LOS ANGELES – To witness the future of interactive television, head out to a dreary sunbaked strip in Los Angeles’ San Fernando Valley. Look for the anonymous low-slung office building next to the roaring freeway, steer clear of the porn-film set down the hall, and avert your eyes at the banks of computer screens transferring porn from master tapes onto hard drives. You’ve arrived at the office of Interactive Television Networks, where the much-hyped promise of interactive television over the Internet has finally arrived.
Never mind that ITVN’s only programming to date has been explicit porn on the aptly named XTV. This little outfit, which had a loss of $1.6 million for the most recent six months on sales of all of $75,000, has big ambitions of becoming a fully interactive broadband network that will topple the existing broadcast infrastructure. The company’s chief executive officer, Charles Prast, waxes about future fitness and cooking channels, where subscribers could not only select a cooking show, but choose cuisines, such as Italian or Chinese, fish or meat (or whatever), and get the featured recipes e-mailed instantly.
“We’re part of something that will be big,” vows Prast, who was previously chief executive officer of Private Media Group, the prolific European porn distributor. “This is bad news for the satellite companies.”
Well, not just yet. As is the case with Akimbo, another Internet broadband network with big ambitions, ITVN is limited by its access to content. The big studios have been predictably wary of anything that digitizes their output and leaves them vulnerable to piracy, forcing ITVN, Akimbo and other upstarts to hustle whatever content they can find. Which is why you’ll find recent offerings from Akimbo about wine corks, and “The what, how, when and why of blanching,” but few mainstream shows. The company recently announced a deal with Major League Baseball to offer “condensed” games and highlight clips.
“The studios are worried about the artistic integrity of their content,” says Prast. “TV’s don’t crash or buffer. They want to make sure they’re comfortable with streaming
. All the studios got burned on streaming.”
On the other hand, porn is in abundance at ITVN. And unlike the relatively tame version on pay-per-view cable and satellite, ITVN’s 5,000 or so subscribers get access to 30,000 hours of porn in all its explicit glory, organized by 70 fetish genres, studios or performers.
Not surprisingly, XTV was co-founded by David Koenig, a well-known name in the porn industry whose Holio.net is a top Internet site. Some $1.6 million of its startup capital came from Interactive Brands Development (otc: IBDI – news – people ), the parent of Internet porn-billing company iBill, in exchange for 22% of the shares. Now ITVN’s largest shareholder, with 32% of the company’s stock, or 7.9 million shares, Koenig also developed XTV’s “Pornholio” feature, which allows viewers to select their own sex scenes by choosing the performers and what they do to each other, extracted from porn scenes that have been methodically categorized by some very oversexed geeks.
The data for Pornholio and the rest of XTV’s porn is downloaded from master tapes onto racks of 550-gigabyte hard drives, most of which takes place in the company’s office in Woodland Hills, Calif. The digitized porn is sent to a server farm in San Jose, Calif., (Prast asks to keep the hosting company unnamed for obvious reasons), which distributes the stuff through a broadband Internet connection to the ITVN set-top boxes at a rate of 300 to 700 kilobits per second. Subscribers pay either $30 per month for full access to XTV’s offerings or $10 for a 24-hour session, as well as a one-time fee of $100 for the box, although the company has previously given away the boxes. For another $10, you can buy a movie, but keep it forever on XTV’s servers, which allow you to fast forward, rewind and pause as if it were a DVD. The original porn producers get 25% of the sales.
Coming up: Live sex performances. Pick a performer and control the fun over a toll-free number. Oh, just in case the wife or kids walk in, ITVN has helpfully placed a big “panic” button on the remote, which instantly kills the picture.
Whether ITVN will have much luck going legit has yet to be seen. The company’s first non-porn channel, “Silver Screen Network,” goes live on Sept. 5 at a price of $5 per month, or free for the first month to existing ITVN subscribers. Featuring a desultory collection of B-movies (Dick Tracy vs. Cueball anyone?), shorts, cartoons and whatever else the company can buy rights to, no one will confuse the channel with Time Warner’s (nyse: TWX – news – people ) Turner Classic Movies network or News Corp.’s (nyse: NWS – news – people ) Fox Movie Channel.
But Silver Screen is just a prelude to Prast’s goal to eventually launch a new, non-porn channel every 30 days. He plans channels devoted to foreign news, home shopping, electronic games and on-demand music videos, as well as controversial subjects such as gunmaker Smith & Wesson (amex: SWB – news – people ), which have a hard time getting exposure on mainstream TV.
“People will stop watching MTV when ITVN comes on,” he says.