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POLL PREDICTS MIXED SUCCESS FOR INTERNET APPLIANCES

ISA Members Modest In Growth Predictions, But Foresee Changes Ahead For Online Services

SAN DIEGO, July 23 /PRNewswire/ -- The interactive industry is cautiously optimistic about growth in advertising revenues, online shopping sales and number of subscribers by the end of the year, but forecasts that online services will be forced to create a new business model in order to ensure their future as consumers flock to the Internet and the World Wide Web, according to a poll of industry leaders at the Interactive Services Association's 11th Annual Conference. The leading trade association for the interactive business, the ISA, queried its members in its opening session today, seeking to determine prevailing opinions using 200 polling devices provided by NTN Communications. Five top industry analysts also were asked to comment on 16 questions confronting the industry. Forty-two percent of the membership believes that the number of paid subscribers will remain under 20 million through 1996, with only 16% confident it would reach more than 30 million. Similarly 78% of the voters predicted ad revenues would not exceed $200 million and 85% felt that online shopping would stay under $400 million, the most conservative choices. Interestingly, more than 71% believe the Internet will change the world, but only 16% perceive the Internet to be a source of revenue in the future. Thirty-two percent of the ISA members predict that a typical World Wide Web content site will take four years to make a profit, 23% think it will require two years and only 3% one year. However, 40% believe that a typical site will never break even. The vast majority (74%) believe that the online services will need to create a new way to stay profitable while competing with the Internet and Web direct access facilitators, while only 14% anticipate that the online services will become the Net gateway of choice. When asked "what year will America Online abandon its proprietary format for the Web?," just over half felt that AOL will likely continue to provide its proprietary format indefinitely while simultaneously courting other options. The industry leaders were very divided on the future of Internet appliances. Forty-eight percent maintained that they would be valuable to consumers, but would meet with limited success, 26% felt the products would fail and 20% indicated they believed such appliances were the answer for universal access for the populace. But the combination of phone and Internet integration is perceived as the hottest telephone application of the next five years, according to 59% of the members. For those betting on the most successful areas of growth in the interactive industry, the membership overwhelmingly predicts that the companies focusing on transactional support processes would be the most attractive stocks for institutional investors. Sixty- eight percent voted for transaction support, with 15% maintaining they would recommend staying out of the market and another 11% would propose investing in search engines. The prevailing opinion (65%) is that credit cards will continue to be the primary method of Internet commerce, with some method of digital cash or smart card selected second at 18%. Interactive television will link video with the World Wide Web, according to 38% of the ISA voters. Twenty-one percent felt network systems and ITV would develop individually from each other, while 31% thought interactive television would become obsolete. Also participating in the session were industry experts Philip C. Wolf of PhoCusWright, Mary Modahl of Forrester Research, Gene DeRose of Jupiter Communications, Berge Ayvazian of The Yankee Group, Chris Elwell of SIMBA Information Inc., and Rod Kuckro of Information and Interactive Services Report. The ISA Conference and Alliance Exposition continues through Wednesday, July 24 at the Sheraton San Diego Hotel.

CONTACT: Jackie Lapin or Dan Clavadetscher at the Sheraton San Diego Hotel, 619-291-2900, ext. 2488; or Bob Smith of the ISA at , 619-291-2900 through July 24 or after the conference at 301-495-4955. [Return to Today's News]