Mix TV And The Web And What Do You Get? VC Money



The allure of a TV-and-Internet cocktail attracted two different groups of investors this week.

AOL, Cisco, EchoStar Communications, and others gave $67 million in first-round funding to Rearden Steel Technologies, which grabbed attention because its founder and CEO is Steve Perlman, co-founder of WebTV Networks Inc. His latest venture, still under wraps (although it's suspected to involve a combo of TV, video games, and the Internet), won't release a product until the end of the year. By then, the Rearden name, an allusion to a character from an Ayn Rand novel, will change. But it fits for now, says chief operating officer Bill Keating.

"It invokes the notion of innovation in a world we think isn't innovating as quickly as it could be," says Keating.

Less-heralded MetaTV Inc. is developing software that would allow broadcasters to deliver interactive programming. It is backed by cable companies Cox Communications Inc. and a division of Comcast Corp., which led a $28 million financing round. "This will allow a consumer with a remote control to access his stock portfolio, weather, traffic, sports--everything you can do on a PC that makes sense on TV," says CEO Ranjit Sahota. In other words, fewer surfing options, less text and white space, and more color and ambient background movement--the atmosphere TV viewers are accustomed to. Unlike WebTV, a branded service that requires consumers to install a special box in their homes, MetaTV content would reach televisions via digital lines run by satellite and cable companies, Sahota says.

Paradoxically, as cable companies invest millions in digital infrastructure to increase bandwidth and offer more channels, the interactive service would be more restrictive than conventional online access from a computer. There may only be 15 or 20 content providers, for instance. "There wouldn't be a searching facility," says MetaTV president Andrew Lev. "The concept of the URL is gone."

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