WebTV shifts its focus to seniors

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As Microsoft Corp.'s WebTV Networks prepares to launch its new UltimateTV to the masses early next year, it is repositioning its original brands to the 55-plus market with a holiday push relying heavily on one-to-one and promotional marketing strategies.

The fourth-quarter effort for WebTV Classic and WebTV Plus-which offer Internet access through the TV via set-top boxes-is handled by Upshot, Chicago, a division of HALO Industries, leaving WebTV lead agency FCB Worldwide, San Francisco, to focus on the upcoming new-product launch.

The integrated effort, including a network TV spot, direct mail and e-mail marketing, promotes a six-month free subscription. After the six-month free period, WebTV charges users $24.95 a month.

The promotion hinges on live demonstrations in "experiential living rooms" equipped with couches, coffee tables, rugs and TV sets, set up in 30 shopping malls and four airports across the country.

The faux living rooms enable seniors and their adult children-presumably the major holiday gift buyers-to try out WebTV firsthand.

"It takes you out of the clutter of the retail environment, and it allows you to do a much deeper demonstration than you could probably ever expect by a retailer, particularly for a low price-point product like WebTV," selling at $100 for Classic and $200 for Plus, said Nick Jones, senior VP-account services, Upshot.

Microsoft bought WebTV in 1997 for $425 million. But Microsoft has struggled to build the WebTV business due to the product's limited applications.

"They were somewhat limited in functionality," said Mary Joy Scafidi, senior analyst at market researcher International Data Corp., Framingham, Mass.

"Most seniors are a little bit afraid of PCs," she explained. "They might have a higher comfort level with TVs vs. PCs, and if they can see the basic functionality and be able to get that basic functionality at a retail price point, it might take off a little more quickly."

The set-top box category as a whole has been waning over the past year in favor of low-cost PCs, said Tom Edwards, an analyst at NPD Intelect, Port Washington, N.Y. "If they can't get the saturation of PCs to the older age group, it's a natural" target, he said, adding that the trend toward using the Internet for photo transmission makes WebTV particularly relevant to seniors wanting to e-mail pictures of their grandchildren. "I think Microsoft can sell that concept," he said.

"We're going back to our roots," said WebTV's Senior Director of Marketing Sam Klepper. "Given the advent of the new brand, UltimateTV, WebTV squarely rests upon the ease of Internet access."

Microsoft's UltimateTV is a more ambitious platform offering enhanced services. It combines digital video recording with live TV controls and interactive TV in a service from DirecTV with hardware from RCA and Sony.

WebTV hardware is marketed by Philips, RCA and Sony.

The two brands "have very different target customers, very different messaging, very different media," he added. "I think for right now we're going to stick to more of a promotional approach for WebTV. It's got significant awareness in the marketplace. We just need to get the people who are aware incented to take action."

Copyright December 2000, Crain Communications Inc.

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