"iTV, Interactive TV, Enhanced TV" -- this week at the National Cable Television
Association's Cable2000 annual conference in New Orleans, the "next new thing" will be
the buzz as cable operators plan their rollouts and set-top box and platform
manufacturers like Microsoft, Liberate, Scientific-Atlanta and General Instruments jockey
to make sure that they're a part of them.
But you may not be aware that this "next new thing" actually had its birth in the
mid-1970s -- before many of our readers (and some of our staff) were born. This
three-part series will trace where iTV has come from, where it is now and will be soon,
and the possibilities that it offers just a little further in the future. So now, in Part
One, let's take a step back to the beginning of the long road to iTV.
The Birth of Cable TV
Cable television itself began as "Community Antenna Television" - CATV. It developed in
small towns on the fringe of the television stations' coverage areas where people had
trouble picking up a good signals with antennas alone. They banded together to put up a
very tall antenna, and then ran coaxial cable to the community's homes.
The owner of an independent UHF television station in Charlotte, NC was one of the first
to discover the potential of CATV and point it on the road to the service that it has
become. UHF was the "death valley" of the television spectrum, and stations that did not
have network affiliations to provide them programming were stuck with old movies playing
to miniscule audiences. The station owner realized that, with cable, he could get a
channel number that wasn't lost in the clutter, a good signal, and by combining each of
those tiny little audiences over a very wide coverage area through CATV, he could
aggregate a large enough total audience to be interesting to regional advertisers.
It worked, and CATV had a new potential. The station owner, Ted Turner, took over a
failing UHF in Atlanta and repeated his plan, this time moving to satellite distribution
to reach a nationwide audience. His "SuperStation," WTBS, became the core of the Turner
Broadcasting empire and spawned CNN.
Qube: the First Attempt at iTV
By the mid-1970s, the movie channels had been born, and cable was starting to make
serious inroads into major cities. The major companies that are cable operators today --
Continental (MediaOne), Warner Cable (TimeWarner), and others -- were becoming the major
powers, beginning to buy up the "mom and pop" operators in the creation of their
nationwide networks. But where could cable grow, beyond just offering channels without
snow and Showtime and HBO?
Some cable execs had a vision of making cable more than a one-way street. They imagined
two-way -- especially, the ability to provide shopping over the television so that they
could actually participate in the sales transactions of their advertisers, not just sell
them viewers' eyeballs.
The first manifestation of this vision was the Qube network, built by Warner Cable in
Columbus, Ohio. The Qube system offered a then-awesome 36 channels, individual subscriber
addressability, pay-per-view programming, and interactive polling of system subscribers.
Operators were able to monitor what programming subscribers were watching (which later
became a privacy issue that was ruled a no-no by the Telecommunications Act of 1996).
Despite some early buzz, Qube was a non-starter as an interactive system, but was
fundamental in the development of wide-spread pay-per-view programming.
Enter the Videogames and Personal Computers
Two more important foundations of interactive television were laid in the 1970s.
Videogames -- Atari's Pong and Magnavox's Odyssey systems -- were the first add-on
devices for the television that gave consumers a reason to interact. Today, these old
games look so archaic that it's hard to imagine that they would capture anyone's
attention, much less their wallet, for very long. But they were immensely popular,
especially Pong (which you can play today on the WebTV new Classic or Plus or a PC in Net4TV's Game Center). The idea of
actually doing something with TV other than just watching it came into the consumer
consciousness, and it spawned the industry that today is over $14 billion.
In the late 1970s, personal computers led by the Apple II began to appear. In those days,
most of the computers used televisions as a display -- monitors began to become
widespread with the launch of the IBM-PC in 1981. By 1983, with the launch of the
Commodore 64, personal computers had become so affordable that they largely replaced the
first generation of videogame machines. By 1984, videogames were dead in the market, and
the PC was on its way to becoming the multi-purpose center for productivity, gaming, and
communications via bulletin boards and online services like CompuServe.
Videodisc Makes Random-Access Video
The consumer VCR was launched with Sony's BetaMax in 1974, but for awhile, it was slow
going. Movie studios insisted that movies had to be purchased and fought rentals with a
passion, but comsumers didn't want to shell out $75 or so for a movie that they wanted to
see once. Sony pushed the idea of "time shifting" to try to come up with an application
for VCRs that wouldn't cost so much, but the biggest application at the time was... well,
porno. It was one of the nice things about videotape -- any amateur or semi-pro could
make them cheaply in small quantities on consumer equipment.
