INTERACTIVE NETWORK MAY FOLD

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Already pummeled by test delays, charges of hype and other setbacks, the fledgling interactive TV industry may soon be mourning its first casualty.

Interactive Network last week announced a second-quarter net loss of more than $8.4 million. Even more unsettling, the San Jose, Calif.-based company revealed it has limited cash available and will shut down unless additional financing can be obtained.

One day after announcing the financial results, Interactive Network said it had secured a $500,000 bridge loan from two strategic partners, NBC and Tele-Communications Inc. But the company reiterated in a release that "the failure to obtain additional financing would require the company to significantly curtail or cease its operations."

Interactive Network said the extent to which it implements marketing programs and expands into more markets will depend "on the amount of additional financing, if any, it receives."

"I wouldn't be surprised if we saw a bankruptcy filing before the end of the month," said Adam Schoenfeld, news director at new-media consultancy Jupiter Communications, New York. "They're in a tough field, and there'll probably be more shakeout."

The death of Interactive Network would give the nascent two-way TV industry its latest black eye and offer information superhighway skeptics another reason to decry the hype. The company's woes come during a year when companies like Time Warner have delayed their interactive TV trials, while others have scaled back testing and rollout plans.

"You're seeing a lot of backpedaling in the interactive television industry," said Michael Rinzel, an analyst with Jupiter Communications.

Still, Interactive Network's demise wouldn't come as much of a surprise to industry observers.

Interactive Network provides hand-held units that allow TV viewers to play along with game shows and sports programming. The service has struggled in its initial markets-Chicago; San Francisco and Sacramento, Calif.; and South Bend, Ind. Only about 5,000 subscribers have signed on since the 1991 launch.

In an attempt to revamp its marketing strategy, the company appointed Peter Sealey, a former global marketing executive with Coca-Cola Co., as president last January. The interactive service, which had planned to start a national rollout next month, recently underwent an overhaul that included a new name and deep price cut. It stopped selling units and began renting them to boost subscriber levels. And it just began a new marketing campaign, the first since moving the account to Kobs & Draft, Chicago, earlier this year.

But Mr. Sealey's efforts have so far failed to reverse the company's flagging fortunes. And unless a new investor steps forward, he may not get another chance.

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