"Virtual VCR" Tops Analyst's Picks of "Unsung Killer Apps" for Interactive Networks.

WASHINGTON--(BUSINESS WIRE)--Nov. 21, 1994--With strategists from several "converging" industries still trying to guess what "killer applications" will make home interactive networks a business, a leading industry analyst has picked some dark-horse winners.

In a new market research study, Robert Wells of Lennox Research in Boulder, Colo., proposes four "Unsung Killer Apps," all of which, he says, "have huge revenue potential and are largely overlooked by corporate planners." Presented in his study, The Interactive Home: Technologies, Strategies & Business Opportunities, just published here by Warren Publishing Inc. and costing $495, Wells's "Unsung Killer Apps" are:

1. Virtual VCR -- a digital storage utility at the cable-system headend that replaces the home VCR, which is hard to program and has poor video quality. "A bankable upstream storage system, by contrast, will be incredibly easy to program -- preferably by voice command -- and will support fail-safe archiving at affordable prices," the report says.

2. Virtual reality environments, viewable by wearing a mask or video-display eyeglasses. Their appeal, the report states, "will be largely related to voyeurism." The report also predicts "virtual social gatherings where participants can don animated costumes and interact in cyberspace with other similarly disguised participants."

3. Multiple-camera sports events. Viewers get to view one camera angle free, "but they will pay to navigate among diverse vantage points, using a headset or other technology." For example, the report adds, "they can gaze from a blimp overhead one minute, look out from the quarterback's helmet the next. "We believe that Rupert Murdoch's Fox Network will develop such products for its NFL Football games -- indeed, that it was awareness of this potential that sealed Murdoch's decision to buy the NFL's rights," the report says.

4. People-matching services -- or, in the report's words, "applications that respond to human needs for association and companionship." From Rush Limbaugh's finding his wife on CompuServe to the in-person sex encounters now being booked on France's Minitel network, this market segment is already a reality, the report says. In the future, it adds, software "agents" will help people in their search for kindred spirits.

Interactive Ads, Gaming Also Winners: Along with these comparatively novel "killer app" ideas, author Wells joins other major analysts in predicting a big role for two other features: interactive advertising and play-along networked games. Wells, a telecommunications industry insider for 15 years, devotes much of the 200-page book not to predictions, but to explaining the technology -- derived from the cable, telephone, computer networking and digital video industries -- behind the clich s of the "Infobahn." A glossary explains the buzzwords.

He also profiles the strategies of more than 50 of the emerging "convergence" industry's major companies, including carriers, equipment vendors and service and content providers, offering predictions about which will succeed and fail. The book has a directory of 300 key executives of "convergence" companies.

The report predicts that interim "partial service networks" will precede the 1998-and-beyond emergence of what the industry is calling "full service networks." The early versions will feature data services accessed from personal computers, near-video-on-demand (dozens of movies available at frequent start times) and viewer-programmable on-screen TV program guides, since "thousands of narrowcast programs are already bombarding the typical cable home each week but go unnoticed due to unusable program guides," says Wells.

Some other key findings of the 80,000-word book:

o A box called a "point-of-entry server" will be the gateway into future homes, receiving signals from cable, telephone and satellite networks and distributing them to TVs, telephones and PCs scattered throughout the home. Government may intervene to set a standard for how this box works.

o Many interactive services will debut on PCs and migrate later to TVs. In the process, thousands of home entrepreneurs and artists will learn how to create video and multimedia products on PC-based editing systems and sell them over interactive networks in competition with big-money entertainment companies.

o The Internet will become a "main-line venue for electronic commerce and electronic publishing," using technology derived from the "hypertext" browsing capability of today's World Wide Web, an Internet presentation format.

o On-demand spoken-word audio, largely ignored amid the industry's focus on TV and videogames, "will be a profitable niche due to its low cost of production and to people's growing interest in information relating to their careers and their personal fulfillment."

Former Yankee Group Director: Author Wells, former research director at the Yankee Group in Boston, is a senior analyst and principal of Lennox Research in Boulder, Colo., which studies new markets created by leading-edge telecommunications for such clients as CableLabs, Tele-Communications Inc., U S West and British Telecom. It can be reached at [phone].

Washington, D.C.-based Warren Publishing is the leading publisher of periodicals in the telecommunications, broadcasting, cable and related industries. It publishes 12 specialized communications newsletters and such reference works as Television & Cable Factbook as well as specialized directories, reports and market studies.

The Interactive Home: Technologies, Strategies & Business Opportunities is available for $495 from Warren Publishing, Inc., 2115 Ward Ct. N.W., Washington, D.C. 20037, [phone]

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EDITORS: By arrangement with the author and publisher, 23 excerpts from The Interactive Home are available for use as sidebars to your coverage of the book, or in other relevant articles you are preparing. They are:

1.   How the interactive market will unfold (730 words)
2.   Societal impact (200 words)
3.   Which boxes will be focus of interactivity? (190 words)
4.   Set-top boxes versus a Point-of-Entry Server (280 words)
5.   Fully-powered set-tops: What s inside? Who will make them? (260 words)
6.   The argument for PCs as the venue for interactivity (390 words)
7.   The role of wireless personal communicators (415 words)
8.   Standards: Where they re needed and who should set them (220 words)
9.   Likely winners in the standards competition (200 words)

10. Compression: MPEG versus DigiCipher (390 words) 11. The role of terrestrial television in an interactive age (190 words) 12. Why navigational tools will be a huge business (180 words) 13. The bleeding edge of input device technology (150 words) 14. Interface metaphors: issues and options (450 words) 15. Filters versus agents as Infobahn browsers (360 words) 16. The failed attempt at deregulation (220 words) 17. Adult content: issues and likely role (370 words) 18. Shakeout in the information services market (360 words) 19. Videoconferencing will join the product mix -- eventually (215 words) 20. A surprisingly big role for audio-on-demand (430 words) 21. The cable industry s strategic position (270 words) 22. Broadcasters: not out of the game (390 words) 23. Americans will dominate world interactivity market (170 words)

Also, we have the seven graphics available as PICT or TIFF images or reproducible hard copy:

1.   A generic model of a full service network (block diagram)
2.   What  s inside a fully-powered converter (block diagram)
3.   Architecture of point-of-entry server and residential area network

(block diagram)

4. In-home functionality of customer-premise equipment, 1993-2004 (line

graph)

5.   Personal communicators in use in the home, 1993-2004 (line graph)
6.   Upstream signaling to broadband networks from U.S. homes, 1993-2004

(line graph)

7. Perceptual map of on-line services (chart arraying services on two axes)

CONTACT: The JohnstonWells Group, Denver

Andrew Krause, [phone]