Hype Tends to Obscure the Meaning of Interactive TV : Information: One man’s interactivity could be as simple as ‘F Troop’ on demand. Others see more complexity. Cost will play a major role.

Three nights a week at 7 p.m., Manhattan cable Channel 37 cuts from the chat show “Realty Views” to a spinning green orb with a message: “Fly the Electronic Neighborhood.”

For the next hour, about a dozen home viewers use their telephone key pads to navigate a 3-D world studded with graphic icons--a bicycle, a tree, a paintbrush, a Zen temple--that contain multimedia fare.

They tour a Russian palace, peruse a cable TV guide, hear full-motion sound bites of New York Gov. Mario Cuomo nominating Bill Clinton for President.

They draw multicolored lines, watch a guy describe his bike route in Queens, read pro-feminist, anti-homeless, happy-birthday and get-well messages, view an animated film about civil rights.

It may not seem like much, but participants in this New York University experiment are pioneers in interactive television--a field larded with hype but also the potential to change America’s couch culture in the 21st Century.

Scores of companies are promoting the first wave of offerings. Countless start-ups have ideas but no money. Corporate partnering occurs almost daily. Newspapers describe the possibilities with wide-eyed fascination.

There’s one catch: For consumers, interactivity is still mostly talk.

“We should have known that any revolution involving the media would be the most thoroughly analyzed and over-hyped revolution of them all,” said Wired, a trendy techno-magazine. It placed “Interactive Everything” No. 2 on its “Hype List” in a recent issue.

The term grows broader daily. Are round-the-clock soap opera reruns really interactive, as one company claims, just because a viewer can choose when to watch? Does interactivity mean something more complex, like controlling what happens on screen or supplying program content?

“We’re trying to get away from choice,” said Red Burns, who chairs the NYU graduate program that developed the “Electronic Neighborhood.” “More interesting is that you can manipulate, you can move around, you can create.”

Industry, however, is driven by sales. Commercial tests will accelerate this year, allowing consumers to order movies, shop electronically, browse encyclopedias, and play along with sports events and quiz shows.

Technology in a short time promises much more: “Virtual” tours of vacation spots. Traffic reports that let viewers manipulate cameras mounted alongside busy routes. Video catalogues showing how a consumer looks in an L.L. Bean sweater or Giorgio Armani suit.

The big mystery is how much consumers will pay for interactive information and entertainment--potentially a $3.5-trillion industry, some have estimated.

“It’s a very, very rich area to work in,” said Ed Szurkowski, head of interactive computing systems research for Bell Labs, American Telephone & Telegraph Co.’s research arm.

“The problem is you have to be careful because ultimately it’s driven by the question of what do people want and what are they willing to pay for,” he said. “You can drive down a lot of dark alleys that ultimately lead to nowhere.”

Everyone’s getting behind the wheel. Cable, telephone and entertainment companies are joining forces. The takeover fight for Paramount Communications Inc. illustrates the stakes.

Dozens of outfits with names like Voyager and Cyberdreams are developing interactive software. Computer hardware, software and chip companies are teaming to build the critical set-top decoder boxes that will control the new two-way TVs. Concepts are abundant.

“We took our ideas to the big companies and they jumped up and down,” said Jennifer Carney, who with two partners started Vortex Communications to develop a video bulletin board program dubbed “America’s Grapevine.”

They haven’t received any money. “It could be because they see so many good ideas that they’re having trouble picking,” Carney said. “There’s a certain level of how do you pick which one?”

How indeed? Name a company or a business figure and they’re probably involved with interactivity. Michael Milken, the paroled financier with a longstanding interest in education, has invested in a multimedia cable venture.

“It really is kind of overblown right now because it is an experimental period,” said Bruce Ryon, a multimedia analyst with Dataquest Inc., a San Jose, Calif., market researcher. “You’re really not going to see anything settle out until the ‘97-’98 time period.”

“The technology is in place but the cost is horrendous,” he said. “In the consumer market, pricing is everything.”

Big business is probing consumer tolerance and desire. AT&T; and cable company Viacom Inc. soon will begin an interactive trial in Castro Valley, Calif., offering movies on demand to start. Time Warner Inc. is testing in Orlando, Fla.

