Backchannelmedia

As technological advances continue to increase channel capacity, viewership will peak and fracture; advertising dollars available to cable networks will then begin to decrease. These economics will influence a cable network's long-term programming and marketing strategies.

Companies who act quickly to take advantage of this changing landscape will become branded, integrated and nimble competitors.

Lines will blur as cooperation between the cable and the computer software industries intensifies.

Entrepreneurs and established corporations will have a renewed interest and be attracted to the quantifiable and immediate results that direct response offers.

The spoils of competition will be rewarded to those who listen to and satisfy the value-conscious consumer, implement effective media and public relations strategies and create strong brand loyalty.
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For 17 years Paula had been fashion coordinator for her family's business, Continental Jewelry located in Montreal. "I had always wanted to be actress. But I never expected things to turn out quite the way they did."

On a crisp November's night in 1995, Baker took to the stage and fulfilled her television dream. Within minutes, the "Baker Rendezvous Collection" sold out on The Shopping Channel!
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Jerry Cismoski, a Costco member, is one of thousands of small entrepreneurs who you might say is lucky enough to cash in on the growing popularity of electronic retailing.

"The toughest part was overcoming the belief that we were not fancy enough for TV. We are a small company, with eight employees, and through QVC we learned that we do have an excellent national product," says Jerry."
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ZDTV, developed in conjunction with Ziff-Davis, was funded with an initial $100 million investment from Softbank Corp. It is built around an eight-hour block of original live programming, repeated three times a day.

Technology as entertainment, up to now slow to catch on, is showing signs of increasing acceptance in the nation´s living rooms.
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The future is one where varied content is reduced to a stream of binary ones and zeroes, carried by cable, broadcasting, computer and other delivery platforms. It's called digital convergence, and it will change the way that you do business.

Your future is not just about more channel choices or broader upselling programs. It's also about processes that can improve the efficiencies within your company.

Consider making education of new system-orientated ideas top priority in your firm.
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In truth, there are many effective, time-proven ways to turn a vision into reality.

At Backchannelmedia, we've always followed these guidelines when exploring business opportunities and when trying to make things happen. We've terminated talks when a company's intent did not measure up to our own. Like most small businesses, we cannot ignore opportunity when it knocks, but experience has taught us that it is better not to compromise one's beliefs.

So remember: Establish your guidelines and link them to a sound business plan.
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As methods of transacting continue to evolve, the two-way interactivity available to online and offline auctioneers can infuse new meaning into direct response.

The future of the direct response industry will not be divided into neat online and offline compartments, but we cannot ignore the fact that 51 percent of Internet users communicate directly with vendors.

Smart direct marketers, armed with the ability to market their product offerings through various methods, including toll-free numbers, television and direct mail, will survive.
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The scope and breadth of today's technological advancements, regulatory rulings and business consolidation s are causing us to look inward and rediscover our companies' core competitive advantages.

At the heart of the cable operator's competitive advantage is the ability to innovate and upgrade.

Our challenge over the next few years, from content providers to content distributors, is to manage our own innovation and to successfully implement mass and local customization.
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Vertical integration is becoming obsolete. The knowledge-based enterprise, which is built on well-defined core competencies and outsourcing, is now the preferred business structure in America.

Often, business owners will interpret critical environmental changes in their respective industries in ways consistent with the company's normal operating procedures, even if the situation calls for radical action..

