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Start-up 21E looks at PC-TV future

An Internet start-up called 21E is readying a Net technology that may offer a preview of what TV service may look like in the future.

An Internet start-up called 21E is readying a Net technology that may offer a preview of what TV service may look like in the future.

Nashville, Tennessee-based 21E wants to make postage stamp-sized video on the Internet a thing of the past by starting a broadband portal that lets users see near full-screen video on their PC.

Although the company could offer full-screen video, executives say that what will make them different from competitors is the leftover screen space--which will be used for conducting e-commerce. Not only does 21E have access to a $130 million, 150,000 square foot digital production facility for live events, but they will also have the ability to digitize existing content and meld that with e-commerce capabilities.

"We will act like a broadcast network with the world marketplace at our fingertips," said Rick Davis, CEO of 21E. "We're not a Web site, we're a network." Right now, 21E only has a placeholder Web site, as it prepares for its official launch next April.

21E won't stop at just aggregating old content, though. The company plans to produce live events--it already tested its system out by producing a portion of the recent Woodstock concert Webcast--and has deals to act as the interface for Webcasts originating from its production partner, Slingshot Networks.

"There are hundreds of thousands of hours of programming looking for a place to go," Davis said. "The entertainment community is begging people to show them how to take that content and utilize it."

If the notion of blending a TV-like experience with e-commerce sounds familiar, it should be by now. The cable and broadcasting industry have been looking for ways to boost revenues, and selling products alongside programming is the holy grail of the industry, it seems. However, there is only a limited amount of new interactive content available because few TV or cable-based systems are capable of enabling these activities right now.

21E hopes to get a jump start by targeting the PC first, then the TV. In both arenas, 21E could have an advantage because they'll be able to create "interactive" content just by using existing video content from the libraries of movie studios and local broadcast stations, for example. This kind of interactive programming would be abundant, and cheaper to produce than content designed exclusively for a platform such as WebTV, which only has about 800,000 users right now.

Five years from now, Internet video content is going to slowly migrate across to the TV set and the digital set-top box, said Jeremy Schwartz, senior analyst for Forrester.

That's just what 21E and other Net broadcasters are hoping to hear, as they are eyeing an eventual move to the television. As next-generation cable and satellite set-top boxes offering Internet-based services become more prevalent, broadband portals will comprise a new tier of TV programming consisting of thousands of sub-channels that are available on demand, he said.

"To start to build a business focused on broadband is not a bad idea. The idea is to target what will be a really good market four years away," said Schwartz. "The lessons they want to be learning is how to marry content with interactive effects, and create something that [an] audience will stay immersed in, and then play that out on TV," he said.

21E is gathering an interesting mix of well-known individuals to guide its development. John Ingram, vice chairman of Ingram Industries and chairman of Ingram Book, has joined the board of 21E, joining former presidential candidate and Tennessee governor Lamar Alexander, and Bert Ellis, Chairman and CEO of iXL Enterprises, a strategic consulting and services firm, among others.

Ingram's presence is of particular note because of his experience with product distribution--a key for any company, such as 21E, hoping to do order fulfillment. Ingram Industries has a stake in Ingram Micro, one of the largest distributors of computer products, and owns Ingram Books, the largest wholesale book distributor in the U.S.

The company has employed Atlanta-based consultancy iXL to provide the design and integration of the project's technology pieces. The end result the two are aiming for is a near-full screen display of archived or live material taken from an all digital production facility; that content is melded with information from a customized database to enable online sales while content is playing.

"We are going to redefine expectations of what an interactive e-commerce experience is," promises Jonathan Ballon, senior vice president for iXL's digital media and broadband solution practice.

IXL is building a custom graphical interface around existing streaming media technology--executives won't say yet whether Microsoft, Real Networks or some other technology is being used--so that users won't see a browser window.

That's because the key to successful e-commerce on the Internet is "don't leave the entertainment experience," said Bill Haggarty, chief operating officer of 21E and a cable industry veteran.

For example, using the production equipment at its disposal, 21E will be able to broadcast a live golf tournament that can offer related merchandise for sale. What's going to be unique, said Haggarty, is 21E's ability to monitor sales in near real-time. If users aren't buying, they can create a new set of offered products for sale in minutes, helping to maximize the company's revenues for any given broadcast.

In order to accomplish all of this, though, 21E is starting out by targeting only users with high-speed Internet connections of 300 kbps or above, limiting the size of their audience in the near term. The majority of Internet users still have no more than 53 kbps connections, but the number of users with high-speed access is expected to increase rapidly. Forrester Research currently estimates that around 30 million households will have access to such services by 2004, giving companies like 21E a substantial audience to target.

Some analysts are still skeptical about the immediate future of TV-style programming for the Net, but that isn't stopping everyone from Internet start-ups to entertainment heavyweights from toying with ways to generate viewer interest and revenue in their offerings.

Many firms are also aiming to provide the broadband market an interactive TV experience on the Web, along with 21E. MeTV said it intends to offer full-screen video for PCs at 375 and 700 kbps. On2, a company that started out by providing proprietary video streaming technology to companies like Sega, is set to launch its own broadband video portal by the end of the year. Pixelon has already launched its portal, which uses custom streaming software to provide video content which can include demographically-correct, on-the-fly ad insertion.

Schwartz agrees that aggressive Internet companies have an edge on the studios so far. Simply augmenting TV programming with new content online isn't what broadband programming is about, he said. The studios will need to showcase both homegrown content and content created by users and independent filmmakers, and then figure out how to tie e-commerce opportunities to this exploding supply of content.

"If studios don't do that, they aren't going to be players in this market," said Schwartz.