RealTime IT News

AOL Gunning for WebTV

Coming to a set-to box next week -- AOLTV, the latest shimmering facet of America Online Inc.'s strategy to provide its 23 million members with access to its services from anywhere, over any device.

AOLTV made its debut at the Consumer Electronics Show in January. At the annual Las Vegas event, America Online boldly launched its services based on non-personal computer Internet access.

After nearly 16 months of testing set-top appliance and AOLTV content development, AOL's alliance in conjunction with satellite programmer DirecTV will be ready for public scrutiny early next week.

AOL, Microsoft Corp., and other technology heavyweights are vying for huge advertising payoffs and e-commerce profits, when consumers can tap into goods and services from their sofa.

Research firm Jupiter Communications Inc. forecasts that interactive TV will reach 30 million U.S. households and by 2004.

David Card, a principal analyst at Jupiter , noted that AOLTV plans a three-step path toward interactive television, or iTV.

"America Online uses the phrase AOLTV as an umbrella term for strategies that the company hopes will give it a strong position in TV," Card said in his iTV report. "The strategies make sense, but TV 'carriers,' particularly cable multiple systems operators are still the gatekeepers."

If the AOL, Time Warner Inc. merger is approved with RoadRunner franchise agreements intact, multiple cable system operators would be the least of AOL's worries.

AOLTV set-top boxes are manufactured by Hughes Electronics Corp. and Philips Electronics N.V. . The devices are based on Intel Corp. architecture, while Liberate Technologies Inc. developed the software.

The boxes are relatively inexpensive to produce, because the devices do not required fast processors or large hard drives. Pricing for the consumer launch of AOLTV has not been announced.

AOLTV will feature services akin to its Web line-up, including e-mail, Web-based browsing, and its much-maligned proprietary instant messaging access. In additional to popular online services, AOLTV will feature program search guides and reminders.

AOLTV is designed to rival Microsoft's WebTV devices, but will also include video recorder-like functions on its devices that will ship early next year.

AOL invested $200 million in personal television creator TiVo, Inc. earlier this week and plans to incorporate TiVO's VCR-like features into its branded set-top boxes. Microsoft does not offer such a feature at this time, but its set-box manufacturer could remedy the feature gap just in time for the holiday sales season this year.

At stake in the rush to develop the iTV market in the U.S. is the opportunity to profit from advertisers ready to sponsor programming and commercials over the new interactive medium. Jupiter estimates that the industry segment may generate as much revenue as $10 billion in four years.

If the industry leaders have their way, consumers may be in store for an onslaught of interactive infomercials before the year's over.