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Industry Leaders Shed Light on the Videotex Business

Magazine article Information Today

Industry Leaders Shed Light on the Videotex Business

Article excerpt

Industry Leaders Shed Light on the Videotex Business

Reality has again set in for the videotex industry. Amidst several years of significant industry activity and 25-30 percent actual subscriber growth, the mass market sought by its players seems all the more distant.

Perhaps the most telling artifact at the Videotex Industry Association's recent annual conference and exposition was the latest lapel button industry analyst and inveterate optimist Gary Arlen passed out there. It reads: "2010: I can't wait!" and is meant to replace the "1990: I can't wait" button Arlen began distributing in 1982. If we take this seriously, and we probably should in terms of the broad mass market concept, it seems that in eight years the horizon for the videotex market to take off has receded 20 years! For this year's meeting, the association returned to Toronto, where the North American videotex industry was launched ten years ago. The keynote address, by Jean Monty, president of Bell Canada, ably presented the telephone-centered view of videotex's future--that videotex will become a "basic" data service and that its evolution will parallel the evolution of the telephone. This year's theme was "The Business of the Mass Market," and with remarkable openness company representatives did discuss their views of the market, their strategies, and their results. In a hard-hitting but very humorous presentation, Mitchell Rapoport, president of Comtex Scientific Corporation, disagreed with those who blame short-term thinking for the failures of videotex. "I happen to believe that the major problem facing videotex is actually not with companies that are obsessed with short-term profits," he said, "but with companies that are not obsessed with profits at all. At far too many companies, especially in the past, videotex simply hasn't been meant to be a business. It's been an application, a technology, a syndicated study, a pilot, a technology test, a field trial, and R&D effort--but a for-real money-making business?"

Rapoport called this kind of operation a "businoid"--where there is no real pressure to make money because its mission is to position itself for the next century. After "learning a great deal," people involved in these projects all too often echo a common obituary: "You can't make any money at this business." His words rang true for more attendees than would have cared to admit it.

Rapoport's conclusions are borne out by the fact that many of the large firms that have entered the business--with plenty of money for R&D--have ended up failing, while many other smaller, entrepreneurial firms that are under pressure to show returns have either made it financially, or are well on their way.

Comtex is one such firm. It packages news feeds from all over the world into branded products such as NewsGrid, OTC NewsAlert and SportsAlert that are delivered to computer users over a variety of networks. In business for ten years, Comtex had sales of $700,000 last quarter, has been self-sufficient in cash for a couple of years, and is moving toward profitability, with a loss of only $3,000 in the last quarter due to internal financing of product development.

Rapoport's advice is to verify the need for a given product, be customer-driven, and operate cost-consciously, trying early on for an attractive bottom line.

* Quantum Computer Services, also represented on the opening panel, is one of the true videotex success stories. Founded only five years ago, and profitable three of those years, the company has been growing at the rate of 47 percent per year and projects $22 million in revenue for 1990. Quantum is the leading independent online service company, operating terminal-specific videotex networks for Apple (American Online), Tandy (PC-Link) and Commodore (QuantumLink). Its winning strategy, said Stephen Case, Quantum's Executive Vice President, is to focus exclusively on the PC-owning consumer, develop strategic relationships with hardware manufacturers and IPs, and design services with proprietary software that have the look and feel of the customer's own PC. …

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