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The PC-TV gamble

For computer companies to succeed in TV, they need the necessary technology and consumers who want it. Neither is a sure thing.

Digital TV is getting confusing, especially with the fresh infusion of interest from computer companies like Microsoft, Apple, and Intel.

To sort through the semantic tangle that is digital TV, it helps to think of it in two ways. First, digital TV is a platform. Just like today's analog television, digital TV signals will travel through the air or over wires. It will use digital compression, however, so broadcasters will be able to squeeze much more content into the stream. Some of that content will be Web-like data, but it shouldn't be confused with the Internet. The Net is many-to-many; digital TV, like its analog predecessor, is one-to-many.

Digital TV signals will be picked up by a range of machines from television sets to PCs equipped with TV tuners (see related story). Some of those machines will need PC software to receive the signal.

Second, digital TV is a service. Assume that PBS will film and transmit the NewsHour with digital equipment. Viewers with high-definition digital TVs will be able to see every pore on Jim Lehrer's nose. Studios will also have the choice of filming and transmitting programs--bass fishing, for example--without the fancy Dolby sound or the high-resolution picture, freeing up the stream for other signals.

"We have the possibility of multicasting up to four shows of standard-definition quality simultaneously on one digital channel," said Pat Mallinson, press relations manager for KCTS-9 in Seattle, one of five stations in the Digital Broadcasting Alliance. Instead of four standard-definition shows, the station could broadcast just one high-definition show on its channel, perhaps a nature show with wide vistas and stunning colors.

Whether those signals are going to a television set or a PC with a TV tuner, this is the digital TV service we're likely to see by the end of 1998, assuming manufacturers and broadcasters hit their promised rollout dates.

The services will go beyond television shows to include text and other data, but it's not clear how quickly broadcasters will include the extras. Smaller stations will likely be concerned with setting up infrastructure and producing shows while larger stations and networks will have the resources to pour in data services from the start.


 
"We're not seeing much evidence of people wanting multimedia interactivity in the family room when they crash after dinner in front of the TV."
--Rick Clancy,
Sony Electronics

"Broadcasters certainly want to make sure the programming works, but there is a great opportunity to give consumers more information and by doing so keep a more loyal audience," said Wen Liao, an analyst who follows interactive services for Jupiter Communications.

Think of such data services as similar to today's Internet "push" technology: The broadcaster selects information the viewer is likely to want--statistics with a ball game, recipes with a cooking show--then pushes it to the TV screen. The digital signal will not carry data back to the broadcaster.

Unless the content is pushed to a PC or TV set with a separate Internet connection, the stream will be strictly one-way. Storage of data is another problem. Considering that TV manufacturers will be wary about adding too much memory and swelling the cost of the initial digital TV sets--already expected to roll out at $2,000 to $3,000--it's unlikely that broadcasters en masse will immediately push entire Web sites to viewers.

"It's probably pretty safe to say that the first and second generations of digital TV won't have interactivity," said Stephan Somogyi, principal of technology consultancy Gyroscope.

However, some broadcasters are already testing the possibilities with Intercast, a system that broadcasts TV and related Web-like programming to PCs with a PCI card connected to coaxial cable. NBC and CNN are already on board; MTV's M2 channel just announced its participation at last week's National Association of Broadcasters conference in Las Vegas, Nevada. Compaq executives told a panel session there that the company will have shipped 1 million Intercast-enabled PCs by next year.

But beyond the curious and the early adopters, who really wants the mixed media message?

"There's no answer to that yet," said Sony Electronics vice president Rick Clancy. "We're not seeing much evidence of people wanting multimedia interactivity in the family room when they crash after dinner in front of the TV or watch movies on the weekend."

Earlier attempts to set up interactive TV services were notably unsuccessful (see related story). This time, there are new players, new technologies, and hints of desperation in several media and high-tech board rooms. PC makers like Compaq fear that the home market is saturated as most everyone who wants a PC in the home already has one--about one-third of all American households, according to most surveys. As the PC goes, so does PC software. Among software makers, most attention this week has focused on Microsoft, which already dominates the PC desktop market and wants to make the successor to Windows 95, code-named Memphis, capable of receiving TV signals.


PC companies hope to simplify Web access on TV.
On the TV side, Microsoft has hedged its bets by acquiring WebTV, a set-top box service that connects a TV to a telephone line for Net surfing on the boob tube. WebTV has anywhere from 50,000 to 100,000 users (not exactly mass market), a network, and patents for its display technology. Those patents plus others that Microsoft owns could give it a huge advantage in the set-top box market, although one analyst cautions that Internet-on-the-tube and TV programming are two different beasts.

"It's gotten to the point that when Microsoft enters a market, everyone quakes in their boots," said Josh Bernoff, senior analyst at Forrester Research. "But we're not talking about enterprise servers; this is the television industry. It's just as possible to say that Microsoft doesn't understand television."

If WebTV takes off, it will give Microsoft a mass-market platform for its lightweight Windows CE operating system and Internet Explorer browser, as well as a friendly channel to carry the company's content and its Internet access service.

The future shape of the television box might be unclear, but it's certain that the future of video content, however it may be deployed, is digital. Even if viewers don't need software, the creators will. Companies such as Apple Computer, with its popular QuickTime media development platform, want their authoring software to be the preferred format for creating digital video, whether it's on the Web or the 6 o'clock news.

"The first thing that has to happen," though, "is someone has to deliver interactive content," Forrester's Bernoff said. "The Web is not sufficiently interesting for people to pay for it. Waiting for text to download doesn't compare with the Miss America pageant."

Managing editor Mike Yamamoto contributed to this report.