Interaxx Television Network, a North Miami company, last week started a five-home beta test of an interactive TV system that combines CD technology with cable wires.
Interaxx will allow consumers to browse through catalogs, play online video-games, participate in polls and follow the stock market. The system doesn't have the bells and whistles of a Time Warner Full Service Network, but Interaxx claims its technology has a chance.
Cable TV of Coral Springs (Fla.) will conduct the beta test. By Dec. 8, the company plans to be in 50 homes in the same area, said Don Rhoades, Interaxx president-CEO. Current plans have Interaxx in 2,000 households throughout south Florida by January and 100,000 by the end of 1995, he said.
But while Interaxx may beat Time Warner to the south Florida market, that alone won't assure it of success. Interaxx had planned to start a test last April, but like Time Warner, has had to delay its system.
Interaxx plans to charge subscribers $15 a month for services like catalog shopping that in many cases can be obtained free through other means.
And because Interaxx relies on traditional cable as opposed to fiber-optics, viewers will not have true interactivity. Information will be downloaded daily from a local PC server installed at each cable company office and then stored on the disc at the subscriber's residence. When a subscriber boots up the system, he can select from an on-screen menu, then browse through full-motion video and audio.
Still, the company says it has amassed a list of 300 merchants willing to participate in the system once it rolls out, although only one will be a part of the beta test. Cable companies that will help launch Interaxx include Helicon Cable (Pittsburgh), Twin County Cable (Northampton, Penn.), Service Electric Cable (Allentown, Penn.) and Susquehanna Cable Television (York, Penn.).
Among the 300 merchants are 800-FLOWERS, Perfumania, Lenox, Bentley's Luggage, Omaha Steaks International, Hammacher Schlemmer, Royal Silk and Sara Lee Corp.'s L'Eggs hosiery. They will get a percentage of gross sales, Mr. Rhoades said.
Purchases are made via 14.4-baud telephone modems, provided free to test families. The subscriber inserts a personal electronic "key" encoded with name, address and a credit card number, and then makes a selection.
After an order has been placed and authorized by the subscriber by entering a personal identification number on the addressable remote control, the information is sent to Interaxx's offices, then to the credit card company and the merchant. Confirmation comes back via cable line and a receipt is printed by a thermal printer built into the Interaxx machine.
"It's the same as a swipe on a credit card," Mr. Rhoades said.
The only sticking point could be the cost. In February, Mr. Rhoades had anticipated the monthly cost would be $8.90, but he said hardware costs are higher than he expected.
Though Mr. Rhoades anticipated the monthly cost would drop to less than $10 once the number of subscribers topped 300,000, getting a public already disgruntled over costly cable TV bills to spend more for services available for free could be difficult, said Bob Pinzler, president of Direct Marketing Associates, a Redondo Beach, Calif., interactive consultancy.
"That's pretty substantial for services that are available for free ... They're going to be very limited in the ability to attract a broad-scale audience," Mr. Pinzler said. "People are already [upset] about their cable bills. Wait until they get a charge that is probably equivalent to their cable bill, or pretty close, to get these specialized services that are to a great extent, available elsewhere."
Mr. Rhoades counters that he's only interested in high-income households. These "early adopters" have been identified by other interactive companies as being amenable to paying upward of $20 a month for such services, he said.
"Fifteen dollars is a more moderate figure," he said. "We're targeting the first users."
The cost to consumers is not an issue, said Camie Dunbar, marketing manager with Perfumania, a Miami-based perfume discounter using Interaxx as its first test of interactive marketing. The number of retailers and services Interaxx provides consumers access to helps to offset any perceived cost stigma, she said.
"It's something that everybody's testing right now," she said.
Veteran interactive marketer 800-FLOWERS is similarly buoyed by the prospect of participating in the test, said Elaine Rubin, director-interactive services. The CD-ROM/cable convergence, coupled with the sheer volume of marketers and services expected to be included will help set Interaxx apart from other emerging systems, she said, calling it an "exceptionally different shopping service that will take care of everyday needs."
800-FLOWERS, she added, will be able to change promotions and marketing on a daily basis.
Ms. Rubin admitted that determining what consumers will pay for interactive TV and electronic marketing is a "big question," but said the number of merchant participants should offset the fees.
"Fifteen dollars a month is not all that much money to spend to have access to 300 merchants how and when you want," Ms. Rubin said. "The consumer might have a tendency to pay a little extra for that."