Ready For Prime Time?
Intertainer, an Interactive TV Start-Up, Set the Scene. Are Viewers and Infrastructure Tuned In to Plans?
By Jennifer Oldham,
Los Angeles Times, August 30, 1999
Jonathan Taplin and Richard Baskin persuaded well-heeled
companies to invest to invest in their idea. Built their server. Signed
content partners and conducted trials. But their toughest challenge
lies ahead: convincing consumers and distributors to buy their
interactive TV service.
The duo founded Intertainer three years ago to provide programming
for the high-speed broadband networks that cable and phone
companies are developing to cash in on increasing demand for
sophisticated Internet services. Taplin and Baskin plan to offer about
700 hours of movies, music games and other content that can be
accessed for a fee from a PC or a TV set that's linked to a
"Our partners said only lunatics could have done what we did-which
was basically cash in all our chips and invest everything we had in an
idea that had not only no distribution, but no customers," Baskin said.
So far the Culver City-based company's staff has grown to more than
100 and it's garnered $37 million in financing from industry
heavyweights such as Comcast, Sony, Intel, NBC and US West,
each of which owns a small equity stake. The Disney Channel, PBS,
ESPN, Warner Bros. and Sony, among others have agreed to provide
content to Intertainer.
To date, Intertainer has had only a few small trials of its service,
including several conducted by US West with digital subscriber line
(DSL) customers in Boulder, Colo., and current trials operated by
RCN in New York City and Comcast in Willow Grove, PA.
This fall, Intertainer plans to deploy its service in a handful of markets,
including Denver, New York City, and St. Cloud, Minn. And it hopes to
have about 100,000 households signed up for its service by the end
of next year. Still, its founders don't expect their company to break
even until at least 2002, when they hope to sign up "millions" of
But analysts wonder whether cable and phone companies will deploy
high-speed networks fast enough to fulfill Intertainer's ambitious
goals. At present, only one in five cable subscribers has access to
such networks and only one in 25 phone customers does. Network
growth is expected to be slow because expensive equipment
upgrades force companies to charge consumers higher monthly
"What it all comes down to is making the service available to
consumers," said Kevin Hause, an analyst with International Data
Corp., a Framingham, Mass.-based market research firm.
"[Intertainer] can have all the content partners they want, but if the
service providers don't sign on then it's not going to be available to
consumers to see."
Taplin, 52 and Baskin, 50, who are entertainment industry veterans,
say millions of Americans are ready to buy handbags, play video
games or demo new CD's on their TV sets. Taplin is a former tour
manager for Bob Dylan, and Baskin directed music videos for
Barbara Streisand and Elton John.
But the fast-growing start-up is at a crossroads in it's quest to
become the interactive TV service of choice.
The company must now set itself apart from the myriad competitors,
such as video-on-demand provider Diva and enhanced-TV specialists
Wink, WebTV, WorldGate and others. All of these are jostling to tap
into the still untested market for such services as video on demand,
surfing the Internet on a TV set, electronic programming guides and
Interactive TV start-ups face an uphill battle with cable operators, who
in some cases are planning to offer their own enhanced programming
through ventures such as Excite @Home. Cable companies also act
as gatekeepers by deciding which of these services they will offer
consumers on their digital set-top boxes.
"A lot of cable providers are hesitating to order any of these services.
That's why we see a lot of announcements about trial deployments,"
Hause said. "It's a 'we'll dabble here and there and see what works'
Intertainer currently has deals with set-top box makers
Scientific-Atlanta and General Instrument to offer its service to cable
Once enhanced TV is available, consumers must be persuaded to
install digital set-top boxes. About half of the nation's 66 million cable
subscribers don't even use simple decoder boxes that are required to
receive extra movie channels such as HBO. If these consumers don't
already subscribe to premium movie channels, analysts say, they
may be hesitant to pay for movies via Intertainer. First-run movies on
Intertainer will cost $3.95, with library films from $1.95 to $2.95 and
TV shows for about $1.
Several things set Intertainer apart from its competitors. Investments
from industry heavyweights lend credibility to their service. And Taplin
and Baskin, along with a third founder, Jeremiah Chechik, have
received praise for Intertainer's easy-to-use home page, which
features a wheel of content choices like movies, music and TV. The
company has also designed its server to work on a number of
platforms, unlike several of its competitors.
But distributors are concerned about how well this server would
handle an avalanche of requests from users, analysts say.
"Intertainer requires a fairly robust infrastructure relative to some of
their offerings," Hause said. "This investment has to be considered by
the service provider."
Intertainer hopes to profit through video on demand, e-commerce
offerings, subscriber fees from distributors and advertising. One
hallmark of Intertainer's service is viedo on demand, which allows
customers with digital settop boxes to pay a fee for 24 hours of
access to movies and shows they can pause and rewind at will.
To beef up it's e-commerce offerings and build customer loyalty,
Intertainer uses a "personal assistant" that allows users to create
profiles that can be saved and accessed later with a password. The
assistant uses this information to present a user with movies and TV
shows, music, books and games geared to his or her interests.
"It's about weaving e-commerce through movies, TV, music and
games in a way that's targeted and focused and makes a real
connection," said Bob Kaminsky, Intertainer's senior vice president of
programming. "If you're watching the 'City of Angels' you might also
like to buy the album. If you're watching "A Room With a View", you
might want to click over to a Tuscan cooking show and click on a link
to buy the book."
As technology improves, the company plans to expand the number of
hours of programming offered on its server.
E-commerce opportunities will also be embedded in ads that will pop
up every eight minutes on Intertainer if the consumer hasn't
purchased anything. (Ads won't appear during movies or other shows
ordered and paid for by the consumer.) "Hypervideo" technology from
San Francisco-based Veon allows Intertainer consumers to click on
products in the ad and order them.
Intertainer's high-profile backers are using the service as a laboratory
to test how interactive TV might look and act.
Sony will use the service to test "different types of movies and TV
shows and to target different audiences," said Cheryl Koll, vice
president of sales and marketing for pay television and airlines for
Sony Pictures Entertainment.
"We're really looking for information about who is using it, how they
use it and why they are using it, so we can better position our product
in video on demand," Koll added.
During US West's test run that ended in April, the Baby Bell found that
consumers-who used Intertainer on their PCs-bought two to five
movies per month on the service.
US West households in the trial reported that boredom with
broadcast and cable offerings motivated them to use the service.
These households also watched less TV and rented movies half as
often when they were using Intertainer, said Audrey Thompson,
director of innovations for Internet protocol services for US West.
But during this transition period for Intertainer, analysts say, its also
likely that Taplin and Baskin will field offers to sell the company to a
hungry cable or telecom player looking to beef up its high-speed
If that's true, the founders aren't talking.