IVE, with offices in Boulder and Englewood, Colo., and San Ramon, Calif., has laid off staffers and revamped its direction to focus on computer-based interactive services.
IVE had to "streamline its staff in a number of areas to provide more efficiency," said Andy Orgel, exec VP-chief operating officer of the unit, which is developing content under the banners of U S Avenue, a shopping service, and GoTV, an interactive entertainment channel.
Participating U S Avenue sponsors include Ford Motor Co., Florists Transworld Delivery Association, Hallmark Connections, J.C. Penney Co., Nordstrom, Book-of-the-Month Club and Lands' End. Visa International agreed to support GoTV.
Mr. Orgel declined to say how many people were let go or how many remain at the company, but insisted U S Avenue will run on interactive TV once networks like U S West's in Omaha are in place.
"We put our eggs with U S West because they appeared like they'd break first," said Roland Sharette, director of interactive resources at J. Walter Thompson USA, Detroit, agency for Ford. "We are definitely very disappointed in hearing of IVE's setback and wish we could move them along more quickly."
IVE, which has traditionally billed itself as an interactive video content provider, will now "shift its short-term focus and target technologies like the Internet and CD-ROM development that can deliver immediate eyeballs and pocketbooks," said Mr. Orgel.
But the shift in strategy could mean the loss of advertisers that were attracted to IVE because of its interactive TV work.
"I can't imagine what they'd have to offer that Ford isn't already a part of in some other interactive capacity," said Mr. Sharette. "They'd have to build a brand that would get people to come. I don't see there's anything different to be learned from a U S Avenue Web site."
Although IVE says it plans to create other platforms for interactive content, it declined to outline or discuss specifics.
"Basically what's happened is the marketing people have outpaced the technology people and created false expectations when it comes to interactive television," said Neal Frank, president of Marlin Entertainment, New York, an advertising sales rep for U S Avenue.
Time Warner Cable and Time Inc.-developers of the Full Service Network that has fallen short of expectations-are also shifting focus and are currently testing a high-speed online service delivered via cable wires that would offer access to Time Inc.'s Pathfinder Web service and other information in 400 homes in Elmira, N.Y.
Bell Atlantic finally launched its Stargazer video-on-demand trial in May, but the Baby Bell has since rescinded applications to build digital networks in its region. Ameritech and BellSouth, meanwhile, are constructing traditional cable networks.