America Online Inc. gave a few more hints last week about its plans for bringing Internet services to televisions through a line of special set-top boxes, saying it wants to blend its familiar chat, e-mail and shopping services with TV programming.
The key, say top officials with AOL and its new partners, is a quality not found in personal computers: simplicity. And their main target isn’t people who shy away from computers, it’s computer users who want to extend their existing AOL accounts into their living rooms.
AOL’s moves–which include alliances with DirecTV, the nation’s most popular small-dish satellite TV service, and Philips Electronics, a leading manufacturer of set-top boxes–come as a slew of cable and satellite companies, broadcasters and high-tech firms prepare a new breed of interactive television services.
Two weeks ago AT&T Corp. and Microsoft announced an alliance to provide an unspecified range of interactive services to cable TV viewers in three cities next year. Other cable operators are already installing video-on-demand, e-mail and on-line shopping services.
Whether anyone wants this stuff or is willing to pay for it is an open question.
“It’s very difficult to convince the consumer that they want this thing called the Web,” said Ken Soohoo, founder and chief technical officer of Planetweb in Mountain View, Calif. “It’s a very nebulous concept.”
AOL is the nation’s largest on-line service, with more than 17 million members. Although Microsoft’s WebTV is a couple of years ahead of AOL in bringing the Internet to the television set, it has only some 700,000 set-top boxes in service.
Nevertheless, the TV set remains the next big opportunity for Internet-related companies, given that far more U.S. homes have televisions than computers. Nearly every house has at least one TV, while only about 50 percent of all homes have a PC.
WebTV’s original product let people turn their set into a computer monitor of sorts, devoting the screen either to TV programming or Internet-related material like e-mail and Web browsing. But even WebTV officials say the average viewer wants something different out of interactivity–they want to use information from the Internet to improve TV, not replace it.
As the Internet rapidly insinuates itself into daily life–an estimated 37 million U.S. adults now use the Internet at least once a day at home, almost double the level of two years ago, according to a new study by The Strategis Group–AOL is betting that its customers want more convenient ways to log on.