But while Time Warner courted publicity for its Full Service Network test, sold ad packages, announced a definitive timetable and eagerly touted content providers, Viacom remained largely silent. In hindsight, that appears to have been the wiser strategy.
Time Warner has faced ongoing press criticism, disgruntled advertisers, extensive delays and lately resorted to sharply discounting its entry fees for marketers (AA, Sept. 26).
Viacom, reflecting the conservative approach of its president-CEO, Frank Biondi, has moved far more cautiously, and thus called less attention to itself. That makes the company appear to be in a better position, although it faces the same delays and technology glitches Time Warner does (Viacom had once expected to have Castro Valley up and running by June 1994).
"We don't feel a great need to rush headlong into testing interactive TV in a full-scale implementation, because the marketplace isn't developing as quickly as some people thought it would," said Bob Meyers, VP-interactive TV who's overseeing the Castro Valley project. "We're trying to be incremental and not visionary."
Indeed, while Time Warner has positioned the Full Service Network as an interactive advertising panacea, able to sell cars and cashmere, Viacom has deliberately dampened the hoopla about what it can do in Castro Valley.
"The limitations of expectations on our part are to keep the enthusiasm down," said Harvey Ganot, exec VP-advertising and promotion sales at MTV Networks, whom Viacom has tapped to sell the service to marketers. "We don't want people peeking early on incomplete ideas."
It's possible Viacom executives learned a lesson from Time Warner and are simply trying to mask their confusion with a veneer of studied vagueness. Even if that's the case, one fact can't be denied: Viacom has for some time been offering near video on demand and an interactive program guide to paying customers, while Time Warner just this month got the framework for its more technically advanced system up and running in two employee households.
But there's no place for advertising yet in Castro Valley. Viacom freely admits that while it's not ready to open the door all the way, it's willing to give marketers a glimpse into its thinking.
Mr. Ganot and Susan Feinberg, VP-interactive media advertising sales at Viacom's MTV Networks, are in the process of meeting with 14 agencies, using their industry contacts to familiarize Madison Avenue with Viacom's plans for interactive TV, online services and videogame software. The list includes Bozell Worldwide; Chiat/Day; Foote, Cone & Belding; Grey Advertising; Leo Burnett USA; Saatchi & Saatchi; Wieden & Kennedy; and Wunderman Cato Johnson.
Mr. Ganot and Ms. Feinberg also have presented their loosely defined strategy to Procter & Gamble Co., whose chairman-CEO, Ed Artzt, has been a vocal proponent of interactive marketing.
In those agency meetings, "there's a lot of `Hey, what about ...' sentences," Mr. Ganot said. "What agencies are doing is trying to prove the business case to advertisers for seed money." Some, he admits, are frustrated by Viacom's lack of specifics, making it difficult to ask clients to set aside research and development budgets, as marketers did for Time Warner's test.
"We're talking to advertisers about what the technology is, and asking them to work with us to think about what this medium is and can do for their clients," Mr. Meyers said. "We're not going to be so presumptuous to say, `We'll build an environment and you place your ads in that environment.' That looks a lot like the model today. This is an emerging technology; we want to work with people that have thought about it."
Mr. Ganot says he may have more concrete proposals for advertisers in another six months, but promises nothing beyond Viacom's intent to add at least a handful of interactive services to Castro Valley sometime next year. He denied agency reports that ad packages will be sold for all three platforms-TV, online and videogames-or that only current MTV advertisers will be allowed to participate.
Some agency executives seem refreshed by Viacom's candor, even though they crave more specifics.
"Time Warner went into the media too fast with too many promises too soon and retracted into silence," said Jean Pool, senior VP-director of media services at J. Walter Thompson USA, New York. Viacom, she said, has "taken much more of a businesslike attitude. They're not promising anything; they're saying, `As we find out what the consumer wants, we'll build upon the network."'
Agreed Andrew Pakula, senior partner-director of interactive media development at Bozell, "They're going about it in a very smart way. They're not overselling it, they're telling people exactly what they have."
Castro Valley's 13,500 cable households have been divided into three test-market sites and offered different prices and combinations of near video-on-demand movie services and the StarSight electronic program guide.
Viacom also is testing Intel Corp.'s cable modem technology, providing quicker access to online services to 250 homes and 25 schools using cable bandwidths that offer full-motion video and "virtual" CD-ROM drives.
The StarSight guide allows viewers to select, record or instantly tune in programs based on category; to view program schedules up to seven days in advance; and to access program descriptions, titles and remaining running time for any show they tune into. It uses the vertical blanking interval signal transmitted by PBS, later expected to provide a platform allowing users to "click" brand logos for on-demand information about advertisers.
Sometime next year, Viacom will employ a similar split test-market strategy to measure demand for new interactive services to be added by its Castro Valley partner, AT&T.
Once 1,000 subscribers agree to pay for a new service, Viacom will begin installing new technology into homes to provide the services incrementally. But Viacom and AT&T are leery of overwhelming consumers with too many choices at once and are more likely to market them separately to discrete groups of households to gain better feedback.
"We're well on the road to doing a lot of work in the invisible, unglamorous places that make interactivity work," said Vincent Grosso, project director for interactive TV at AT&T. "The reason why we're in trials is to understand what kind of investment [we] should be making.
"The low profile is not a question of strategy, but attitude," he said. "What we're trying to do here is make the least amount of mistakes that we can."
Services planned for Castro Valley include networked videogames, rotisserie sports leagues and transactional features.
Some services could offer advertisers billboard-type sponsorships, product-information retrieval or direct sales of merchandise.
AT&T's Mr. Grosso said early offerings will focus heavily on movies on demand, home shopping and games. But, he said, "There's very little chance that what you start with in content is what you'll end up with. The content will change."
Although Mr. Ganot said he's seeking "collaboratively cerebral partnerships" with marketers and agencies, he claims Viacom doesn't want an exclusive agency relationship like the one Time Warner formed with Interpublic Group of Cos.
"They set the level for responsiveness," he said of agencies, adding that one crucial issue is measuring whether the interactive medium proves a more persuasive selling tool than traditional, passive TV.
"Is 20 responses good? Are 400 responses bad? Maybe it's not at all applicable to package goods. For all of its bluster, would P&G be interested in getting into interactive TV to sell a few more bars of soap?"
Debra Aho Williamson and Scott Donaton contributed to this story.