Why Broadband Isn’t [email protected] TV

Four score and so many reruns of Fantasy Island ago many media and technology companies spent billions of dollars envisioning a new media they dubbed interactive television. The heart of it was you could zap and watch a video on demand.

Time Warner, Microsoft, the Baby Bells, TCI and tons of others in 1995 touted its inevitability. And then the Internet wiped it out, a simple 9600 baud text feed. Are you ready for interactive TV part two, subtitled broadband Internet?

I think we’re seeing a macro shift in investment philosophies once again into the lexicon of the interactive TV hey day when Al Gore proclaimed himself king of the (info) road. Zap on demand, convergence of TV and Web, on and on.

While many of these trends may have some verity I think the primary danger is in throttling up the old interactive TV viewing habits and trying to make them apply to the emerging broadband Internet.

To make sense of the multimedia Internet and see the opportunities investors need to have a clear vision of the potential of the medium and not as a new and better interactive TV.

The challenge for investors today is realizing the limitations of what interactive TV was and not confusing it with what a broadband Internet could be. Subtle distinctions but powerful differences.


1) Interactive TV was still mostly a major media company driven experience

2) Interactive TV was largely entertainment driven

3) Interactive TV was interactive in a narrowly-defined sense where for all intents and purposes ‘interactive’ meant a viewer requesting a video on demand

4) the major features of interactive TV lacked a disintermediated information or commerce experience

5) interactive TV relied on cable wires

6) interactive TV lacked leverage mechanisms for viewers (viewers were consumers and not creators)

For comparison, the Internet is:

a) a user-driven media experience (note the word users and not ‘viewers’)

b) information, commerce, entertainment, communication blending

c) interactive on several layers from e-mail, chat, e-tail, creating Web sites

d) a collapse of all or part of the manufacturer to wholesale to retail channel (Amazon is one example)

e) more of a telecommunication wire experience (translation: uses the huge installed base of plain old telephone wire)

f) full of leverage mechanisms that empower users who can create their own Web sites, share data, sell things, buy things at discounts or name their own prices (Priceline, eBay or ONSALE are three of dozens of services).

As media companies begin to acquire Internet firms and vice versa the single biggest challenge in maintaining value I believe will be in ensuring that users come first, that price is in flux, that tools, software, communications and all else are now putty in the hands of consumers more than ever and more and more.

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