The folks at Santa Monica-based Intertainer Inc. are betting their fortunes on a simple theory: Entertainment is chaos.
What with broadcast TV, cable, rental video movies, pay-per-view, compact discs and the Internet all vying for an audience, consumers face an increasingly complex series of entertainment choices.
Intertainer is working to accomplish two things: Simplify the process of getting entertainment and at the same time expand the amount of on-demand content available to the home audience.
Under its system, to be rolled out in Philadelphia and Phoenix next month, subscribers will be able to view a wealth of material through their personal computers or their TV set-top cable boxes everything from recently released movies, to old episodes of television sitcoms, to the latest music recordings.
“We want to be the Ted Turner of the broadband world,” said Richard Baskin, co-chairman of the 2-year-old company. “People are inundated with media, and the prize will go to those who organize the chaos of entertainment and make the new TV experience usable. We’re the first company to bring together programming in this way.”
Broadband is the telecommunication industry’s move toward offering multiple services such as cable television, data, and telephone services over the same network. (Narrowband refers to single-service networks, like plain copper wires intended only for telephone calls.)
Both telephone companies and cable companies are gearing up for broadband services, and Intertainer is cutting deals with both for delivery of its content.
In effect, it’s gambling that broadband technology will take off to the point where its product will reach a sustainable mass market. Industry observers say its odds are good based on the fact that cable companies plan to roll out millions of set-top boxes over the next couple of years.
But then, similar gambles have not paid out in the past.
“In the long term, there is definitely interest in this kind of product,” said Jill Frankle, an analyst at International Data Corp. “Previous attempts weren’t economical, but the cable companies have a major advantage with the set-top box. (Intertainer’s) kind of next generation pay-per-view should do well, and they have the potential to be successful where others have failed. But it’s worth remembering that others have failed.”
Intertainer’s product includes both content (it has licensed a library of movies, music releases and TV shows it will provide subscribers) and a software system that will deliver digitized content to subscribers over the broadband network.
On a computer or set-top box, users will be able to click on a selection of movies, television shows and music videos. The system will also have features to let users buy CDs, books and even vacation packages.
Revenues will come through modest pay-per-view fees (around 50 cents per sitcom and under $2 per movie) and commissions for online sales.
Intertainer is building a “mission control” site in Culver City, near the Sony Pictures Entertainment compound, where it will transmit programming nationwide. The company also will move its headquarters to the Culver City location.
Beyond Intertainer’s film and TV library (which consists of over 500 hours of programming licensed from, among others, Sony, Warner Bros. and PBS) is its broadcast quality an audio/video experience akin to laser discs.
“When we first saw the jerky, poor-quality video available on the Internet, we were shocked,” said Co-Chairman Jonathan Taplin. “We’re guys who have spent our lives in studios crafting good images and good sounds. We saw this (junk) and thought ‘people are excited about this?’ We can do better.”
Cable company Comcast Corp. and telephone company U.S. West Communications have signed agreements to carry Intertainer over their respective broadband services. Comcast just finished a trial period in Fullerton, which a Comcast spokesman characterized as successful. The cable company is carrying Intertainer’s debut in Philadelphia next month via its cable modems, with plans to expand quickly from there.
U.S. West has agreed to offer the service in 40 cities via its ADSL service, which transmits high-speed data over telephone lines. It will debut in Phoenix in July.
Intertainer is led by Hollywood veterans. Baskin is a composer whose credits include the scores for “Nashville” and “The Best Little Whorehouse in Texas.” He also produced Barbra Streisand’s quadruple platinum “The Broadway Album.”
Taplin has produced “To Die For,” “Mean Streets” and the Emmy-winning PBS series “The Prize.” Company co-founder Jeremiah Chechik is the director of “National Lampoon’s Vacation,” “Benny and Joon” and the upcoming “The Avengers,” which brings the popular British television series to the big screen.
“Between the three of us, we represent over 60 years in the industry with strong relationships,” Baskin said. “We have or are working on deals with all the major studios. They know that this (use of media) is coming, and to varying degrees they’re embracing it.”
Douglas Newhouse, a partner in one of Intertainer’s first investors, Sterling Ventures, said the strength of the company’s management, as well as its market opportunity, is responsible for the many investment deals inked over the last four months.
“There is no better management team out there to oversee a company like this,” Newhouse said. “Intertainer has the entertainment focus that will make this type of venture work.”
Sterling Ventures, Intel Corp. and Comcast invested $6 million in the company at the end of 1997. In April, Sony Corp. and U.S. West Communications invested a total of $10.5 million in return for equity stakes.
“From Intel’s point of view, we’re eager to support rich content for broadband and we’re excited about what Intertainer is doing,” said Lynn Heinisch, a spokeswoman for Santa Clara-based Intel.
Meanwhile, Intertainer executives seem willing to wait for the technical infrastructure to fall into place before their product can hit the mainstream.
“It will come when it comes,” Baskin said. “My only concern is planting the flag now, and being at the station when the train arrives. We’re going to have a couple-year head start over our future competitors.”