NTN RESTRUCTURES TV TRIVIA NETWORK, ADDS E-COMMERCE: PACT EXPANDS RELATIONSHIP WITH AOL

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Ntn communications, a leader in interactive TV entertainment, today rolls out plans to revamp its network of trivia games in bars and restaurants into an ad-subsidized, e-commerce-ready system.

NTN also is announcing a two-year exclusive deal expanding its relationship with America Online's AOL Interactive Services. AOL will be the exclusive provider of NTN sports and other trivia entertainment online.

In return, NTN will earn royalties from AOL and revenue from advertising off its area on AOL.

REVENUE BECOMES THE FOCUS

Not including AOL, people play some 15 million trivia games every month on the NTN Network, averaging 100 million impressions, according to the Circulation Verification Council. In addition, 2,800 hospitality locations in the U.S. and 500 in Canada are signed up for the network, including restaurant chains Pizzeria Uno and T.G.I. Friday's and various bars.

And while the Carlsbad, Calif., company has carried advertising sporadically since its start 15 years ago, it's pouring new emphasis into ad sales, transaction revenue and direct marketing. Current advertisers include Canandaigua Wine Co., Sprint Corp. and International Distillers & Vintners' Cuervo tequila and Smirnoff vodka brands.

Its ad rate of $3 per thousand impressions will double in August, when full-motion video begins testing in 35 locations, said Tyrone Lam, VP-general manager of the NTN Network, noting that new direct marketing sales categories will be introduced.

ADS TARGET FREQUENT PLAYERS

"This is the first time we've gone after sales aggressively with rep firms," Mr. Lam said.

NTN has hired Beverage Industry Marketing Services, Avon, Conn., and M3 Group, with offices in Los Angeles, New York and San Francisco, to sell ads.

NTN's new Playmaker system, which will be fully installed in January, will allow advertisers to send targeted ads to frequent players who sign up for a Players Plus membership. That allows users to have their scores cataloged on the NTN Web site (www.ntn.com) in exchange for some demographic data.

It also will allow users to enter personal information to participate in polls and surveys or to make online transactions using a pre-programmed smart card.

International Distillers has had good results with new product sampling, said Kay Olsen, marketing manager-super premium tequilas in North America.

TRIAL LEVELS SPURT 75%

When launching Cuervo 1800 tequila, it advertised on NTN, and then followed up with product sampling and a research study by Simmons Market Research Bureau. Four months after the campaign and sampling, the study found trial levels increased 75%.

"People are sitting in a bar, wondering what to drink," Ms. Olsen said. Not only is fulfillment immediate, she said, but "it's a very targeted audience; we don't have to worry about anyone under 21."

The network also is changing its pricing plan for restaurant and bar owners. Owners pay about $600 a month to offer the entertainment in their establishments. In January, NTN is adapting a tiered pricing model.

"There's a basic service and then tiered to additional services," Mr. Lam said. "It allows our larger chains to customize content. One chain could customize to sports, while another could customize to kids."

All of this will please investors, said Tim Stobaugh, analyst at Stonegate Securities, Dallas, noting that the price for restaurant owners has been NTN's biggest barrier.

"They've generated millions and millions in losses," Mr. Stobaugh said. "We'd like to see growth in the subscribers and less churn," he added, noting NTN has a 20% turnover rate.

At the same time, he adds, "The games are incredibly popular, as evidenced by their popularity on AOL," but increasingly, he added, it comes down to garnering more eyeballs to generate more advertising dollars.

NTN found that less than 10% of its AOL members were aware of the NTN Network, something Mr. Lam said it hopes to change. "There are huge opportunities for us to do cross-promotion between the home and public environment," he said.

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