True strategic focus will mean that each direct response company will have to develop, in conjunction with "best in the world" partners, a selected set of knowledge factors, databases, and service skills in such depth that the company becomes world class.
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In 1996, Congress passed the Telecommunications Act to spur privately funded construction of the global information network. Since then, the Federal Communications Commission has been given the task to ensure that this new systems of highways will be constructed by thousands of corporations using a variety of new and untested technologies, all at no cost to taxpayers.
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Nearly four years ago Oracle founder Larry Ellison predicted that non-PC devices linked to the Internet would outnumber Internet-linked PCs by 2000. Ellison started a company, Network Computer Inc., to create and sell the software for these non-PC devices. But the drop in PC prices short-circuited Network Computer's strategy as manufacturers were now unwilling to make the non-PC devices. By most accounts Network Computer Inc. was a failure.
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All cable programming distribution is controlled by a head-end operations center. As channel capacity has increased in recent years, more cable operators (including cable networks and broadcast operations) have updated their operations to include digital servers. One of the leaders in the field of manufacturing and installation of digital servers is Maynard, Mass.-based SeaChange International.
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Restrictive channel capacity and antiquated analog technologies usually squeezed out home shopping for one of the new hybrids of Discovery. This year, although the hall was still buzzing with countless digital hybrids, it felt like things had finally begun to change.
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Lee Masters, former president of E! Entertainment Television, works inside AT&T's National Digital Television Center, which is located on the border of Los Angeles and Santa Monica. Except for a few satellite dishes, the nondescript facility blends into the neighborhood surroundings. Housed inside this sprawling complex, though, is one of the most technically advanced broadcast facilities ever constructed.
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Georgia-based electronics manufacturer Scientific-Atlanta (S-A), which is one of the largest makers of digital set-top boxes and its transmission equipment, formed a subsidiary in July 1994 -PowerTV- to build an interactive TV (ITV) operating software package. In the past year, as over 40,000 units of its set-top box are now being installed weekly in the United States and Canada, the company has recently taken steps to charge up the rollout of PowerTV's operating system and its "SofaSOFT" suite of Web-based, enhanced TV applications.
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Upon entering the 20,000-square-foot office of Commerce.TV, the signs of a high-tech venture greet me at the door. You see television is changing, and so is TV commerce (t-commerce). I am here to discuss the state of the industry with Matt Kay, the 28-year-old co-founder of Commerce.TV. Fresh on the heels of a strategic fund-raising round, Commerce.TV and Kay are staking a claim in the land of interactive television (ITV) commerce.
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During the 1999-2000 broadcast season, MST is encoding 230 episodes of Jeopardy! and 195 episodes of Wheel of Fortune. Mixed Signals takes the questions, clues, correct and incorrect answers; codes them as text; then blends the information into the TV signal. When a viewer first tunes into the show the WebTV box dials into the game engine and downloads all the necessary data. At the end of the show, the viewer has the option to redial WebTV and upload their highest score
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After three years of interactive delivery to a limited number of television households in Europe, how developed is the overseas market? And more specifically, what have foreign interactive television (ITV) providers learned from their real-world experiences with ITV advertising - which may say will probably be the main driver of the U.S. interactive market?
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"Because of our experience with the Full Service Network we know how the customer will use interactive television and what they will pay for," said Robert Montgomery, president of Prasara Technologies, and past senior director of Business Application Development at FSN. Prasara's mission is to provide engineering, software and business solutions to enable its cable system customers to quickly deploy interactive applications while maximizing profits
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One of the most difficult tasks facing any direct response campaign is motivating viewers to respond to calls to action. Wink, an interactive TV content enabling company that went public in August 1999, believes that seamlessly delivered ITV programming content, blended with advertising, will ultimately maximize viewer response to calls to action.
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The mention of interactive television advertising conjures memories of failed attempts - like Time Warner's Full Service Network - that have clouded marketers' perceptions of this real and rapidly growing industry. While U.S. cable and direct broadcast satellite industries slug it out over which interactive applications each will soon offer, European DBS and cable companies have been delivering on the promises of interactivity since 1997. After three years of interactivity to a limited number of television households in Europe, how developed is the market?
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With local cable ad sales growing by 25 percent to 35 percent a year, the CAB projects local cable ad spending will rise to $2.87 billion in the year 2000. While many would trumpet these figures, industry insiders say that with improved viewer ratings tools and further refinement in back-office processes, local cable could sell billions of additional ad time.
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Critics will say that the current, crowded marketplace of eTV middleware, application providers and set-top manufacturers is merely shifting its attention, trying to get in on the ground floor of the next technology boom. But a greater battle between the direct broadcast satellite and cable industries is being waged as each platform fights to expand its video services subscriber base, and interactive television is an important tool in their strategies.
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A couple of months ago I would probably have heaped praise on the cable industry for its trial rollouts and its leadership role in interactive television (ITV) technology. But in reality, as the CTAM's annual summit opens in Boston today, the cable industry is stutter-stepping into interactivity, and DBS has bound forward with its own ITV product offering.
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With the push of a few buttons on your standard remote control, you are now guided seamlessly through a series of video elements and an informative sales pitch that is targeted to your individual needs. Behind the scenes, direct marketers are aggregating your interactions and will soon develop additional video and data elements - based on the accumulated viewer responses - that will dramatically extend the shelf life, appeal and profitability of the campaign.
