sunnyvale, Calif.

"The principal thing we're looking at is what is the singular compelling consumer reason for this product," said Peter Sealey, who joined Interactive Network last fall as president and chief operating officer. "We really are concentrating at that level."

Interactive Network has accumulated only 5,000 subscribers since launching its service nearly three years ago.

While Mr. Sealey won't discuss subscriber turnover, industry executives say the service has had trouble keeping viewers hooked. Once the novelty of playing along with the TV wears off, critics say, subscribers get bored and cancel their subscriptions.

That could be bad news for marketers like American Airlines and Chrysler Corp. that have agreed to test consumer response to interactive ads on the service. The Advertising Council became the newest member of the advertising consortium last week and will test interactive public service announcements.

Consumers "have got to be crazy to make a commitment to that expensive piece of hardware," said an advertising executive familiar with the product. "It's a real problem getting people to buy them."

Mr. Sealey's goal is to reverse that trend, and it can't come a moment too soon for Interactive Network, which reported a $25 million net loss last year despite backing from Tele-Communications Inc., NBC, Gannett Co. and A.C. Nielsen Co.

In South Bend, Interactive Network will charge subscribers a $25 deposit for the unit, a $30 set-up fee and $9.95 per month for the service, with the first 30 days free.

"The primary difference is going to be an emphasis on the service, on the fun of playing, and less emphasis on the hardware and mechanical components," Mr. Sealey said.

That change was something Kobs suggested when it pitched the account.

"We thought it would be prohibitive to sell a $200 unit plus the subscription fee on the back end," said Yvonne Furth, president of Kobs' Chicago office. "Frankly, we're going to use a lot of the strategies we've found successful in selling HBO [another Kobs client]. You don't sell the hardware, you sell the service, the benefits."

The agency is now revising existing TV creative to add the lease message and will spend most of April testing various media and subscription offers in preparation for an all-new campaign to break in May or June.

In South Bend, TCI will set up a kiosk in its service office to demonstrate Interactive Network and will provide ad time on its cable system.

Interactive Network will test approaches including 30- and 60-second direct response commercials, infomercials, telemarketing and direct mail to TCI subscribers.

Interactive Network plans to enter several more markets this summer before a national rollout in the fall.

Alice Z. Cuneo contributed to this story.

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