Perhaps if all couch potatoes were like Alan Loo of San Francisco, interactive television would already be ubiquitous.
Loo paid $200 last year to buy a TiVo, one of the personal digital video technologies that is being called a Trojan Horse for the interactive TV industry, leading the way for more extensive customized services to come.
Loo said he was so jazzed by the way the TiVo could pause live broadcasts, record his favorite shows automatically and suggest new programs he didn't even realize were out there that he bought a second TiVo three months later. He even dumped an old VCR in favor of the TiVo.
"It's the greatest thing since sliced bread," Loo said. "The problem with all of these technologies is people don't really know what it is until they see it."
Viewers such as Loo are still the exception, not the rule. And the interactive TV industry, which includes cable operators, digital TV satellite providers, advertisers, high-tech firms and consumer-electronics-makers, is still trying to find the right combination of technology, features and prices to bring to consumers.
But after years of false promises, the interactive TV market finally seems poised to grow during the next few years and is catching the attention of giant firms such as Microsoft, AOL Time Warner and Sony.
And the Bay Area has become a hotbed for interactive TV companies that say they now have what it takes to convince couch potatoes around the world that having interactive TV is better than just sitting glassy-eyed in front of the old boob tube.
"We're not so arrogant as to say we're solving problems for you in your TV viewing," said Mark Mullen, strategic planning director for UltimateTV, the interactive service begun in March by Microsoft's WebTV Networks Inc. in Mountain View.
"What we are saying is, 'Gosh, the networks have "Friends" and "Survivor" on at the same time, now you can record both of them and go out to dinner,' " Mullin said.
OLD CONCEPT
As a concept, interactive TV is about as old as TV itself. But it was severely tarnished by a long series of false starts and expensive consumer trials that failed to live up to "TV-of-the-future" hype.
Yet the recent introduction of services such as UltimateTV and AOLTV, growing consumer awareness of digital video recorders, the growth of interactive TV in Europe and general consumer familiarity with the Internet are among the reasons analysts say interactive TV is finally, albeit slowly, becoming reality.
"It's just a matter of time, and it is a lot closer than it was even two years ago," research firm GartnerG2 senior analyst Mark Snowden said.
Jupiter Media Metrix this month forecast that interactive TV will be available in more than 40 percent of U.S. homes by 2005. It will account for 44 percent of home TV shopping, generating $4.3 billion in revenue by then, the New York research firm said.
"Instead of picking up the phone, you'll use the remote," Jupiter senior analyst David Card said. "You could be watching Oprah interviewing an author, and you can click on the author to order the book."
ON THE VERGE
Bay Area firms such as OpenTV of Mountain View, Liberate Technologies of San Carlos and Wink Communications Inc. of Alameda, along with big-name giants such as Microsoft, DirecTV and AT&T, believe they are on the verge of tapping that gold mine. In the 1990s, there was the hype about Internet e-commerce. Now get ready for interactive TV "t-commerce."
"This is one of the biggest direct marketing advances of all time and I think that's how it's going to be used over time," said Richard Fisher, president of RespondTV Inc., a San Francisco company that produced technology behind interactive TV commercials for firms including Coca-Cola, Domino's Pizza and Ford.
OpenTV Inc. and Liberate Technologies Inc. have become leaders in creating interactive TV software platforms, Snowden said. Right behind them, however, is Redmond, Wash., software giant Microsoft, which is pushing its MicrosoftTV interactive platform.
Other companies, such as Wink Communications, say they have developed enhanced TV services that are available to more than 3.2 million satellite and cable subscribers in North America.
And San Jose's TeleCruz Inc. is making inexpensive interactive TV chips that will be inside some Panasonic, Zenith and Daewoo TV sets to be sold in the United States later this year.
WHERE'S THE MONEY?
"Interactivity is promoted by the cable providers and satellite providers who believe you will pay them more money per month to enjoy interactivity," TeleCruz Chairman Kris Narayan said. "But they haven't been able to figure out a way to monetize a $400 box."
Interactive TV is an all-encompassing term that has come to mean anything the viewer can do with the TV beyond passive watching. It can start with a simple on-screen version of TV Guide magazine, which lets viewers click on a program and learn more about it.
