September 8, 2000 9:20 AM PDT

Interactive TV rivals create marriages of convenience

Like square dancers moving at Internet speed, sometime competitors in the emerging interactive TV industry are partnering in an effort to dominate a market still very much up for grabs.

Some of the dance pairings announced today at the International Broadcasting Convention in Amsterdam include Nokia and Intel, Philips Electronics and Liberate, and Microsoft and News Corp., following Microsoft's content deal with CBS.

As in other markets in which Microsoft competes, the dilemma for its interactive TV competitors has been whether to ride Microsoft's coattails to its possible hegemony or to team with rivals to thwart the Redmond, Wash.-based behemoth. Philips has decided to do both.

Philips, which already is partnered with America Online by way of making a set-top box for the Internet giant's AOLTV service, announced it will work with Liberate to develop enhanced TV set-top boxes incorporating Liberate's navigator software with the Multimedia Home Platform standard developed in part by Philips. AOLTV also uses Liberate's open standards.

Philips said it wants to transform the digital set-top box into an all-purpose, multimedia home-entertainment device, and Philips Digital Networks chief executive Rob van Oostenbrugge said in a statement that "it is increasingly important that Philips align itself with technology innovators."

Liberate's business plan is to partner with as many hardware and distribution partners as it can. Considered a primary rival to Microsoft in the interactive TV market, it received early backing from such luminaries as AOL, Comcast, Cox Communications, General Instrument, Lucent Technologies, Sony and Sun Microsystems.

Meanwhile, AOL announced today that it is selling Philips-manufactured AOLTV boxes in Phoenix through an exclusive distribution arrangement with Circuit City. A nationwide release is expected to follow. AOL subscribers can receive enhanced programming and Web access via the TV for $14.95 monthly, while nonmembers will have to pay $24.95 monthly.

Philips is playing it safe, also announcing that it will license Microsoft's enhanced TV software for its set-top boxes and will work with Microsoft on developing new products. Philips said the first boxes with Microsoft software will debut next year.

Microsoft's enhanced TV software is based on open standards, a departure for the guiding force behind DOS. The company says that strategy reflects its desire to be placed in all sorts of home appliances, from set-top boxes to DVD players. Microsoft also says its software will work with the multiple transmission formats that have been adopted by broadcasters for digital television.

However, the company insisted in a statement that its push of enhanced TV software for multiple technologies "does not take away from Microsoft's commitment to deliver enhanced TV through the set-top box, the vehicle through which the company believes most consumers will access enhanced TV services."

That commitment was demonstrated recently when Microsoft officially took direct control of struggling WebTV.

Microsoft also announced a partnership with News Corp. subsidiary NDS Group, which will mean enhanced TV programmers can use NDS's toolkit to develop content compatible with Microsoft's software. This announcement came just after Microsoft partnered with CBS to have that network develop interactive programming this fall for WebTV and its upcoming partnership with DirecTV, UltimateTV.

As Microsoft seeks to place its software in a variety of devices, including AT&T Cable and DirecTV-compatible set-top boxes, Nokia has announced a catchall hardware device called the Media Terminal. Nokia's box, running on open platforms including Linux and Mozilla, is designed to work with any display device, including a TV or computer monitor. The box was developed in cooperation with Intel.

Media Terminal will be DSL-ready for high-speed Internet access and will be capable of receiving digital TV-enhanced content, receiving video-on-demand, playing and storing MP3 files, and connecting to a printer, a digital camera or any of several other devices.

Nokia also is taking aim at TiVo and Replay TV, incorporating the ability to record programming to a hard drive and pause and replay live broadcasts. The Philips-Microsoft offering also is expected to have such features. Nokia said Media Terminal will be available in the second quarter of 2001.

 

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