The television and the personal computer haven't merged, but there's plenty of evidence that users are bringing the two technologies together. It's now estimated that one-quarter of all U.S. homes have a PC in the same room as the TV.
As broadband proliferates, allowing consumers more audio- and video-streaming possibilities, the number of PCs in the TV-stereo family-living room is likely to swell. That will have a profound impact on broadband-service providers and content players.
Consider this: The Gartner Group estimates that in 27 million homes, consumers watch TV while using a PC.
Showtime reports similar results. In its most recent survey, released in August, it found that 25 million homes-or about one fourth of the U.S. population-use online services while watching TV. That's up from 18 million in January 1999.
The premium channel also found that 48 percent of teens are simultaneous users, while 30 percent of adults 18-to-49 watch and surf at the same time. The biggest categories of content that generate simultaneous usage are news shows, sitcoms and sports.
In what's now become an annual survey, Showtime shares its internal research with Viacom Inc. sister networks MTV: Music Television and Nickelodeon. Executives there are trying to come to grips with what consumers are doing, how they are using both devices, and what it means to their own interactive, broadband-content and TV/PC programming initiatives.
Generation Y is multitasking in a very different way, said Mark Greenberg, executive vice president, corporate strategy and communications at Showtime.
"The kids are doing their homework, chatting online, with the TV and stereo on," he said. "It's a very different generation. They definitely move in and out of things."
Greenberg said sports, sitcoms and music videos are among the more popular TV content among Generation Y's simultaneous users.
With that in mind, Turner Broadcasting Sales Inc. published a report early this year aimed at convincing advertisers to buy both TV and Web ads.
"The foremost activity performed, when the TV and the Web are used simultaneously, is the gathering of more information about a news story being shown on television," TBSI concluded. But TV-PC viewers also were spenders.
"Simultaneous TV and Web users are 18 percent more likely to make online purchases than Web users alone, and they are more likely to spend more on those orders," TBSI reported.
Convergence is not lost on the interactive-TV industry, which is, in fact, counting on that behavioral change.
"So much of what we're seeing in interactive TV is that it's moving to a two-screen setup," said Jack Myers, publisher ofThe Myers Report. "[ABC's]Who Wants to be a Millionairehas a very successful two-screen format."
Myers ticked off other examples, such as Game Show Network's deal with Liberty Media, ABC'sMonday Night Footballand MTV'sDirect Impactprogram. Younger people are driving this convergence, and they'll continue to do so, Myers said.
"It's the Net-savvy generation that has no loyalty to traditional viewing patterns," he said.
Since Showtime is a premium service-and available to a subset of the country's PC universe-its TV/PC convergence programming strategies focus on the core programming, Greenberg said.
One aspect is "brochureware," in which Showtime's online component includes information on the movie playing on the network at a given time.
"It's graphical database information," Greenberg said.
Showtime joined with ACTV Inc. to test enhanced interactive elements for its signature seriesStargate SG-1. Extra content was made available via PC, and viewers could log on and choose between different camera angles for the program, join an online chat or play aStargate-related game.
"The more value you can drive, the more you can drive the service," Greenberg said. "The programming challenge is how you bring it together. We're trying to figure out how people want to use it."
Sometimes, the "coolness" factor wins out over substance, especially among teens using the TV and PC simultaneously.
"The PC provides control and an interactive element," Greenberg explains. "Napster is really not the best sound quality, but it's cool, it's in their control, and it's what they want to do."
Although Showtime has conducted as much TV/PC research as any cable programmer, Greenberg acknowledges there's more to learn.
"We look at this as a big incubator," he said. Referring to America Online Inc. studies which indicated that simultaneous users pay more attention to the PC than the TV, he said, "I don't think everyone has all the answers."
"What's exciting about this is the interactive world will become the ultimate direct-response mechanism," Greenberg said. Marketers can target advertising to particular demographics.
That flows into Showtime's new plex-launch strategy. It plans to add a Generation Y channel in 2001.
"We're starting to see our audience getting younger," he said. "New connects are coming from those under 25. They believe multi-premium is a way of life."
To meet those subscribers needs, Showtime will unveil a companion Web site for its Generation Y channel.
Showtime also experimented by video-streaming a Mike Tyson pay-per-view fight earlier this year. PC users could choose from five different camera angles and three audio feeds for $19.95.
"People loved the ability to do different camera angles," Greenberg said. "We'll probably look at doing more stuff," he said, such as streaming other untelevised bouts on the boxing card or interviews with the ring girls.
Offering videostreaming of concerts on a delayed basis is another possibility.
There isn't much data on what faster connections mean to a household in which the TV and PC are in the same room.
"Speedier connections is an interesting area of growth. They are claiming to be on longer," Greenberg said. Anecdotally, Greenberg believes teens are using high-speed connections for quicker music downloads.
But other research shows that broadband is making a big difference.
Arbitron Corp. released a study last month which showed that time spent with broadband content rivals that for TV and radio. In broadband homes, Internet's share of media stood at 21 percent-the same as radio and slightly behind TV at 24 percent. That compares to 33 percent TV usage in the average U.S. home, versus 28 percent for radio and 11 percent for the Internet.
Broadband users spend 134 minutes per day online, the study found, 61 percent more than people in dial-up homes.
"Broadband changes everything," said Warren Kurtzman, vice president at Coleman Research, which co-sponsored the study with Arbitron.
The study found that broadband homes were twice as likely to download streaming content from the Internet. Some 49 percent of broadband homes have tried streaming audio, versus 20 percent of the U.S. population.
Things are likely to get more complicated before they become simpler. For the first time, Showtime found that TVs and PCs in the same room appear to be breeding.
"We're discovering there are multiple PCs and TVs in the same room," Greenberg said.