THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Sunday, October 30, 1994 TAG: 9410290153
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
LENGTH: Long : 176 lines
Videos on demand. The term conjures up images of Hollywood's latest megahits at one's remote-punching fingertips.
Hundreds of thousands of hours of movies, music videos and games, available when you want them. This is what America's phone companies and cable operators are promising to deliver within the next several years to tens of millions of American households.
While video on demand's main emphasis will be entertainment, J. Mark Tisone is betting there will be a sizable market for programs to improve people's minds.
Tisone's Norfolk-based company, International Communications Corp., develops videos that are downright boring to most people, but potentially captivating to select groups of others. He thinks there will be enough interest in how-to programs on subjects like engineering, business and law to make his fledgling enterprise a smash.
Since ICC's startup in February, it has been profitably distributing the shows through special closed-circuit satellite networks and by mail order. Tisone says ICC will generate about $100,000 in revenues this year.
Pleased but not satisfied, Tisone and his three partners are angling for a much faster and potentially more lucrative lane of the information highway. They plan to deliver ICC's brand of professional-development programming straight into America's homes via telephone and cable wires.
The first step in that plan is to take place Dec. 1, when ICC's shows are scheduled to premier on Southern New England Telephone Co.'s video-on-demand system in West Hartford, Conn. That is currently the most ambitious trial of pay-per-view programs in the country.
ICC has also signed deals to put its shows out over the video-on-demand networks of Bell Atlantic Corp. and U S West Inc. beginning early next year. And Tisone said he's close to agreements with at least three other major phone or cable companies.
If current plans hold, Tisone says ICC's programs will be available to nearly 7 million U.S. homes by the end of next year and as many as 70 million by the turn of the century.
Tisone is a Ph.D. telecommunications technologist who spent a decade building a national reputation for Old Dominion University's telecourse/teleconferencing center before bolting to start ICC when he got the entrepreneurial itch.
He's a quiet, understated type. But Tisone can't help dreaming when he thinks about all those potential video-on-demand customers just around the corner. A buck a year from every home, some $70 million in sales, is not inconceivable, he says.
``It's a niche,'' Tisone says. ``But I think people are going to be surprised by the demand for the kind of special-interest programming we're putting together.'' IN THE STUDIO
It's 10 a.m. on a weekday. Tisone is in the Virginia Beach control room of Video Horizons for the taping of ICC's latest program: ``Heat Transfer for Engineers.'' Today's two-hour segment is part one of five episodes. The subject: conduction heat transfer.
Tisone, slightly nervous, is clutching a folded sheet of notebook paper. If the series' lecturer, an ODU associate engineering technology professor named Robert Michel, runs short of his allotted two hours, Tisone has to to fill the time by walking on camera and asking Michel intelligent-sounding questions.
Problem is, Tisone doesn't know a thing about heat transfer. So Michel helped write out some suggested questions on the sheet of paper Tisone is holding.
In spite of his edginess, Tisone is feeling happy about this video series. It will go out over a closed-circuit satellite network called National Technological University starting in November. Two big NTU subscribers, NASA and Texas Instruments Inc., have agreed to buy the satellite feed.
At minimum, Tisone says, the series will gross $10,000 in revenues. After the satellite network takes its cut, ICC and Michel will split $6,000 evenly.
Tisone is pleased with Michel's performance. The lecturer seems at ease on camera and is easy to work with behind the scenes. As the professor plops into a chair in the control room during a break, he cracks a smile and a quip. ``Next stop, David Letterman.''
Although fine for its target audience of engineers, Michel's series is not ready for prime time, Tisone has concluded. He's not planning to offer it on any of the household video-on-demand networks because it's too technical.
For those larger venues, Tisone is gathering programs for that are, while not aimed at general audiences, broader in scope.
Among those is a series of 13 half-hour women's leadership programs taught by Chris Stubbins, a former vice president of Junior Leagues International. ICC will premier the show on the Southern New England Telephone network.
It also plans to run a series of business pep talks by Lee Milteer, a nationally known motivational speaker from Virginia Beach. And there's a series on legal negotiation and settlement by Charles Craver, a George Washington University law professor.
