AOL previews TV plans

Hordes of companies are out showing interactive TV products at the Consumer Electronics Show, with America Online being the big new competitor on the block.

3 min read
LAS VEGAS--Hordes of companies are out showing interactive TV products at a trade show here, with America Online being the big new competitor on the block.

At the Consumer Electronics Show, AOL's first big move to offer its services to markets beyond the PC is close to becoming a reality. After nearly 10 months since its plans were first announced, the giant online service is showing off interactive TV services in conjunction with satellite programmer DirecTV, as previously reported.

The setting is fitting, for AOL and a raft of other companies are making big bets that various forms of interactive services on the TV will eventually be a hit with consumers. AOL, Microsoft and numerous other technology companies are hoping the payoff comes in the form of new revenue streams as consumer start purchasing goods and services from the couch. Research firm Jupiter projects that interactive TV will reach 30 million U.S. households and generate $10 billion in revenue by 2004.

Broadcasters and advertisers, meanwhile, have long been eager to fire up interactive services, because they can know more about who is watching (and doing) what, and what consumers are buying. Targeted advertising with better response rates has long been a goal in the television industry. But figuring out which technology will fulfill those dreams has been a gamble that few companies have succeeded with, to date.

AOL is the latest to plunge into the market. The company is previewing AOL TV-branded boxes made by Hughes Electronics and Philips Electronics. Inside are processors based around the Intel architecture and software from Liberate Technologies. The Hughes box, for instance, uses an ancient (by PC standards) 166-MHz Pentium processor from Intel, a 4 GB hard disk drive and 32 MB of memory.

The services are mostly familiar--email and the ability to browse Web-based material--but AOL is also adding its instant messaging technology as well as the ability to search through DirecTVs program guide automatically to flag programs matching a customer's interests. Representatives at the trade show did not elaborate on pricing. The systems are expected to be on the market sometime this quarter.

AOL representatives at CES were also showing an AOL TV cable set-top made by Philips.

Meanwhile, one booth over from DirecTV, Echostar is heavily promoting the newest addition to its lineup, the Dishplayer 500. The Dishplayer 500 is built around Microsoft's WebTV platform. It offers the ability to record up to 12 hours of programming with the click of a button, as well as pause a live TV broadcast by recording video onto a large hard drive.

AOL's new TV product will represent formidable competition for Microsoft's WebTV devices, analysts say. But Microsoft's marketing efforts at the event, as exemplified by the presence at Echostar's booth, shows its won't go gently. In related news, Philips said it would build a new WebTV device that includes digital VCR-like functions for pausing and storing programs in a fashion similar to the TiVo box and service; no pricing or availability dates were announced. The move is a public relations coup of sorts for Microsoft; Philips already makes and offers a TiVo-based digital video recorder (DVR)

Sony declined to elaborate on whether it would follow Philips' example but did announce its first digital video recorder based on TiVo's technology and service platform. The device, which is expected to be priced at $499, includes a 30 GB hard disk drive that can record up to 30 hours of programming. It is expected to available in April. DirecTV showed off a DVR box as well that's based on TiVo's technology. No pricing or availability were announced.

Meanwhile, not to be left on the sidelines, Panasonic finally unveiled its first DVR, called the ShowStopper. The device is based on technology from TiVo competitor Replay Networks. The device will be available in April at an as-yet-undetermined price. Further out on the horizon, Panasonic also demonstrated at DVD-RAM set-top that can record video onto a DVD disc. Each disk can store up to two hours of material.