The more advanced form turns the TV into an information machine that goes beyond offering shows merely for watching, including such features as online games or merchandise sales.
Subscribers to WebTV and UltimateTV can already access local weather, call up baseball players' batting statistics in the middle of a ballgame or send instant messages to friends as they watch "Friends."
But research by firms such as International Data Corp. show consumers now have little understanding of what interactive TV is, much less a clear and compelling reason to pay $400 for it.
RADICAL FEATURES
"The economics of the business are still in a state of flux; AT&T has lately put off plans to deploy higher-end set-top boxes that would enable a lot of these sort of radical interactive TV features," Snowden said.
"And nobody really wants to pay for interactive TV," he said.
Even defining what interactive TV offers right now is challenging.
Steve Perlman, the creator of WebTV -- which Microsoft purchased in 1997 for about $500 million -- compares the current interactive TV offerings to the earliest days of the personal computer.
"It's the equivalent of DOS (the early, text-based operating system for PCs) for TV," he said. "You're looking at the raw transmission, the raw file structure of the PCs. If that remained for PCs, the computer wouldn't have advanced so far."
Perlman says his newest venture -- Palo Alto's Rearden Steel -- is more broadly focused. The company, named after a firm in Ayn Rand's pro-capitalist tome "Atlas Shrugged," is shrouded in secrecy. But Perlman says it will offer software, hardware and networking technology for home entertainment.
PUTTING IT ALL TOGETHER
"It's like 1945 and TV's first been invented," he said. "We've built the TV, we have the receiver and the tower. We're figuring out how to put it all together, and we're going to deploy systems that consumers are going to relate to and that they'll derive significant experiences from."
That deployment has moved at a snail's pace in the United States and is shaping up to be a heated race between cable and digital satellite providers. So far, satellite providers have taken the lead in interactive TV.
Such is the case in Europe, where cable and the Internet are far less pervasive than they are in the United States.
But satellite operators only serve about 15 percent of U.S. homes. The cable industry, which has about 67 percent of U.S. homes, has been slower to deploy interactive TV features because of the expensive system upgrades required.
Snowden said many cable firms have finished upgrading their lines to allow them to handle larger streams of data. However, they are curtailing spending.
"With the capital markets so much tighter, cable companies are trying to deploy interactive TV services with as little investment as possible and as much potential return as possible," Snowden said. "As a result, these new, high-technology set-top boxes that are very costly to deploy have been put off for a number of years."
One of the biggests tests of interactive TV in the United States came in 1994, with Time Warner's Full Service Network in Orlando. It was an ambitious test of 4,000 households connected to a fiber-optic network of features that included getting movies on demand, online banking, home shopping and postal services.
But the excessive costs caused the project to shut down just three years later.
"There was so much press that said 'the future is here,' that you could order everything through your remote," Mullen said. "The expectations were so enormous that when they didn't deliver, everybody dumped on it."
MORE HYPE
Microsoft has ratcheted up the hype over interactive TV to a new level with a $50 million marketing campaign for UltimateTV that began in March.
Mullen said the campaign has tried to educate consumers about the basics of interactive TV, especially spotlighting UltimateTV's ability to record up to 35 hours of programming on an internal hard drive.
It's the same technology that TiVo and ReplayTV brought to market two years ago, but have had trouble selling as a stand-alone box. UltimateTV has bundled it with features from WebTV, which has only had limited success in turning television into an Internet device.
"That seems to be the sort of Trojan horse that people have latched onto, " Snowden said.
"I don't think the personal video recorder as a stand-alone box has much of a future, but combined with a satellite receiver or cable set-top box, that's a much more compelling story and it has a recurring subscription revenue stream," he said.
And that opens the door to possibilities such as an interactive video magazine downloaded once a week into the digital recorder, he said.
As much as Alan Loo likes his TiVo, he said he will wait and see whether other interactive features that come through his TV make sense.
"It would be nice, but not necessary for me," Loo said. "It's still easy for me to pick up a phone and order a pizza."
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Chronicle Staff Writer Kelly Zito contributed to this report.