Thinking that the market would be for purchase instead of rental movies, the major consumer
electronics manufacturers tried to improve on the linear nature of videotape with the
videodisc. RCA introduced a truly awful system based on a system called CED that was played with a
stylus on a platter, something like an LP record. Several other manufacturers brought
out laser-read optical disc systems, but the "dueling standards" ultimately reduced to
LaserVision (laserdisc) in most of the world and an additional format in Japan.
Meanwhile, though, by the early eighties, it had finally dawned on the movie studios that
perhaps they should stop fighting rentals and instead make money on the market. In 1981,
VCR sales took off, fueled by rentals, porno, and commercial-free movies on cable
channels like HBO that consumers could record and keep. Even though Sony's BetaMax had a
better picture, the competing VHS format from JVC was supported by more studios and
hardware manufacturers and ultimately won. Laserdisc, which launched in 1982 and had a
much better picture than any videotape, was the loser in the mainstream market. It couldn't record, there was
virtually no porno available, it was expensive to manufacture (especially in small
quantities), and it damaged too easily to make it a good rental item.
But laserdisc had one thing going for it beyond its superior picture: it was random
access, which meant that you could jump around on the disc without having to rewind and
fast-forward. By 1983, laserdisc had found a new market. By connecting it up to a PC, the first interactive video applications were developed -- mostly for corporate
training. There were a few consumer interactive laserdiscs made as well, including a
version of the Grolier Encyclopedia that included video, still pictures, and text. But
the fact that there were no standards for how the various laserdisc players interfaced
with the PC (in fact, there were even different interfaces for various models by the same
companies) kept it in the corporate training world where the player, PC, and application
all came together.
The CD Opens a new Attempt at iTV
In the late 1970s, over thirty electronics manufacturers were laboring to create a
replacement for the LP record, each trying to do it their own way and hoping to become
the "standard" (which largely meant "everyone use my method and pay me for the
privilege"). Philips and Sony, both losers in the video wars, decided to combine forces
and technologies and, in 1982, released the joint "Red Book" standard for their Digital
Audio Compact Disc that is today's CD.
By 1985, the CD was taking off and economies of scale had brought the cost of
manufacturing into the very reasonable range. CD Audio was audio that had been turned
into digital data, and the CD could actually carry any kind of digital data -- including
computer data. Sony and Philips had already worked out a provisional standard for CD-ROM,
and an ad hoc industry group developed a file standard so that every kind of PC
could read data that was written on CD-ROM.
The CD-ROM could carry over 700 MBytes of data at a cost of about a penny per Megabyte --
absolutely awesome in that time when a 50 MByte hard disk cost $500 or more and most
programs were delivered on 720K floppy disks. One of the most exciting possibilities of
this cheap, high-capacity, random-access delivery system was programs that included
high-quality graphics and audio -- both 'way too big to be delivered by magnetic media.
It was the birth of multimedia programming.
And, if there were a common system that combined a multimedia computer and CD-ROM in a
consumer format that would use a TV and be a part of the home entertainment center
instead of a desktop PC, there was a potential for a new interactive TV market!
Philips and Sony decided to extend their CD-ROM standard into this new market. They
called it Compact Disc Interactive -- CD-I -- and announced it in March 1986 for consumer
launch in Fall 1987. It offered photographic-quality display capabilities in a time when
most PCs could only display 16 colors, and stereo audio in several different quality
levels. Developers flocked to the new system, imagining the games and "infotainment" and
"edutainment" that they could make on the new iTV system. One industry analyst proclaimed
it "the birth of a billion-dollar market."
The announcement was, to say the least, about a decade-and-a-half premature. Both Apple
and Microsoft, who had been left out of the standard, were fiercely antagonistic to it
and relationships between Sony and Philips also soured. Philips, left alone with CD-I,
delayed it year after year while PC computing power and graphics continued to develop
until they had passed the system that had looked so hot in 1986. By the time Philips
finally got CD-I to market in 1991, other competitive systems from Commodore and Tandy
had already launched and failed, and Microsoft had pushed through its "MPC" standard for
PCs that offered many of the same capabilities in a desktop PC.
One of the biggest problems with those systems, in retrospect, was that it was expensive
to make that fancy "infotainment" and "edutainment" software, which meant that there was
not much of the "grass roots" software development that had made the personal computer so
successful. With CD-I, Commodore's CDTV, Tandy's VIS, and other CD-ROM-based iTV players,
the only thing that consumers could do with the system was play a few expensive (and
rather boring) titles that someone else had made. You couldn't do word processing or dial
up to CompuServe, they weren't very good game systems because they weren't designed for
action games, and meanwhile, Nintendo had brought back the videogame and had created a
booming new market for people who wanted to play on their TVs rather than just watch
them. Even the MPC never created the multimedia CD-ROM market beyond games that everyone
had hoped for. CD-ROM was, more than anything else, a way to deliver big software
programs without having to swap twenty-seven floppy disks in the process.
