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MEMORY LANE: When TV really clicked

Mon, 06/30/2008 - 8:15pm
Stewart Schley, Media & technology writer, Englewood, Colo.

The pairing of the Internet and television sets is in the news again, as aspirants ranging from Apple Inc. to the start-up Sezmi try to lure consumers away from traditional subscription TV and instead to new Internet-over-TV services.

Stewart SchleyIf they succeed, they’ll have to rewrite a fascinating bit of digital-media history that went by the name of WebTV. Its bright launch and quick demise sounded a warning that still echoes for nearly a dozen hopeful successors.

WebTV arrived on the Silicon Valley scene at a time when a whiff of the next big thing sent investors scrambling to be first in line, checkbooks in hand. WebTV had that scent about it, which is why, shortly after its 1995 founding, the likes of Citicorp, Seagate Technology, Bill Gates and Marvin Davis had put a collective $65 million into the idea. It’s also why, two years later, Microsoft acquired Web TV Networks in one of those why-didn’t-I-think-of-that deals from the dot.com era that made a few people rich overnight.

The Microsoft deal and the private investments that preceded it were borne out of exactly the same leap-and-stretch reasoning that once made pets.com seem like a good idea. It went like this: The Internet is popular. Television is popular. If people could get the Internet on television, it would be really popular.

Cheap shot? Probably. It’s easy today, 62 million U.S. broadband-to-PC connections later, to malign a business plan that seemed to veer badly from target. Yet in 1995, when the Apple protégé Steve Perlman first conceived the idea behind WebTV, the elevator pitch seemed anything but far-fetched. As the story recited in a 1997 Business Week article went, Perlman came up with the idea after watching a commercial for Campbell’s Soup on television. Like many ads of the moment, it included a listing of the Campbell’s Web site address. Perlman, thinking big, wondered if the television set might not be exactly the sort of everyday device that could catapult Internet penetration into the consumer mainstream. He tore into a three-day jag of code-writing to try to get Internet pages meant for the computer to look good on TV. Convinced it would work – that consumers would pay a monthly subscription fee to get the Internet into their living rooms – Perlman enlisted two partners and set about to develop the technology under the code name Artemis Research. (An intentionally deceptive Web site for Artemis explained that the company was conducting sleep-deprivation research.)

The idea was that WebTV would license to consumer electronics companies a reference design they could use to manufacture boxes that would take Web pages, convert them to TV-palatable specifications, and spit them out to the living-room set. September 1996 was the commercial launch, and within a year, WebTV had cultivated 150,000 subscribers who paid about $20 a month for email and a connection to the WebTV server that gathered and distributed Internet content.

That was enough for Bill Gates, who offered the founders a buyout that made WebTV part of Microsoft in August 1997. The timing wasn’t great. Not only was the dot.com boom about to go bust, but a quiet revolution was occurring within the cable industry that would deliver exactly the sort of robust, multimedia Internet experience Perlman once had envisioned for WebTV. That revolution was broadband, and in a short time it would prove that the gating factor for the mainstreaming of the Internet wasn’t the PC, but instead frustrations over slow, dial-up connections.

Microsoft, sensing trouble, altered the business plan for WebTV by associating the service with a new video storage and playback device called the personal video recorder (now, by popular vote, the “digital” video recorder). An early distribution alliance with EchoStar Communications briefly gave WebTV a new jolt of life, but a better-designed and friendlier alternative called TiVo quickly usurped WebTV’s momentum.

By now, the name “WebTV” conjures recollections of an experimental era in which, at least for a moment, it seemed reasonable to think the Internet would play well on television. Today, the argument is being repeated as a number of contenders seek to sell boxes and subscriptions that take Internet video content in on one side, and export it to the TV set on the other. Apple is one of them, and so is Netflix, and so are several upstarts with vowel-happy names like Vudu and Verismo.

Is the moment finally right for the marriage of the Internet with TV? If the answer is “yes,” it might mean Steve Perlman had it right all along. Except it will also mean that he had it right too early.

stewart@stewartschley.com

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