Scientific-Atlanta, a leading supplier of broadband communications systems and networks, and Microsoft Corp., owner of WebTV Networks, are developing an advanced digital set-top box designed to give cable customers easy access to WebTV Network services.
When it becomes available, WebTV Network executives expect the Scientific-Atlanta Explorer 2000 advanced digital set-top box and digital interactive network to significantly increase WebTV's subscriber base.
Its edge: the ability to weave together WebTV service with standard cable offerings by integrating Scientific-Atlanta's conditional access, head-end network systems and other technologies.
WebTV executives say cable TV MSOs will also be able to cobrand the service and develop content appropriate for its customers. Web browsing, interactive programming and advertising, searchable TV listings, video on demand, electronic commerce, in-home networking and e-mail are services that will be available to cable customers who subscribe to WebTV using Explorer 2000.
Cable subscribers accessing WebTV through the Explorer 2000 can also expect a heavy emphasis on Microsoft products and services.
"Scientific-Atlanta has had longstanding success in the cable industry, as Microsoft has had with software technology," says Michael Harney, corporate VP-general manager, Digital Subscriber Networks at Scientific-Atlanta. "Together we have the necessary services, features and tools to support a long-term broadband service that will help multiple system operators serve their customers in a complete and customized way."
Says Jeff Barco, director of broadband services for WebTV: "WebTV services will highlight the most popular Microsoft properties, such as MSNBC, Expedia, Carpoint and Home Advisor. These services, integrated into the core services WebTV is offering, add additional brand recognition and customer value to the service package."
Although WebTV has just begun talks with MSOs, the network already expanded its reach in other areas.
Until recently the only way to access WebTV was for consumers to purchase a set-top box from an electronics store, but in January EchoStar Communications Corp. integrated WebTV Network Plus services into its Dish Network's digital satellite TV programming. The new service, which will include digital video recording, broadband data services and video games, is scheduled to roll out this spring.
Microsoft is also developing WebTV for Windows, a TV tuner card and software for Windows 98 that will be able to handle interactive cable TV programming.
WebTV is expanding its interactive options for advertisers while trying to preserve the privacy of its growing client base.
"We've had a fair amount of momentum building over the last year," says James Aguilar, network media group director.
"We now have 700,000 households, 500,000 of which we've gotten in the last year, and our new advertising vehicles have gotten attention, as well."
On its base of traditional Web page banner ads, the network has added three products to stimulate interactive relationships between advertisers and consumers: surf spots, video spots and click-to-video ads. "We run both branded advertising and product-specific television spots," says Colleen Corbett, marketing manager, Toys R Us Direct. "We plan to encode our product-specific spots so they are linked directly to that item on our site. We can then provide the consumer with additional selling features that we might not have had time to mention in the original ad."
SURF SPOTS POPULAR
A surf spot takes advantage of the time that WebTV users are waiting for a Web page to download. An advertising spot will appear during that download time, then disappears after the site loads. Video files can take a while to download, so the network downloads video spots at night. Advertisers can have 15 or 30 second spots they already developed for TV and have them downloaded to WebTV boxes, which will activate automatically the next morning. Click-to-video ads look like traditional banner ads, but a viewer click will access a 30-second TV commercial.
Once the commercial plays through, the viewer is automatically connected to the advertiser's Web site. E! Online, Ford Motor Co., Hewlett-Packard Co., Maytag Corp., Ricolla and Volvo Cars of North America all have signed on for WebTV click-to-video spots.
"We enjoy working with WebTV Networks because they are leading the movement toward convergence in advertising and providing real interactive TV offerings today," says Gregory Galloway, head of interactive media for Chicago-based division of Leo Burnett USA's Giant Step, whose clients include General Motors Corp.'s Oldsmobile division and Maytag Corp.
"Click-to-video ads enable us to get a tremendous 'bang for the buck' by leveraging our TV and online campaign assets," he adds.
Mr. Galloway says that his clients take advantage of WebTV's categorical and geographic targeting capabilities, but the network is working on developing advanced tracking methods to improve on the click-through and impression models.
In an industry where one-to-one interactive models are the Holy Grail, WebTV is somewhat reserved about compiling data on individuals for advertising purposes. "We are going to continue to enhance the service for our providers," Mr. Aguilar says, "but continue to be sensitive to the privacy of our subscribers as well."
Jay Bobowicz, general manager of Hearst New Media Center, says his goal is to learn the extent to which TV viewers are willing to access the Internet.
"The audience for WebTV service is particularly appealing to us because they are engaged TV viewers and active Internet users who access the Web for the information they want," he says. "WebTV is helping us gather important information about cross-media content, a frontier we're certain is poised to explode."
The impending explosion of a rich mix of cable content and Internet services is also being pioneered by TCI and Kraft. The two companies, with the help of Grey Advertising, New York, are in the middle of a two-year deal to test interactive cable services and advertising, but are not ready to report on their findings, says Jerry Machovina, senior VP of advertising sales, TCI Media Services.
"We are in the process of working on the second set of market testing, something we're calling intramarket testing, for specific Kraft brands," says Jim Porcarelli, senior VP-director of client services, Grey Advertising, New York. "The initiative has proven worthwhile and has provided several scenarios for us to test."
SECOND PHASE UNDER WAY
Now that a first round of testing is complete and the second phase is under way, Mr. Porcarelli says, new technologies to deliver the interactive services are also being tested.
"From our point of view," he says, "all of the components of the agreement are worthwhile. They were not mere guesses, but opportunities we have identified and have now brought to the fore," he says. "It's a way to fine-tune our targeting and reach the end goal of finding better ways of talking to our audience to stimulate sales."
Interactive content is the way to stimulate interactive sales, according to WebTV executives. To enhance the total interactive experience, the network has found new partners, including cable networks Discovery Channel, HBO, HGTV, MSNBC and Weather Channel.
"These networks are finding that taking part in interactive television they can take advantage of the best of both worlds, television and the Internet," Mr. Aguilar says. "WebTV is the glue in the middle that pulls those two worlds together."
WebTV's goal is to evolve a new TV experience where viewers participate in a show, access the network's extended ad options and buy goods. For advertisers, the network is selling synergy between the Internet and TV by weaving together ads they have already developed for both media.
"The blending of television and the Internet is opening up new opportunities for broadcasters and advertisers to reach their audiences, enabling them to approach entertainment and information access in an entirely new way," says Joe Poletto, WebTV VP-strategic partnerships and advertising sales.
He says that industry commitment and support during the past year is proof that broadcasters and advertisers recognize that the value of interactive services will continue to grow in the future.
"For us," Mr. Aguilar says, "it is all about the television and enhancing the