GTE Corp. began one of the earliest trials in 1989 in Cerritos, Calif. About 7,500 homes have access to on-demand movies. Another 350 pay $9.95 a month for a two-way system called Main Street, offers about 50 services ranging from airline reservations to stock trading. About 600 households in suburban Boston and 2,000 in northern San Diego County also subscribe.

But critics say GTE’s on-screen presentation is a dull mix of photos, audio and text for services with limited appeal. Rather than borrowing a book through TV, for instance, readers might want to visit a real library.

“What GTE is to be congratulated for is doing a trial and experimenting,” said A. Michael Noll, dean of the University of Southern California’s Annenberg School for Communication. “The negative side is . . . a trial creates a need to promote it and sometimes an inability to admit failure, that you didn’t find a market for it.”

The past is dotted with failure. Knight-Ridder Inc. lost millions in the mid-1980s on a videotext experiment in Florida that let TV viewers select and read news. J.C. Penney & Co. canned an interactive shopping experiment.

Dataquest recently surveyed 200 households with a minimum income of $30,000 and an existing personal computer or video game, finding strong interest in interactive services--but at low prices. Some trials indicate consumers won’t pay more than a $1 premium over a store rental for an on-demand movie.

Programming must be compelling and entertaining without complexity. It’s more than watching an “F Troop” rerun whenever you want, but that’s a start. So is competing against “Jeopardy!” or predicting football plays, services offered by Interactive Network of Mountain View, Calif.

Design is important. Using the TV is a culture. It evolved from turning a knob to change channels--usually to watch a specific program at a specific time--to remote-control “surfing” among offerings.

To avoid techno-exasperation that may sap consumer interest, industry executives want to make new contraptions and services unobtrusive.

“We have to be very careful (not to) inundate them with the new technology,” said Bob Meyers, who heads Viacom’s Castro Valley test. “We’d like to make the steps reasonable so people don’t trip on them.”

Viacom will inaugurate interactive services slowly to its 12,500 customers in the San Francisco suburb. First offerings: on-demand movies and an electronic TV guide. A home shopping service will follow, enabling consumers to specify a product and choose brands.

“For a lot of people this is the beginning of direct involvement with the new world of the digital electronic marketplace,” said Michael Sheridan, president of EON Corp. of Reston, Va., which is developing interactive programming with Capital Cities-ABC Inc. and others. “It’ll take time and there will be a lot of lessons to learn.”

Besides consumer uncertainty, technological hurdles remain. A big issue is managing the enormous multimedia databanks needed to store and transmit the movies, pictures, newspapers, music and other data traveling on the network.

The network will have to be powerful enough to accommodate the electronic nightmare of tens of thousands of people dialing up “Terminator 6” at once. The system of switches, transmission lines and computer storage requires elaborate standards still under development.

Software maker Oracle Corp. recently unveiled a database program using a supercomputer it says can serve 66,000 homes simultaneously, up to 750,000 in a version due in 1995. Silicon Graphics Inc., International Business Machines Corp., Digital Equipment Corp. and others are also developing such systems.

Beyond the commercial race, the interactive age has fuzzier aesthetic and intellectual ramifications.

That’s the focus of NYU’s year-old program, funded by regional phone company Nynex and available to 565,000 lower Manhattan households. Participants supply words, pictures and movies via fax, telephone and computer modem, and take turns controlling the picture seen by everyone who tunes in.

In Germany last summer, a group of artists with corporate and government support created a 100-day on-air multimedia experiment called Piazza Virtuale, designed to foster collaborative art and dismantle interpersonal barriers.

Such efforts carry anti-TV overtones. They view television as an active, non-commercial medium that can stimulate communal behavior rather than satisfy individual cravings to be informed or entertained.

“If the audience can choose their role and their function, the content--his private truth--will come more easily and clearly,” said Karel Dudesek, a co-director of the Ponton European Media Art Lab in Hamburg, Germany. “We’re talking about culture. We’re not talking about information.”

Esoteric? Sure. But such projects offer a window on behavior that could help companies determine what interactive arenas to pursue. Society in a few years probably will use its souped-up TVs in ways no one has yet conceived.

“People who grew up on Nintendo machines don’t think this is so strange,” said Nathan Myhrvold, senior vice president for advanced technology at Microsoft. “There’s a huge generation that’s mounting now where that’s been their whole life.”