They want their DTV

Digital technology will allow broadcasters, TV manufacturers, set-top box makers, and service providers to offer a slew of features revolutionizing the television experience as we know it--and blazing the way toward true technological "convergence."

The problem is that nobody's sure which of these or what mix will strike the consuming public's fancy and, consequently, what will drive the new market for digital television sets, cable set-top boxes, or DTV services.

A brief look at the possibilities shows why the digital guessing game is so complicated: a high-definition signal with roughly twice the picture clarity of current TVs; an interactive, computer-like screen; Internet access, including email; online shopping; as many as 500 channels (ultimately); powerful TV program search engines; advanced programming guides akin to Web browsers; movies on demand; and PC applications such as basic word processing.

"We talk of 'utilivision'--adding functions to television, at least initially. Entertainment is the main reason people sit in front of a television set, but it's also the main way they get their information," said analyst David Card of Jupiter Communications. However, he added: "The utilivision notion is useful, but it isn't necessarily the one that's going to win."

Broadcasters aren't waiting around to find out what will. Already, close to 50 TV stations are are beginning digital TV broadcasts by this fall, according to the National Association of Broadcasters.

An even bigger leap toward DTV will occur in the spring: affiliates of the four major networks will start DTV broadcasts by May 1 in the 10 largest markets, as required by government regulations, eventually reaching the top 30 regions by November of 1999. All other commercial stations must begin digital broadcasting no later than May 1, 2002.

In the meantime, the television signals will continue to be available through digital satellite service, or DSS. That technology offers some of the promise of DTV in improved images and more channels, but it has yet to complete two-way interactivity.

Viewer participation provides the catalyst
That viewer interaction--specifically, the ability to buy things through this technology--is what many believe to be the catalyst driving the engine behind digital TV development.

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"We didn't get color television because users were tired of black and white. We got it because you needed to show what color a shirt was to sell it," said Ron Rappaport, an analyst with Zona Research. "The notion of sitting on a sofa and doing nothing in this era of high degree of activity is absurd."

That's where digital technology becomes key, to provide the kind of pipelines necessary for viewer interactivity.

"If it's a fairly simple call to action that links off to a Web application with little interactivity, bandwidth requirements are going to be minimal," said Patricia Vance, senior vice president and general manager of ABC Internet Group. "But people are talking about transactions. The kinds of things we're toying with that are more keyed into the TV signal are far more difficult to deliver without much expanded bandwidth capacity."

Of the major networks, NBC has taken an aggressive approach toward this digitized future, seeing plenty of opportunity for linking viewers directly to advertisers or becoming a medium for commerce. But, if today's consumers are any indication, getting there won't be easy.

The network has developed prototype digital devices that can show live broadcasts and provide a raft of interactive features and hyperlinks. Peg Murphy, an executive with NBC Interactive, said the initial reaction from focus groups is: "'My TV isn't supposed to do this.'"

"This" can include truly converged television and computing features, such as embedding Internet links into a live broadcast.

"Video hypermedia allows you to click through a piece of media: You're watching a fashion show, see an item that you like, click on it, and buy that item," said Jonathan Taplin, cochairman of Intertainer, a digital technology developer that recently got a major investment from NBC.

"Myself and my partners all came out of producing television for 25 years," Taplin said. "We want to preserve the magic of television but want interactivity to become a crucial part of the experience."

Still, some in the industry caution against developing too much too fast without gathering enough information about what consumers really want.

"People are rushing out to make products before researching interfaces, determining usage," said David Atlas, executive vice president of marketing for Alation, a home networking firm that develops technologies for digital devices. "I come to my apartment after work, get messages, cook a meal, get information to watch a movie. You should build from that paradigm."

TV manufacturer RCA is taking a more measured approach. Owned by Thomson Electronics, RCA equates DTV largely with high-definition television, commonly called HDTV.

RCA describes HDTV as television that can display at least 1 million pixels--the tiny dots that compose the images seen on television and computer screens. Today's TV screens provide less than half of this resolution. RCA expects DTV sales to reach 500,000 in the year 2000 and 2 million by 2002, still a relatively small chunk of the 25 million to 30 million conventional sets sold annually.

"People are definitely impressed when they see [HDTV]. But they walk out with [conventional] sets," said Lou Lenzi of Thomson. Nor is he very keen on the set-top box idea: "We don't envision bolting à la WebTV into a monitor. We don't see this as the mass-market sweet spot."

The company is, however, enthusiastic on another digital front--interactive interfaces, specifically electronic programming guides that could eventually become the Web browser of DTV. "Highlight a program and it takes you to the program," as Lenzi says.

But Mike Ramsey, founder of DTV start-up TiVo, may have the most innovative vision of digital television. His company is targeting powerful search engines for DTV, analogous to those found on the Web.

"When you get to 500 channels, navigating [with electronic programming guides] gets very difficult...You have 10,000 hours of programming raining down on you. You need search engines...a My Yahoo for TV," he said. "Choice of channels is more exciting than picture quality, especially when the sets are $5,000."

In another form of industries converging, TiVo will face competition from Internet companies as well. Web browser developer Spyglass, for one, has struck a $20 million deal for a joint venture with cable set-top box maker General Instrument and is creating Java-based applications that can display TV show times and program ratings as well as drag a show name into an electronic calendar.

Continuing that Internet-like path of development, the digital television industry will see the emergence of a new breed of "portals," DTV equivalents to Web gateways such as Yahoo, America Online, Lycos, and Excite. And many, if not all, of those Internet companies are working on plans to enter the interactive television fray.

Then, as always with all things technological, there's Microsoft.

"How do all of those things work together for the consumer? It's a fairly complicated food chain, and there are lots of different ways it will pan out and be offered," said Steve Guggenheimer, product manager for Microsoft's digital television group. "We do work with everyone. If we're competing for something that isn't well defined, we'll have a backlash." 

News.com's Jim Hu and Stephanie Miles contributed to this report.

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