Why Time Warner cut FSN

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Time Warner Cable will shut down the Full Service Network, its 2-year-old interactive TV service in Orlando, Fla., by the end of the year, the company said last week.

Announced with much fanfare in 1994, FSN was to have been the prototype of a national shopping and entertainment service. But high costs and technical problems forced the company to pursue less ambitious goals.

Time Warner Cable says it will continue to develop its video-on-demand platform, known as Pegasus, which grew out of the FSN project.

"The value of the Orlando experiment to Time Warner has been tremendous," said Glenn Britt, president of Time Warner Cable Ventures.

The multiple system operator said it plans to deploy Pegasus commercially in early 1998. The Pegasus box is being developed by Scientific-Atlanta, Toshiba and Pioneer.

Last month, Time Warner asked manufacturers for proposals on the next phase of Pegasus, including the combination of full video on demand with high-speed Internet access.

The Full Service Network had been billed in the beginning as the future of interactive TV. FSN's 4,000 customers were supplied with expensive digital processors that allowed them to create customized program menus, order merchandise and play interactive games.

But ordering movies proved to be the service most popular with consumers, and such a service could be provided with far less costly equipment, the company concluded.

Signs of FSN's demise began to surface last fall when the company laid off 30 employees, about 15% of its work force. Two months earlier, FSN had shut down a news production office in New York. FSN currently employs about 200 people.

Lee Hall is staff reporter for Electronic Media.

Copyright May 1997, Crain Communications Inc.

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