Why WebTV failed to grow

Cable World, Feb 18, 2002 by Andrea Figler

Cable operators must learn from the mistakes of WebTV before they can profit on the community formed by interactive television users, a market that the fledging ITV company essentially ignored, according to a five-year report on the consumer use of WebTV to be released today.

“They had clearly discovered where that market was,” says Laura Buddine, president of Iacta, a consulting and applications company, of her report on WebTV. “The problem was that that wasn’t the market they wanted.”

WebTV offered consumers Internet connection via their television sets in the mid-1990s. The service grew quickly at first, attracting mainstream users that typically shied away from technology. They became dedicated WebTV users; logging onto the system to check email and converse with fellow subscribers religiously through their television, Buddine explains in her report titled “Lessons Learned from ITV.”

But they did not interact with television programs as much as anticipated, she says.

A majority of them did not shop online. A majority did not click on Internet advertisements regularly. Essentially, they weren’t interactive. Rather, they were using the Internet on their television. And to WebTV’s dismay, they became the dreaded consumer: a customer who failed to produce new revenue streams but insisted on creating expensive customer service problems. They called when the connection timed out (every four minutes in the beginning). They called for email advice. They even called to ask about Web sites unaffiliated with WebTV.

So Microsoft Corp., which bought WebTV in 1997, scrapped the brand. It never passed the one-million-subscriber mark.