Tisone is negotiating with other lawyers to develop a range of videos aimed at legal novices. He says he also is talking with a physician about developing programs dealing with women's health issues.
By Dec. 1, he hopes to have as many as 40 hours of programs available for the Southern New England Telephone trial. Tisone ultimately would like to build that to as many 250 hours, he says.
Building up that library won't come cheap. It costs a minimum of $350 to produce a two-hour program.
That's nowhere near the tens of millions of dollars that Hollywood studios routinely spend on a feature film. But ICC is a small company, with Tisone the only full-time employee. To prosper, he must spend prudishly.
Initially, the company will get to keep all the fees that customers pay when placing their video-on-demand orders. That will average out to about $2 each program purchase, Tisone figures.
Eventually, ICC will probably have to split revenues with the phone or cable provider. But Tisone says he's working on another revenue stream: written resource materials for each video, which he figures ICC can sell for about $10 a pop. THE BIG QUESTION
So, are America's couch potatoes ready to buy this stuff?
Elliot Gold is not convinced.
Gold's Altadena, Calif.-based company, Telespan Publishing Corp., publishes a newsletter on teleconferencing. He says at ODU and so far at ICC, Tisone has done a good job distributing by satellite ``fine-tuned programming that fits the needs of an addressable business market.'' But going mainstream, into people's homes, is a whole other matter, Gold says.
``I think it's a good idea to try this, but it's really an unknown.''
One drawback Gold foresees for ICC's programs is the fact that they aren't live. He says viewers increasingly are demanding immediacy to specialized programming and that many want to be able to interact with the on-screen presenters.
Tisone, however, is encouraged by the early results of video-on-demand trials like Southern New England Telephone's.
Beverly Levy, a spokeswoman for that New Haven, Conn.-based company, says sales of specialized programs have been surprisingly strong since it started its trial last spring. Enough of the 450 paying subscribers in that trial have chosen such programs that Southern New England Telephone now offers 34 programs just on computers.
``Sure there's a time when people want to be entertained,'' Levy says. ``But there's also a time when they want to better their minds.'' BRING THEM ON
At 36, Tisone says he's ready for the challenge of making his ambitious business plan work. He believes he was well-grounded to enter business by his experience at ODU.
There, he was a kind of academic entrepreneur, building the university's telecourse/teleconferencing center from practically no programming to an average of 45 courses and a dozen national or international conferences a year by the time he left.
ODU's became one of the top two or three such centers among all American universities, says newsletter publisher Gold. One of ODU's productions, a joint U.S.-Soviet youth conference, was even nominated for an Emmy award.
``They just did some wonderful stuff there,'' Gold says of the ODU center. ``I'm not surprised at all to see Mark breaking out on his own.''
Tisone says one of the smartest things he has done since leaving ODU was recognize that he didn't have all the tools needed to succeed in business.
That led him to take on his three partners: Warren S. Bates, a telecommunications engineer at ODU, and C. Arthur Robinson II and Christopher B. Robinson, brothers and partners in a Norfolk accounting firm.
ICC's offices are located on the second floor of the Robinsons' tidy brick office building on East Freemason Street. Arthur Robinson, who is both a CPA and lawyer, handles its legal affairs. His brother, a CPA, keeps the books.
Arthur Robinson says he's hoping ICC will grow to the point where it becomes his main pursuit. ``We all give a lot of lip service to trying to retool in today's economy,'' he says. ``It would be nice to get involved full time in a new line of business.''
Tisone is trying to make that happen.
He's working hard to expand ICC's programming for satellite feeds. Some ICC shows will soon be distributed on Mind Extension University, another big satellite network. Tisone aims to distribute programs through Public Broadcasting Service's business and adult-learning satellite networks as well.
But long term, his main focus is video on demand.
``We're in on the ground floor of something that could be very big,'' he says. ILLUSTRATION: Color photo
MOTOYA NAKAMURA/Staff
Mark Tisone and his partners plan to deliver ICC's brand of
professional-development programming straight into America's homes
via telephone and cable wires.
by CNB