Content Is King – Part 2

August 16, 2015

“(American television) is terrible – nothing but a vast wasteland.
I ask that the government levy complete federal regulation of this medium.”

– Newton Minnow, Chairman, Federal Communications Commission – May 9, 1961

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In April of each year MIP-TV (Market of International Production) is held in Cannes, France. This is not unlike NATPE in its subject but is far greater in scope for it attracts television program buyers, sellers and producers from all over the world with a high degree of non-North American-based attendees. Where NATPE caters to primarily American delegates (North American at any rate), MIP is populated with mostly television professionals from Europe, Asia and Spanish-speaking countries, although English-speaking content is still the attraction. For any serious television professional, MIP is Mecca.

There is always a ‘buzz word’ or theme that surrounds this annual industry gathering and in 1992 the word was: INTERACTIVE.

On-site demonstrations of the “…future of television consumerism…” – t-commerce I suppose you might have called it – were everywhere.

Watch television – buy a product! Revolutionary! TV will never be the same!

Scattered throughout the Palais, the big Cannes’ exhibition hall, were TV kiosks and their attendant hawkers foretelling the day when we would all buy groceries, CDs, books and movies through our television set (sound familiar…?!) The demos went something like this:

Attached to each television was a black set top box (STB), connected via TV cable and a phone line. The STB also had a slot through which a narrow strip of thermal paper (fax paper) could be fed on command. On the front of the STB was an array of blinking red, green and yellow lights plus three back-lit alphanumeric characters: an “A, ” a “B” and a “C. ” You also had a hand-held wand, or remote control.

While viewing a particular TV program, associated information travelled from the host broadcaster down the vertical blanking interval and the viewer responses travelled back to source via the phone line. So, if you were watching a game show, like Jeopardy for instance, and you wanted to play along, you pressed the appropriate button on the remote in response to a question and your answer was transmitted and collated back through the phone line. You weren’t only playing the game with contestants on the show, you were competing with other home audience members – response time on the remote played a significant role in your success rate. A comparison to online, Multi-User Games or MUGs would be an appropriate analogy.

If you were lucky enough to ‘win’, a little piece of paper would be printed and regurgitated out of the top of the STB containing your answers and, possibly, the location near you where you could pick-up a prize. This might also serve as a delivery system for an advertiser you’ve expressed an interest in via a redeemable coupon for, say, $1.00 off a product.

This system, as complicated and cumbersome as it sounds, was actually a hit in both markets where it was being tested at the time: Seville, Spain and Melbourne, Australia. Why these two cities…? A bit of a ruse, really.

The Reg Grundy Organization, which was based in Australia, was a producer of high-concept television product. Baywatch was the most-watched television show in the world at that time and Reg Grundy created notable cheaper spinoffs and made a name for itself. However, it was in game shows that they really excelled in generating revenue. Looking to “… extend the length of view… ” and “… enhance the value proposition to the viewer… ” (sound familiar?), the Reg Grundy Organization spearheaded the move toward interactivity through television and used several of its own game show franchises as guinea pigs. Game shows, at the time, were very big in primetime in both Spanish and Australian format editions. If you’ve got a captive audience – especially in primetime where per-minute advertising rates are higher – anything you can do to leverage that viewership is gravy. Reg Grundy thought they had the world by the short and curlies.

So, the success of interactive television, as it was being pitched at MIP-TV in 1992, was predicated on maximum eyeballs, reliable ‘stickiness’ (sound familiar?) and a consistent product rollout to the world at large.

But there was a problem. Several, actually.

First, game shows weren’t popular in the United States or the UK at the time. There weren’t enough game shows that were willing to ‘retool’ in order to accept the ‘interactive’ aspect, even on a test. R&D for this was very expensive. Let’s not forget the huge cash outlay in infrastructure required to allow the home audience to play along with contestants. These shows weren’t ‘live’, they were taped. All interactive elements had to be embedded into the show, and therefore the videotape, in order for even one show to attempt to pull it off. Add to this the fact that success required the cooperation of individual television stations that carried the shows, the cable companies that distributed the signals and the telcos (telephone companies) whose phone lines were required to complete the ‘interactive’ loop. Don’t forget, regional, local and national phone services were all different in the U.S. after deregulation and the birth of the ‘Baby Bells’.

As if this weren’t enough, the phone companies and the cable companies hated each other (some things never change). They were all looking to be the market leader in delivering content – phone companies wanted to deliver television signals and the cable companies wanted to compete in telephone services (some things never change).

Second, interactive TV as an advertiser coupon delivery system. What were they thinking…?! Direct marketing was in its heyday. Coupons, flyers, handbills… They were cheap to produce and even cheaper to distribute. Add to this the fact that consumers actually were redeeming them and trying new products at an increasing rate. Why add an expensive ‘middle man’ (the STB) to a tried-and-true equation…?!

1992 was a seminal year for the home video business. It was the year that video rental and sell-through revenues for any given movie exceeded the theatrical box office return for the same film. VHS sales were at their highest levels ever and home taping had finally entered the mainstream. For advertisers to believe the interactive concept – and most importantly, buy into it – they had to believe that consumers loved their commercials. But consumers were using VCRs to skip through commercials in increasing numbers. What made anyone think that these same consumers would use a second expensive box to not only watch the commercials, but ‘interact’ with them…?

Finally, what about dramas, soap operas, news, sports? How would these genres work in the interactive universe that was being suggested?

Interactive TV failed. Reg Grundy underestimated the marketplace. Several of the associated companies involved in bringing interactive television to market in the early 90s went bankrupt, such was their level of financial commitment to the ‘next big thing’ in entertainment. The Reg Grundy Organization – mostly through syndication of their other holdings – managed to stay afloat for a couple of years. Pearson plc, a media conglomerate from the UK, purchased an embattled Grundy in 1995. In an ironic twist, Pearson is the co-producer of Baywatch internationally and through its acquisition of Grundy owns all the game show franchises in the Grundy catalog. A catalog that has seen a major resurgence in the last year due to the international success of Who Wants To Be A Millionaire? What’s the number one interactive, WEB-based game…? Guess!

Adding insult to injury, and proving that timing is everything, Pearson is today the leader in European interactive television. This time it’s the convergence of television with the Internet that’s driving the desire. Pearson understands the marketplace.

There’s an interesting sidebar anecdote to this story. Because of my own involvement in interactive TV at the time I was lucky to attend an invitation-only cocktail party at the Carlton Hotel hosted by Reg Grundy. The purpose of the gathering was to have a more formal, less frenetic perusal of the system so they could interest potential investors and program producers.

Among the fifty or so attendees were seven ‘very interested’ Microsoft executives. I have been convinced ever since that the concept of WebTV was born on that day!

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