THE BIGGEST THING SINCE COLOR?

By MICHAEL KRANTZ

He was America's quintessential media consumer: a hardworking breadwinner who settles down after dinner with his feet up and his thumb on the remote. So Tim Bajarin, an analyst at the research firm Creative Strategies, was curious about how the man would react to a focus-group presentation of Silicon Valley's latest hot idea: using a TV receiver to cruise the Internet. As Bajarin watched, the subject waited patiently a full 30 seconds for a sports-related Web page to fill the screen. He studied it for a minute, then looked up and asked, "When do the movies start?"

That may be the question of the year. The man represents the Internet industry's most coveted market: the estimated 85% to 90% of American homes that aren't yet connected. For this Passive Majority, most of whom don't even own a computer, let alone a modem, "Net TV" would seem to make perfect sense. After all, nearly everybody in America has a TV and a telephone, and many are presumably curious to learn what the World Wide Web is all about. If they could use their existing sets to access the Infobahn from the comfort of their La-Z-Boys, the Web might finally become the mass medium its promoters have been promising all along.

To that end, some half a dozen companies plan to begin selling a Net TV of one sort or another between the end of summer and the beginning of next year. Rick Doherty, a director of the Envisioneering Group, estimates that 1 million Net TV devices will be sold in the first year, and that a third of American homes will have one by 2002.

These devices, in their simplest form, consist of a television with two ports in the back: one for cable, the other for an Internet connection (usually a phone line). Once their link to the Net is established, viewers will, in theory, be able to navigate Websites with their trusty remotes as easily as they now surf TV channels.

There are, however, as many variations on this latest get-rich-on-the-Internet scheme as there are firms that want to cash in on it. Companies like Zenith and Curtis Mathes are building new TVs that come out of the packing crate Net ready; others, like ViewCall America, are designing set-top boxes that plug into ordinary TVs and make them Web capable. Sony and Philips, for example, are licensing set-top technology from WebTV Networks, a company partly financed by Microsoft co-founder Paul Allen. Sega and Nintendo, meanwhile, are adding Internet capability to their video-game machines, and this fall Apple is expected to market its long-delayed Pippin computer as a $600 Web-browsing set-top box that also plays Macintosh CD-ROMs.

The TV-PC hybrid idea is attractive to computer makers, although most would prefer to add TV reception to their PC lines than get into the TV business. Direct-mail giant Gateway 2000 is already selling Destination, a $3,500-to-$4,500 hybrid TV-PC. NetTV, Inc. introduced its competing WorldVision in March, and Compaq and RCA are expected to follow suit early next year.

Whatever approach they favor, Net TV makers share one belief: that the era of stand-alone desktop computers, if not quite over, is on the wane. "The lock that PCs have had will be broken," says Joe Gillach, chief operating officer of Silicon Valley start-up Diba, which is providing Web-browsing technology for Zenith's NetVision TV as well as Internet circuitry for a variety of vcrs, set-top boxes and cable converters; a deal to make Internet appliances with NEC will be announced this week. "The Internet TV," Gillach says, "is the Trojan horse for bringing technology in a non-PC form into the home."

Even if the PC revolution can be decoupled from PCs, however, it is by no means certain that the boob tube is the device to do it. Television's very familiarity is a double-edged sword. Yes, TV may help seduce the Passive Majority into trying the Net, but if today's Net fails to meet their entertainment expectations, they may just change the channel. The Web is info-rich, but it's still a poor entertainment medium. It takes agonizingly long for even a fast modem to download the average Web page, and that page, by and large, offers mostly still pictures, graphics and plain text--hardly fare to set a couch potato's heart aflutter. "People aren't going to sit there waiting for something to develop on the screen," says Peter Krasilovsky, a new-media analyst at Arlen Communications. "We don't believe in TV as a reading vehicle."

Even if he's mistaken--even if there are millions of folks who think TV's problem is that it isn't enough like a magazine--Net TV users may find that the Web's most exciting pages don't work right on their machines. Netscape and Microsoft, whose Web-browsing software dominates the market, are currently engaged in a life-or-death struggle to be the first to introduce the newest and whizziest Internet embellishments. Net TV's programmers may be hard pressed to keep up with the big boys. "Nobody is targeting [browser] improvement at set-top boxes," says Josh Bernoff, a senior analyst at Forrester Research. "The gulf between the two will only get wider and wider."

Then there is the eye-straining challenge of reading screenfuls of text from eight to 12 feet away--the distance most people sit from their TV sets. Net TV designers have tried to solve the problem by redesigning Web pages for larger type, but that limits the number of words that can fit on a screen. "It's going to take a dozen scrolls to see one [traditional] Web page," complains Bernoff. "These devices are not going to be able to deliver a complete Web experience."

Net TV makers say they never intended to do that. To judge Net TV by current Web standards, its boosters say, is to miss the point. "This is a brand-new architecture," argues WebTV Networks ceo Steve Perlman, whose company won licensing deals with Sony and Philips in part by delivering the best-looking Web pages seen on any TV screen. "We view Web TV as a complement to the TV experience," he says. Perlman is trying to get TV producers to jazz up their standard prime-time fare with Web content that can be displayed with the press of a button. Soap operas, for instance, could conduct mid-episode viewer polls; baseball fans could get statistics updated with every pitch.

If this sounds familiar, it may be because equally dreamy scenarios were spun only a few years ago by telephone and cable-TV companies--including Time Warner--convinced that the interactive TV of the future would be carried over privately owned fiber-optic and cable-TV lines. Billions were spent designing proprietary technology that would enable TV viewers to shop at virtual 3-D malls and order movies on demand. The rise of the Internet has eclipsed those efforts, at least for now, as those same phone and cable-TV companies race start-ups like @Home to deliver ever-faster access to the Web.

Whether it will ever be fast enough to satisfy that quintessential couch potato remains to be seen. "My general view," says Adam Schoenfeld, senior analyst with Jupiter Communications, "is that these people are crawling all over each other to provide a service that has no proven demand." If the Net TV makers are wrong, they could find themselves offering pallid, expensive hybrids of services millions of PC owners and TV junkies already enjoy. If they're right, however, and they manage to attract tens of millions of new viewers to the Web, a lot of Internet business plans that were looking pretty iffy will suddenly start making a lot more sense.

--Reported by Daniel Eisenberg/New York

With reporting by DANIEL EISENBERG/NEW YORK