1993 Year in Review : TECHNOLOGY : The Rampage of the Technomonster

Technoids. Bell-heads. Digit-nerds. Men who wear white socks.

These are the new powerbrokers in Hollywood. Indeed, these are the people who may someday own Hollywood. And they’ve never eaten at Spago or been to a premiere.

The TV and film businesses underwent a transformation in 1993 that had nothing to do with the usual round of musical chairs among studio chiefs (although there was that too). It was the year that the cable industry and telephone companies came into their own in Hollywood.

CNN’s Ted Turner gobbled up New Line Cinema and Castle Rock Entertainment. US West acquired 22% of Time Warner Entertainment. Nynex invested $1.2 billion in Viacom. Viacom and QVC Network waged war over Paramount. And cable king John Malone held talks with MCA parent Matsushita, while agreeing to merge Tele-Communications Inc. into Bell Atlantic.

If someone had proposed a year ago that cable operators and telephone companies would become a force in Hollywood, he or she would probably have been met with a belly laugh. Yet the marriage between the show-biz glitz of Hollywood and the technological behemoths like US West or BellSouth has actually been in the making for several years.

What is driving the flurry of deals is the expectation that before the decade is over, the majority of homes in America will have access to 500 or more TV channels via broad-band, fiber-optic networks built by cable-TV operators and telephone companies. And those companies are looking to the Hollywood film and TV studios to fill that pipeline.

The electronic pipeline will carry everything from movies and TV shows available at the flick of a remote to information services and niche networks catering to the most narrow of interests. Every conceivable programming idea is on the drawing board, from the Military Channel to the Wellness Network.

The pipeline itself is now possible because of significant advances in technology.

By compressing a video signal, for instance, it’s possible to send more information over existing lines. Digital technology also allows for the storage and transfer of vast amounts of information in a fraction of the time rustic analog systems provided. Symbolically, it’s like the leap from vinyl albums to compact discs.

On top of that, the phone companies have achieved remarkable success in transmitting video pictures over regular copper lines, thereby dramatically lowering the cost of pumping hundreds of channels into the home.

For consumers at home, that means the functions of the television, phone and computer in a single device. Cable TV will be available from phone companies (along with video telephone calls). Phone service will be offered by the cable company. Computer companies will make the equipment and software to “navigate” through thousands of program choices. The industry calls it “convergence.”

“You’ll essentially be able to get any kind of information from anywhere in the world anytime you want it,” TCI’s Malone predicted recently. “You’ll be able to play the latest video games without having to go to the store to buy the cassette. You’ll be able to receive them electronically. It means a broader, more diverse world.”

But the really big moneymaker in entertainment--and the reason the cable operators want access to Hollywood--is expected to be video-on-demand. Under this scenario, viewers will no longer trek to the video store but instead choose from thousands of movies stored in the cable system’s computer. They will always be available, and users won’t have to hassle with returns.

The problem is that while the cable operators and telephone companies are long on technical know-how and can-do spirit, they are impoverished when it comes to ideas about how to fill the channels, program the networks and develop the hit movies and shows people will watch.

And that is where the Hollywood studios come in and, increasingly, the smaller entrepreneurial companies that specialize in interactive programming. Viacom is developing interactive programs that would make it possible for the viewer to influence the course of action over the course of the program.

Whether viewers really want to interact with entertainment in that way nobody really knows. Some industry observers contend that that’s why writers and directors are paid lots of money--to create the stories and entertainment that most of the rest of us can’t think up.