Driving Viewers to What They Want

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Gates: love 'em or hate 'em.

No, this isn't abouthim, but rather about
those entry points into the Internet space, also known as "portals." Are they
irrelevant doormats, or a friendly passageway into the interactive morass? As the Web's
portal frenzy continues, cable companies can find ideas about creating their own
digital-TV portals right in front of viewers' eyes.

"Viewsers" are an emerging hybrid of
video-watchers and interactive-channel-surfers dynamically involved in the TV-plus-Web
space. They crave options: knowing what's out there and having the ability to get to it
easily. Portals attract customers by offering one-stop access, then driving customers
through the doorway toward revenue-generating commerce sites.

These online front doors are fundamental in cable-modem
services, giving operators a way to steer customers to preferred sites and to pick up some
change in the process. For modem services, that big payday may wait until the number of
high-speed-access users is meaningful to advertisers, online merchants or content
packagers.

In the TV space, the portal might be the
"welcome" screen that has long been the holy grail of programmers: the first
thing that viewers see when they turn on the TV set. Whether it's simply a program-listing
guide, a channel directory or a customized roster of digital space, the video portal is a
huge opportunity.

It's one of the reasons behind the recent Gemstar/United
Video scuffle, although the term "portal" has not been used in that boisterous
battle. There's a vast revenue potential from channel promotions, or the ability to jump
directly to a specific program. As digital TV enables more on-demand programming
(including customized shopping or information), these video portals will offer even more
value.

Today's narrowly defined Web portals took some lumps at a
recent New York conference. The focus of that discussion was on the viability of
sustaining countless portals that Web surfers can easily ignore. More pertinent, the
valuation of those Web portals has been wacky.

But the underlying portal concept itself has proven
immensely attractive. It's responsible, in large part, for NBC's investment in CNET, a
computer-oriented online site and video program that established a portal called Snap!
last year. America Online itself is at root a proprietary portal service, offering a
one-stop entry point to nearly two-dozen categories of content.

Equally important, America Online's Web portal, AOL.com,
attracts 22 million unique users per month, second only to Yahoo's 30 million visitors at
its portal. By some measures, portals account for 15 percent of Internet page views today,
but nearly 60 percent of ad revenues, underscoring the importance of aggregating those
eyeballs.

Outlooks vary widely. One forecaster expects Web portals to
expand by 2002, attracting 20 percent of page views, but the forecaster thinks their
ad-revenue share will halve, to only about 30 percent of presumably a much bigger pool.
Another seer expects that more than 50 percent of commerce revenues will go through the
surviving portals by 2002.

No one envisions that portals will disappear.

During this unpredictable growth spurt, portals are
offering an ad hoc mixture of material -- often anything that they can get their hands on.
News, horoscopes, e-mail and plenty of advertising are painted on the portals. Lycos'
portal includes an option that blocks access to adults-only content sites -- a feature
that could be adapted for video portals. Given the search-engine roots of Excite, Yahoo,
Infoseek (or "Infosqueak," as we call it since the Disney investment) and
several others, it's not surprising that search capability is built into their portals.

That's another reminder that portals don't deprive users of
their ability to go directly to their preferred sites. Rather, they give confused and
time-pressed neophytes access to a comprehensive package of interactive material.

Video portals will inevitably offer the same options. Just
as personalized portals, such as MyYahoo, allow customers to customize their entry gate,
broadband-digital portals could offer such options.

Savvy packagers can also take some lessons from today's
Web-portal developers. For example, AOL, playing its usual game of having it both ways,
snagged Barnes & Noble as the "exclusive" bookseller (for a reported $40
million for four years) on the Web's AOL.com portal. Meanwhile, rival Amazon.com is the
"exclusive" book vendor on AOL's proprietary front page.

Maybe $40 million is today's magic number: That's also the
figure bandied about for Citicorp's payment to Netscape to be the exclusive sponsor of the
financial channel on the Netcenter portal.

That should give digital-TV packagers a benchmark and
incentive.

Some analysts categorize portals as the latest Internet
concept du jour, soon to be overrun by the next faddish scheme for generating revenue.
What they overlook is the value of consolidation and simplicity, as seen by viewers (or
viewsers). The bonus to the portal operators is that advertisers will pay to bring those
customers further into the system.

Portals offer a prepackaged way for customers to find what
they want, simply. Today's lessons from the Web should encourage broadband developers to
capitalize on this front-door experience, and not just wait to pass that gate when they
get to it.

I-Way Patrol columnist Gary Arlen has, on numerous social
occasions, been shown the front portal.

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