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Are we having fun yet?

Rumors about the death of online entertainment are greatly exaggerated.

To all the doomsayers who have declared online entertainment dead, I have only this to say: Pop-Up Video.

Yes, this is the VH-1 show that plays old videos punctuated by annoying bubbles popping up at random to impart such useful information as whether Meatloaf actually eats meat loaf. Started as a goofy idea only a few years ago, the show instantly became the cable channel's No. 1 hit and employs a small army of writers and researchers, even though its producers describe VH-1 as MTV's lame older brother. (Which explains why I watch it.)

If this is the Darwinian equivalent of the lungfish in multimedia evolution, then the missing link can't be far off--Broderbund (Myst), meet Pixar (Toy Story). People will surely be willing to pay for more digital services that allow them to enhance their entertainment experience at home.

The houselights had barely dimmed on the entertainment divisions at America Online and Microsoft Network when the naysayers came out in force. Entertainment on the Web is dead, they proclaimed in unison.

Many of these technological obituaries assumed that the ultimate stage for digital entertainment is the platform we use to surf the Web today: an awkward jumble of boxes that sits on a desk nowhere near the living room, an ugly setup with a tiny screen that takes forever to bring up the most basic graphics and photo stills. When it isn't crashing, that is.

It doesn't take a genius to figure out that this isn't an ideal setting for an evening of family fun.

What's amazing is that so few people, including many self-anointed Internet visionaries, seem able to look beyond the current generation of Web devices to assess the viability of online entertainment.

Clues to the future are everywhere. In just one day this week, seemingly disparate advances from television manufacturers, PC makers, software publishers, and Hollywood studios prove that entertainment development is very much alive--it just may not come in forms like Websodics of The Spot variety, the category that is often cited as hard evidence that the Net is not ready for prime time.

On Monday, NBC said it is taking a 6 percent stake in a company called Intertainer, which plans to offer a broad range of interactive services from music samples to movie purchases over high-speed Internet connections. With technology like this, it's not hard to envision a service that allows viewers to watch an episode of Frasier, find out the latest gossip on Kelsey Grammer's love life, click on his double-breasted Armani to find out where it's sold (and eventually buy one), and become a member of his official fan club.

On the geek front that same day, progress was reported on hardware that could eventually be used to deliver such services. Compaq dropped the price of flat-panel screens under $1,000--still steep for most consumers but far less than the going rate for such displays only months ago, an indication that picture-frame TV computers may adorn our walls in a few years. Also that day, Panasonic said it will begin shipping next-generation TV sets equipped for digital broadcasts.

Even Washington is encouraging the development of online entertainment, albeit indirectly. With Tuesday's passage of congressional legislation providing major protections against digital piracy, Hollywood studios may be less reluctant to make their films, music, and other creative property available through the Internet.

Business alliances toward the convergence of computing and television are being made all the time. Last week, a consortium of high-powered companies--Microsoft, NEC, Alcatel, and DirecTV--said they would each take a 7.5 percent stake in Thomson Multimedia to promote interactive television, another idea that refuses to die.

The mere mention of interactive TV is likely to set off another round of cries from digital naysayers who will insist that it has already been proven a failure. And they would be right, at least in part, as it has yet to succeed in a mass market.

But previous attempts at such services were all started before the explosive growth of the Internet, at a time when many people simply couldn't grasp the concept of "interacting" with anything electronic other than to punch a button on the remote control.

Things are obviously different now, as even newbie consumers have gotten used to the idea of hooking into a new type of network capable of providing services that they could not have imagined earlier. The Internet has allowed them to think outside the box, whether it be the PC or the TV.

Although bandwidth and other technological obstacles remain, the most formidable challenge to the success of online entertainment--consumer psychology--has already been met.

To research his monthly column, News.com managing editor Mike Yamamoto watches a lot of TV.