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After a few months of advertising and on-site promotions, the local Ford dealer decides it's time to experiment with some fresh ideas, including ideas outside of cable. You've hit a critical turning point: Do you turn once again to a network cross promotion, or do you look for something new? Perhaps the solution lies in the photo advertising department, where the production staff has been holed up all month poring over the latest interactive television (ITV) developers' kit.
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Interactive television, much like the Internet, can be used to gather detailed data about users' advertising and programming preferences. These data in turn could help cable ad sales department create media plans that result in greater, and more effective, reach and frequency. But there's plenty of work to be done to figure out exactly how to transform data into dollars.
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During this period in the cable industry, hardware manufacturers, including Motorola and Scientific-Atlanta, were wrestling - and today are still wrestling - with integrating robust software into a cable subscriber set-top box (thick client). The thick client box is supposed to provide superior processing power and features, including smart cards, VOD, personal video recorders (PVR), plug-ins and more - possibly rivaling the consumer's own home computer.
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The ongoing controversy surrounding the accuracy of the methodologies in Internet ad-serving and measurement foreshadows similarly inaccurate metrics that will accompany the rollout of interactive television technologies. In November at the big iTV industry confab, the Western Show 2000, I spent my days discussing iTV's future role with many of the architects of interactive television.
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In preparation, cable operators spent $10.82 billion on infrastructure upgrades last year that will enable operators to offer two-way capable systems and increased bandwidth, according to Paul Kagan Associates, a consulting firm. Competing with cable in the race to offer interactive services, direct broadcast satellite providers, Echostar and DirecTV, have already begun rolling out interactivity.
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Few people, surprisingly, predicted the crash of the Internet sector and how the shattered valuations would leave thousands of pink slips and shuttered doors in its wake so quickly. The digital hangover which lingers today may be responsible for cable's continued stutter steps and the investment communities' recent lackluster interest in ITV. Despite this reality, several well-funded interactive application companies are still pushing forward and striking strategic alliances with like-minded advertising/media buying agencies.
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You may no longer have to grab for your credit card as the home shopping network barker counts down the availability on that George Foreman grill. With the average QVC Network customer spending $455.84 per year, and, according to a study released by the Boston based research firm TechTrends Inc., with more than 80 percent of the most active home shopping channel customers interested in t-commerce, home shopping fanatics today are proving the viability and possible future demand for shopping via remote control.
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During the past couple years a new group of entrepreneurs --driven by venture capitalists' desire to land grab the interactive television space® found themselves overnight with deep pockets and legions of willing believers. It was a heady time in the cable industry as additional funding rained down. Strategic alliances with other ITV application providers put companies on the map, even with no clearly defined revenue stream. Then the bottom fell out.
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Shows stand and fall based on their own merits and the nimble media buyer does not dwell on non-performing avails. Taking into consideration this culture there really are no compelling reasons for companies to redirect their attention to unproven distribution technologies, including interactive television. However, Wink's latest quarterly results should give one pause.
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For the past couple of years America's walled garden companies have looked abroad to the United Kingdom (U.K.) for trends in the consumer adoption rates of interactive television shopping sites. The U.K.'s walled gardens, which are collections of interactive shopping pages that U.K. direct broadcast satellite operators deliver to the consumer via television, have left participating merchants with poor conversion rates and high production costs. However, the two-way path of the United States' cable plant- compared to the U.K.'s one way technology with its slow dial up return path- may pave the way for a more appealing shopping experience
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On the surface, one might suspect that the dip in the economy lead to this shift. While that factor could have contributed, one should look more closely at how advances in digital technology, spurred on by competition in the video subscription marketplace, may also have come into play.
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The noise and the hand-wringing that have come because of the launch of companies such as Joost, and from companies such as Google, Microsoft and Apple claiming that your PC is the next television, are wrong. Television currently offers a huge, engaged audience, is a trusted medium and the basis of entertainment for most of the households in the country.
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For obvious reasons the technology and advertising communities have essentially accepted the Internet as the ultimate originator and final resting place for content. It is not difficult to come to this conclusion. Each day digital Web properties -- flush with high valuation multiples -- charge forward, scooping up properties that they imagine will facilitate the end of today's content companies and delivery platforms. Yahoo and Right Media. WPP and 24/7 Real Media. The list is getting longer every week. Is the final resting place for all media to be found buried in a server farm? Or is there a new technology on the verge of its very birth ready to create a Big Digital Bang?
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Our industry — having been blinded by the bright lights and public relations spin of multiple companies such as Google, eBay and Joost — is at a crossroads. Today it seems we look no further than the Internet to solve the structural issues of the television platform (which had found its birth within a treasured natural resource called the spectrum).
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There are bookstores filled with advice on how to reinvent your business. Network television is filled each week with feel-good stories of against-all-odds, everyday folk who overcome tremendous obstacles to win. It is a common theme in life to possess the desire to achieve and move yourself — and perhaps the world — a little bit forward.
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