During this time, there was another development that was slowly laying the groundwork for
the future -- the emergence of online as a consumer medium. Computer bulletin boards had
been around for ten years and, in universities and computer companies, email and Usenet
newsgroups were active on something that would someday be called the Internet. In France,
the world's most wired country, the Minitel was in daily use by millions of people, and
a teletext system was connecting people via their TVs in the UK (similar systems were tried
in the US by Knight-Ridder and TimesMirror in 1985, but both failed). An IBM joint
venture called Prodigy made a very easy-to-use online consumer system that was installed
on virtually every new PC. It wasn't wildly popular, but it was a start.
Cable Tries Again for iTV
The cable industry and some telephone companies watched all of this with interest, and
began to work again towards delivering interactive television over cable. There was a
problem -- most of the US' cable wiring could send a signal to turn on a channel in a
set-top box for pay-per-view, but it really wasn't capable of two-way communications or
sending a lot of data to a single box.
But that didn't deter the cable companies and telcos, and many of the majors fired up
interactive TV trials. Some of them used awkward hybrid systems -- combining a still
frame store coming from a "sliced" video channel with a telephone back-channel to carry
user input, or using an extra box to put a crude digital overlay on the screen.
Others, like TimeWarner with their Orlando Full Service Network trial, laid brand new
cable for high-speed digital service. TimeWarner's system used a Silicon Graphics Indy as
the set-top box, a $5,000 3-D computer system whose primary application was as an
entry-level workstation for professional computer animators. The system featured games,
shopping, banking, and true Video-On-Demand from a library stored on a server in the
cable head. Altogether, more than $1.5 billion was poured into iTV trials, with as much
of a third of it being just TimeWarner.
The Tide Goes Out Again on iTV
But at the end of the day, as the trials wrapped up and the results were reviewed, no one
had shown their test users anything that they'd want to buy. TimeWarner was the
exception, but the cost to deliver this kind of service was in the several thousands of
dollars per year per household, even at full deployment. It just wasn't economically
possible. By the end of 1995, virtually all of the iTV trials around the world had either
shut down or were about to.
Part of the problem with the cable and telco approach to iTV, like the CD-ROM approach,
was that they were closed systems. Consumers could do anything with it except watch and
click on the "clicking opportunities" that had been provided them. There wasn't anything
compelling to consumers that they could do. In early 1994, Barry Diller of USA Networks
had described iTV enthusiastically as "games, home shopping, home banking, and a host of
things we haven't thought of yet!"
But the games couldn't hold a candle to the games on videogame consoles, home banking had
been around for a decade on PCs, and the home shopping didn't deliver the goods when all
that was available was a few stores and a few products.
And the bigger problem was that "host of things that we haven't thought of yet." Making
iTV content was expensive, and because the cable systems each were doing it a different
way, each one had to bear all of the costs themselves. If the interaction didn't bring an
individual result that a consumer wanted, ... well, why should they do any work for it?
Why not just sit back and watch TV and not have to work? But the problem with providing
that individual result was that it meant making more and more content for smaller and
smaller audiences, as each person would have a different individual selection. The
economics just didn't make sense but, without a huge volume of interesting content, there
wasn't enough to attract an audience.
But as the cable companies retreated from iTV, something new was happening that would
change everything. The Internet, originally the domain of scientists and academics, had
spawned something new called the World Wide Web and had become a multimedia delivery
system in its own right. Next issue, The Long Road to iTV - Part 2: The Internet will pick up with the
Internet, WebTV, and the latest from the Cable Show to see where we have come to today
and what we can expect in the next two to three years.
"iTV, Interactive TV, Enhanced TV" -- this week at the National Cable Television
Association's Cable2000 annual conference in New Orleans, the "next new thing" will be
the buzz as cable operators plan their rollouts and set-top box and platform
manufacturers like Microsoft, Liberate, Scientific-Atlanta and General Instruments jockey
to make sure that they're a part of them.
But you may not be aware that this "next new thing" actually had its birth in the
mid-1970s -- before many of our readers (and some of our staff) were born. This
three-part series will trace where iTV has come from, where it is now and will be soon,
and the possibilities that it offers just a little further in the future. So now, in Part
One, let's take a step back to the beginning of the long road to iTV.