FOLLOW-UP

Videotex’s uncertain fate

IAN BROWN May 14 1984
FOLLOW-UP

Videotex’s uncertain fate

IAN BROWN May 14 1984

Videotex’s uncertain fate

At the first international convention three years ago in Toronto, two Canadian exhibitors—Infomart and Telidon—were the Couple of the Year at the fledgling high-tech ball. Telidon was Canada’s new, computer-based, two-way information system that allowed users to retrieve information from a central information bank via telephone lines. The Toronto-based Infomart was a $6-million joint venture among Torstar Corp., the publisher of The Toronto Star, Southam Inc. and Ottawa’s federal department of communications, which saw the operation as the instrument to market Telidon in Canada and abroad. Five years ago, with DOC figures to back him up,

Infomart’s then-president, David Carlisle, confidently predicted that by 1984, 500,000 Telidon decoders would be wired into Canadian homes.

But so far Carlisle’s rosy prediction has not translated into sales success.

Currently, there are only an estimated 5,000 Telidon decoders in use in Canada. David Carlisle left Infomart last summer to establish himself as an independent videotex sales agent in Toronto. Last March Torstar announced a decision to gradually reduce its financial interest in Infomart. What is more, the DOC has decided to curtail its support of Telidon: to date the government has invested $65 million, with the private sector investing an additional $200 million. For Infomart and others with a stake in the potentially lucrative videotex industry, that loss of support comes at a time when most observers believe that the new medium may be belatedly coming of age.

Torstar founded Infomart in 1975 to diversify its newspaper base. Industry observers believed that print had a bleak future and that real growth could be found in electronic publishing. Infomart, which was established to market data bases in Canada, grew slowly until 1978, when Bernard Ostry, then DOC deputy minister, discovered Telidon languishing, almost forgotten, in a department laboratory. To Ostry’s keen eye Telidon was vastly superior as a

videotex technology to earlier versions that Britain and France were still marketing aggressively. His interest resulted in the three-way partnership between Torstar, Southam and the DOC. Infomart was to market the new technology, and the DOC undertook to cover 60 per cent of Infomart’s international costs.

Under Carlisle, a former IBM salesman and a brilliant promoter from Grande Prairie, Alta., Infomart grew from 12 employees in 1979 to 200 in 1981. By 1981 Torstar’s and Southam’s investment in the still-unprofitable company had doubled to $12 million. In addition to selling Telidon videotex systems around the world, Carlisle also started Grassroots, a commercial videotex system that provides hourly updated weather and crop information to farmers in Manitoba; Cantel, a public information system serving the federal government; and Teleguide, a network of terminals in shopping malls, hotels and subways across Toronto that flashes tourist information, classified advertising and such details as the latest currency exchange rates.

But last summer Carlisle began to falter. The cost of Telidon decoders had not dropped to the desired $300 range as predicted (they remain priced at $1,400 in Canada and at $600 in the United States), and a mass-market consumer videotex service was still a blip on a distant horizon. Carlisle had his troubles at head office as well—particularly with the financially cautious Torstar, whose interest in Infomart had always been shorter term and more cash-conscious than that of Southam president Gordon Fisher, an avowed technology enthusiast. Having fired Carlisle and discarded his plan for a large-scale consumer videotex service last summer, because it was expensive and perhaps because such a plan threatened the Star's own advertising base, Torstar then announced in March that it was gradually reducing its financial commitment to Infomart and that it plans to let Southam pick up the slack. Torstar may eventually go ahead with its own scaled-down “in home” videotex

service, while Southam will concentrate on business applications for Telidon, likely tied to its 50 special-interest trade magazines.

Some industry observers believe that Torstar is pulling out just when the future of videotex is beginning to look promising. Said George Murray, vicepresident and director of media for Ogilvy & Mather (Canada) Ltd. advertising agency and a respected videotex analyst: “Torstar probably wanted things to have happened by now. Videotex will pay off in the end for

Southam . . . and I think Infomart will benefit from having one market philosophy rather than two.”

The cost of a Telidon decoder, which is required to receive videotex on a television set, is finally dropping to what may be a more affordable price. Several personal computers—notably IBM’s and Commodore’s—will soon be equipped to decode videotex. As well, Infomart’s president, William Hutchison, has recently seen the fruit of several seeds planted by the visionary Carlisle, who could predict the technological future

better than he could assess markets. Infomart recently sold two versions of its Grassroots project in the United States through its subsidiary Videotex America, which it owns jointly with the Times Mirror Co. of Los Angeles, the secondlargest printing and publishing conglomerate in the United States (Time Inc. is number 1). Infomart has sold a Teleguide system in San Francisco and it reports that it is closing three other similar deals elsewhere in the United States. Infomart is also a principal in six commercial videotex trials in U.S. markets, providing decoder-equipped subscribers with services ranging from videogames and home banking to—in Toronto, at least—classified real estate advertising and financial services.

Infomart now has some serious U.S. competitors in the North American videotex market. Last month’s Videotex ’84 conference, held at the Hyatt Regency hotel in Chicago, saw two significant recently formed videotex partnerships in action: one between IBM, Sears, Roebuck & Co. and CBS, and another between Honeywell Inc., Centel Corp. and News America Publishing Inc., all of which see a common interest in videotex. As a result of the new activity Hutchison can once again afford to be slightly optimistic about the videotex industry. “Our opinion continues to be that videotex is a new, important medium,” he said. “It will depend on the price of the terminals as well as the network”—a reference to Bell Canada’s growing interest in per-call telephone charges, which will throw a wrench into videotex’s delicate works—“but it is a medium that will be as important as television or radio. And if you look back, they took a long time to get established.”

Still, the commercial development of videotex may have been too slow for the DOC, which has finally curtailed its support for Telidon. Robert Rabinovitch, for one, who is now the department’s deputy minister, has reservations about videotex’s viability, particularly since the government has been supporting videotex technology since 1977 with, he believes, little to show for its investment. Said Rabinovitch: “That is a fairly long period of time for the market to decide whether it wants to pick Telidon up. There is a point at which the government has to fish or cut bait.” But industry observers contend that to delay videotex’s progress now, when the rest of the world finally seems to be taking notice of the new technology, could well sabotage Canada’s slim lead in the application of the technology over the competing videotex technologies of Britain, France and Japan. Said George Murray: “To pull out now would be like buying stocks at the top and selling them at the bottom.” -IAN BROWN