General

ViaClix and the Monetization of Television — continued

The details
Technology to enable integrating web advertising with TV may be impressive, but will consumers want it, or will they find it intrusive and irritating? Elliot talks about overlaying advertising "creatively" so it's not "disruptive," which suggests the company may have already encountered objections along these lines.

ViaClix is also aware that collecting click-through data is constrained by privacy regulations and norms. But it believes that if it can even deliver information about distribution of interested customers by zip code, this will be of interest to advertisers and they'll be willing to pay more for blended advertising.

How realistic is the thinking at ViaClix about the advertising opportunity? We wonder. At one point, Elliot compares the user experience of a ViaClix-enabled service to Apple's AppleTV hard-disk-based local area network TV storage and delivery solution.

"AppleTV," he says, "is a dead-end solution. You don't do much other than just watch a movie. With ours, you not only watch movies but also access the internet." Yes, but how many of us really want to do these two things simultaneously?

Other opportunities
Advertising, in any case, isn't the only application for the ViaClix blending technology. It could be used for other kinds of messaging—to enable e-mail or voice call notification, for example. A window pops up while you're watching TV with caller ID information and a menu of clickable options for handling the call: answer, send to voice mail, disconnect.

This is an application long talked about by IPTV system vendors, supposedly only made possible by the fact that the messaging and TV signal are delivered over the same IP network. But here ViaClix is saying it can make it work with any pay TV system.

Developing educational programming that tightly integrates video and interactive content is another possibility. The company is apparently working on such applications in the Middle East.

Beyond simply adding Web-style content to live video streams, the technology could also be used to add interactivity to broadcast TV. For example, viewers could vote on American Idol using their ViaClix remote controls, Elliot suggests.

And the technology could eventually help enable the "million-channel universe," the notion of serving an infinite number of live digital TV streams directly over the web, much the way the web currently serves live radio streams.

If Elliot sometimes seems a little vague about exactly how the company will roll out its technology, it may be because ViaClix is making it up as it goes along. This is not necessarily a negative comment. Everybody is doing the same thing. Nobody really knows how the convergence of the internet and TV will shake out. ViaClix may indeed have the answers. Or not.

Also, although it was formed four years ago, the company was inactive until about the middle of last year, Elliot says. It's very small, with only 15 employees, and is clearly focusing much of its resources on projects in the Middle East. Under the circumstances, if it hasn't worked out all the details yet, that's understandable.

The ISP opportunity
In the meantime, ViaClix seems serious about attracting ISPs. "I think this really fits in well with the smaller ISPs," Elliot says. "It's a great opportunity. The larger ones are much more difficult to break into."

The U.S.-based ISP it is currently working with is looking at adding a ViaClix server to its video-on-demand head end. It's not immediately clear how a single small ISP could exploit this technology to generate advertising revenue, especially given that blended advertising is such a new and untested concept.

But Elliot says ViaClix can deliver an entire package, including content and a full-blown IPTV system—and is doing this with at least one of the Mideast customers.

Much clearly will depend on the company's—and its technology's—performance in those Middle East projects. They wake ViaClix out of hibernation last year. But Elliot is realistic about the pace of further growth. He doesn't expect more than a couple of ViaClix-enabled services to be up and running by the end of 2008, and growth is likely to continue at a similar rate for a few years, he says.

Part of this is the length of the sales cycle for a new technology and concept like blended advertising. Given that long sales cycle and the expected slow growth, the company will likely have to go out for another round of funding to keep itself going, Elliot says.

Will it find takers? We're guessing it will.

The business model may need some tinkering, especially for the North American market, but if the ViaClix technology works as well as the company claims—and the fact it's being used in the three projects in Dubai and Kuwait suggest it does—it holds out interesting possibilities.

The big question is: will those possibilities include delivering new revenue to ISPs?

—End

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