Developers: Interactivity Is Still Nebulous

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New York -- Consumers are increasingly using interactive
broadcast and Internet content, but it's less clear whether the television or the
personal computer will become the predominant means for accessing it.

Panelists at last week's three-day eTV World
conference here traded barbs, product pitches and statistics to try to bolster their
respective contentions that one medium or the other was likely to appeal the most to
consumers who, more and more, are turning to interactive media for information and retail
transactions.

Hal Krisbergh, CEO of Internet-over-cable-TV provider
WorldGate Communications Inc., said in a keynote address that usage patterns of his
company's TV-Internet surfers mirrored that of PC-Internet users. That belies the
notion that consumers prefer to access the Internet on computers, and that TV is better
suited as a passive, "lean-back" entertainment medium.

"People are intimidated by the PC," Krisbergh
contended, noting that some 65 percent of WorldGate users accessed the Internet daily,
averaging more than one hour of surfing per day, primarily for Web browsing and e-mail.

The idea that consumers don't want to use televisions
for Internet access "is a myth generated by those in Silicon Valley who probably
spend about five minutes per day watching television," Krisbergh added.

But David Reese, president of TV-Internet
"hyperlinking" developer ACTV Inc., said his company's experience indicated
that users -- especially the younger, so-called generations Y and Z -- were avidly using
the Internet via PC simultaneously while watching TV programming.

Reese, whose company's "HyperTV" technology
delivers Web content to PCs that is synchronized with the TV programs subscribers are
watching, said that type of behavior supported the idea that people will tend to use
different devices for video and Internet access. "That's reality," Reese
told a panel on interactive devices and services.

There were plenty of challenges to the idea that
convergence would not occur in either the TV or the PC as consumer use of interactive
services continues to grow.

Joseph Haddad, cofounder of Internet-over-TV technology
developer NetGem S.A., theorized that the number of Internet appliances in the home will
actually proliferate as cheaper, specialized devices are developed in a variety of form
factors to suit a variety of needs. One example: a flat-screen Web-browsing device
embedded in a refrigerator door.

Others agreed that because of each platform's unique
attributes -- such as the greater processing power of the PC versus the TV set-top's
or TV's superior access to broadcast video -- consumers would retain their current
usage habits in the foreseeable future.

"When it comes to interactivity, we interact with our
computers and we are entertained by our televisions," said Fred Fourcher, president
of video-content aggregator AnyTime TV. "You can converge the two, but why?"

Mary Kim Coleman, vice president of account development for
Web and digital-media audience-measurement firm Media Metrix Inc., noted that user
research indicated that some 51.2 percent of U.S. households owned PCs and 37.1 percent
used the Internet as of this past April. That was up from 49.5 percent and 33.1 percent,
respectively, three months earlier.

She also noted that some 51 percent had the TV and the PC
in the same room, while 2 percent of household PCs were equipped with TV-tuner cards for
viewing broadcasts on the computer. "Even though that seems like a small percentage,
one year ago, that number was 0.3 percent," she said.

At the same time, the TV could continue to maintain its
dominant position, as new digital services over cable and terrestrial broadcast leverage
that platform's ubiquity.

Jennifer Cistola, Scientific-Atlanta Inc.'s marketing
director for digital-subscriber networks, noted that there were 180 million TVs connected
to cable, versus 30 million computers online in the United States.

S-A has a TV-centric view of the interactive future because
consumer research has indicated a preference for TV's features of convenience, such
as no long boot-up times to access content, no need for launching of applications and no
fear of rapid equipment obsolescence.

"There are already 260 million TVs out there. All the
consumer needs to do is sign up for digital cable," Cistola said.

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