Talk about your multiple marriages. Television and the personal computer are getting hitched again. Performing the ceremony this time is DigitalConvergence.com, a Dallas company that is counting on the growing trend of multitasking to make for a happy union.
The number of people in the U.S. using a television and computer in the same room now exceeds 44 million, according to a report issued by research firm Gartner Group. The report predicts that the number will grow to 52 million by 2001. DigitalConvergence.com is among a number of companies looking to tap into that TV-PC audience by offering broadcasters, advertisers, retailers and others a chance to deliver enhanced content from one device to the other-in this case, from television to the PC.
While other companies such as Wink and ACTV are offering programming and commercial enhancements via digital set-top boxes, DigitalConvergence.com's technology is available to anyone with a television and computer within 20 feet of each other. The company's proprietary technology-:CRQ, a phonetic acronym for "See Our Cue"-is based on an audio cue that is encoded into the vertical blanking interval of the broadcast signal. This allows the system to work with video delivered over the air, cable or satellite. It will even work with recorded video.
Activating the system requires little more than loading software into a PC and plugging in a couple of cables. Once the software and hardware are installed, the system will respond to the 0.3-second audio cues. The user can program the software to go directly to the particular Web page or to store the information for later use.
"This isn't about us vs. Wink or ACTV," says Scott Carlin, a former Warner Bros. syndication executive who is president of DigitalConvergence.com's Media Group. Because the audio cue is in-band and can't be stripped out, the system works with other enhanced services, he explains. "Our technology actually makes those services work more efficiently and effectively.
"On the electronic side, no one is really doing what we're doing, because we're using technology that has 100% penetration: basic free television," says Carlin. "Anyone using a computer is capable of using our technology. We don't require anybody to put special cards in their computers or have a digital set-top box. The only limitation to our installation base is the [number] of people with PCs that have Internet connections, which is now about half of all America."
DigitalConvergence.com has also developed a print application-:CAT (keystroke automation technology)-based on the same concept as :CRQ. A scanning device, built to look like a cat and to split off the cable running into the PC's mouse portal, reads a code on a printed page and delivers Internet addresses to the computer. Once installed, the :CAT will read codes from practically anything-from newspapers and magazines to bar codes on soup cans or cereal boxes.
The initial installation for :CRQ will require users to tether the computer and television with a 20-foot cable. However, RadioShack Corp. is developing a version that will ultimately work via "wall warts," devices that plug into the TV and PC that allow wireless signals to be sent between the two.
RadioShack is one of an impressive group of equity and strategic partners backing DigitalConvergence.com. The group, which spans several industries, includes NBC, Belo Interactive, Young & Rubicam and Forbes.
The company has raised a reported $165 million in private backing and, in late April, filed with the Securities and Exchange Commission for a $100 million initial public stock offering planned for October.
The IPO corresponds to a massive deployment of DigitalConvergence.com's technology. Carlin says that, beginning in late summer, the company and several partners will start to distribute up to 10 million of the :CRQ cables and :CAT devices without charge, while making free software available via downloads and CDs. This distribution will come in advance of significant content launches featuring the technology in early fall.
A.H. Belo Corp.'s Internet subsidiary, which owns a 7% stake in DigitalConvergence.com, is planning to roll out the technology in its home base of Dallas, where it owns WFAA-TV and The Dallas Morning News. "The first commercial deployment for us will come in August, with a launch of the content right after that in September," says Belo Interactive President Jim Moroney. "We will be distributing at least a half million of the :CATs and accompanying software.
"There are two things we're planning to do," he continues. "We want to take the content in our newspapers and the news content on our television stations and enhance it so the viewer or reader can go directly to an Internet page on our related media site for extended information on the story they're interested in.
"The other application is for commercials. If I'm a computer company and I want someone to go to my site and buy a specific computer, I can fire-off the exact page from my television commercial and store it on the viewer's computer."
The appeal to an advertiser is easy to understand, says Carlin. "If I'm a dotcom company or somebody who's very interested in getting people to my site and I have an opportunity to buy time on a TV station that is now going to give me the ability to put a percentage of those viewers, who are watching my spot on my Web page, wherever I want to take them-whether a transaction page, a product page, an application page or what have you-I'm going to do that."
"I think what they're onto here is something that's very compelling," says Tim Hanlon, who tracks technological developments for Starcom Worldwide, part of the B|Com3 advertising group. "Marketers and media agencies are desperate to find more accountability or measurability for the money that they're placing. Anything that helps bridge the gap between impression and action is the Holy Grail of marketing."
In perhaps the highest-profile showcase for the technology, NBC, an equity investor in DigitalConvergence.com, plans to use :CRQ nationally and locally during its fall schedule. NBC Stations President Jay Ireland says the deal was made too late for the technology to be included in the network's Olympics programming in September. However, viewers should begin to notice :CRQ tones on NBC stations sometime in October.
"In our newscasts, we'll be able to use the prompt and key it into one of our Web pages that drills down to a specific piece of the story we're telling. On a more commercial view, we plan to run two enhanced spots every half-hour."
The two enhanced spots per half-hour is the limit set by DigitalConvergence.com. The number of enhanced spots a station can sell in any one day is based on the non-network half-hours the station controls between 5 a.m. and 1 a.m. "If a station controls 10 hours of time periods a day, it would have the ability to license 40 enhanced spots," says Carlin. He adds that stations will have unlimited use of cues for content and promotion.
Another limitation DigitalConvergence.com is imposing is that only two stations within any local market can license the technology. "This is a historical moment of differentiation for local television stations," says Carlin. "It gives the local television station the ability to become micro-local, which until now only the newspaper has been able to do."
Although there is tremendous enthusiasm about the potential of DigitalConvergence.com, there are a few issues to be dealt with before the marriage can be considered a success.
"I think what the hurdle is going to be is getting people to use it," says Valerie Pearcy, senior editor for the technology group at Hoover's Online, a business research firm. "The most compelling risk factor [DigitalConvergence.com] listed in its prospectus is the part the consumers are going to have to play to actually make the system work."
Pearcy points out that the system is dependent on users' installing software, plugging in cables, having the PC and TV on at the same time, and/or reading the printed materials within reach of the :CAT. And if they do all that, it still means nothing unless they decide to follow the cues to the desired Web pages.
Another issue revolves around the delicate issue of privacy. The technology allows for gathering demographic profile information that DigitalConvergence.com or its licensees can provide-for a fee-to advertisers looking to target their messages.
"When a user downloads the software, you obviously know who they are," says Belo's Moroney. "With some very fanatically adhered-to privacy policies, there will be some information they will be asked to provide. We can use that information to intelligently select different types of commercials and content to go to the users."
The other unanswered question is whether, even with their enthusiasm for the concept, advertisers will pay a premium for interactive commercials before there is a measurable and significant threshold of homes actually using the technology.
"There will be a large group of people, both agencies and clients alike, who will say, 'Come back to me when you've got an installed base of x. Show me that it's part of the culture, and we'll get serious about it,'" notes Starcom Worldwide's Hanlon. "I would argue that, if you believe media is changing, then you will take some initial steps to be ready for it. Even if the number of users is initially low, to learn now in front of tens or hundreds of people is a far better scenario than to make mistakes in front of millions."
Carlin expects the adoption will be much better than tens or hundreds. But even if the initial payoff is small, it's still a payoff. "Quite frankly, if only 10 people go to your Web site, that's still 10 people who weren't there 30 seconds ago."