Delphi's new interface will replace screens showing only text. DELPHI TAKES ON THE BIG THREE MURDOCH SEEKS TO BE A FORCE IN THE ONLINE WORLD; SHADES OF FOX
When Rupert Murdoch announced plans to create a fourth TV network nine years ago, the broadcasting world laughed it off.
When Mr. Murdoch said last fall he was buying a tiny, obscure online service called Delphi Internet Services, the media world barely took notice.
But Fox's stunning capture of up to 12 new affiliates makes it strikingly clear just who's having the last laugh, and it isn't ABC, CBS or NBC.
With Delphi, Rupert Murdoch is once again looking to shake up the ranks of the Big Three-online services in this case. As with Fox, he has a long way to go.
Delphi is currently the fifth largest online service and has racked up a mere 100,000 subscribers by touting itself as the only service offering complete access to the Internet. It trails far behind the Big Three of Prodigy, CompuServe and America Online-with a combined reach approaching 5 million members. (General Electric Co.'s Genie is the fourth largest service with an estimated 400,000 subscribers).
Delphi has labored under a reputation as a stodgy, techy service better suited to software engineers than "The Simpsons." It has a text-only interface that all agree is difficult to use and tedious to read.
The 13-year-old online service is hard at work on a new graphical user interface that will give each content provider its own look and feel. And Delphi has several News Corp. properties under development, including services based on Fox Video titles, TV series "The X Files," and magazines TV Guide and Mirabella.
But making Delphi a major player in the online world will not be easy.
"I think America Online is a real threat, and it's a very serious threat to Delphi," said Robert Young, who as VP-business development orchestrated the Delphi sale to News Corp. before leaving the company last December. "Delphi needs to manage that competitive environment very, very carefully."
Delphi should move fast to upgrade its interface, said Mr. Young, now president of ProductView Interactive, a new online service that will offer only advertising.
But those looking for News Corp. content to flood into Delphi may have to wait a while.
Delphi VP-General Manager Russell Williams said the service has spent the time since the acquisition adjusting to a parent company more focused on traditional media than computers.
"We've gotten exposure to a true media company and a true media mentality, where programming and creation of content .*.*. is the culture and heritage and true skill," said Mr. Williams, an eight-year Delphi veteran.
Since it acquired Delphi last September for more than $12 million, News Corp. has assigned several top executives to Delphi posts. Jaan Torv, former VP of News America New Media, shifted to Delphi in January as senior exec VP-programming and development. In March, Matt Jacobsen opened an office on the Fox studio lot as Delphi VP-entertainment services. He had been VP-western division sales for Twentieth Television.
Even so, Delphi has been slow to capitalize on the News Corp. association. And the much-touted redesign is just going into test toward the end of summer and probably won't kick in before yearend.
"The hard thing for me personally right now is to sit back and watch the other online services make their moves," Mr. Torv said. "We just know that what we have is superior to what we're seeing. And we have to be Zenlike and patient and we will get there."
So far only fX, the new Fox basic cable network, has used Delphi extensively, setting up an area several months before the network's June 1 launch to talk with subscribers and gauge response to programming.
fX is looking at ways to incorporate Delphi into its programming, ranging from asking viewers to e-mail ideas and opinions, to showing an online discussion during live shows, said Bob Fleming, the network's senior VP-finance and administration.
Other News Corp. properties are in varying stages of development.
TV Guide Online recently completed a beta test among TV Guide subscribers and plans another test starting in August. Mirabella has designed an online venue for Delphi, but that product is still "under discussion," Mr. Torv said. Delphi is considering creating online products for "The X Files," a Fox TV series, and for Fox Video titles.
On another front, Delphi is expected to announce as soon as this week a deal with News Corp. company Scott Foresman to develop online educational materials. Delphi will name Steve Hill, a former Houghton-Mifflin VP, to the new post of director of educational programming.
"Virtually every News Corp. branded operating division has a Delphi-related project going on," said Stan Honey, News Corp. exec VP-technology. "The only ones that have already been introduced as products are the simple ones that fit into the current Delphi service. A lot of the stuff we're doing is scheduled to be released in conjunction with improvements in the fundamental Delphi service."
Mr. Jacobsen, the executive charged with bringing entertainment products to Delphi, is realistic about the online service's place in the News Corp. empire.
"It's folly for me to think that this is going to be the most important thing" to News Corp. executives, he said. "We're not going to replace their business; we're going to be able to add value .*.*. A 30-second spot in any one of the Fox shows is far more valuable than what they're going to do [on Delphi] in 30 seconds or even half an hour."
Roland Sharette, manager of J. Walter Thompson/Online, Detroit, has trouble believing the News Corp. cachet alone will help Delphi: "I'm not sure News Corp. can develop a marketable product [solely] on the basis of their other offerings."
Delphi already offers typical online fare: news, special interest groups, shopping and travel information. Subscribers can also participate in multiplayer games and real-time chat services.
Delphi does have one advantage over other online services: It's profitable.
The goal is to boost subscriber levels to 400,000 or 500,000 within 12 months after the new interface is installed, Mr. Torv said.
Whether Delphi can attract the broad audience it desires will in the end depend more on execution than content. The idea of a "Beverly Hills, 90210" online forum may pique the interest of teen-age girls, but if it's not appealing visually, it won't keep their attention for long.