Voldeng: Give me an overview of what you're doing with Extend.

Kocho: Well, the best way to think about us is we're effectively in the business of turning television programs into businesses. We're doing that as what you would call a hybrid production company, trying to position ourselves, if you will, as the Pixar of this interactive television space. We effectively get out and partnership with both individual shows and also networks, in some cases. We've got two divisions in the company. One's a services division and the other is a studio group. They're both targeted at this certain convergence industry, I guess, from a content perspective, that we really determine as media telecom. We will go out and focus on taking a brand and extending across multiple media which includes the Web, narrowband, broadband, and various ITV platforms, on behalf of a partner either in the form of a contract to do it or in the form of a joint venture in which we'll actually invest in it, help staff up, and in some cases, spin up a new company to run with the thing. That's it. There are two or three core competencies we have in the process of doing that, not the least of which is our size and that we've been around for a little while. We actually have various products in the field.

Voldeng: How novel.

Kocho: Well, you know, it's true. But in this industry, as it's gone through several evolutions in the last [while], I've been through interactive television now three times and at least this time, for the most part, it's real. We're going into our third season of an interactive cooking show. So it's one thing to take a demo of Martha Stewart of whatever and slap it onto a set top box and say, "Look, you can click on this salad bowl and buy it." But it's quite another [...to...] not only [produce] the product, but [build] the business relationships on the advertising, retail and sponsorship side, dealing with the various distributors involved in the program and [ensure] that the advertising and media sales are packaged. And on the technology side, [build] a publishing system that effectively allows us to target. Take one show, one brand and publish it instantaneously across both narrowband and broadband, and, as I said, across a bunch of these different ITV platforms.

Voldeng: All within an interactive context, I'm assuming. Like you're not repurposing things from one medium to another. Or are you?

Kocho: A little bit of both actually. You know, in the case of the television program itself, the interactive context in the generic television program is mostly just triggers and using a script as a vehicle to drive traffic to the Web. [...Like] using a bumper and other kinds of things to illustrate an ability or send people to go online. We also use narrative devices too. We put a flat-screen computer in the set. [It goes something like this:] so the host is online and she's pulling up recipes and feedback from the audience, ...seeing yourself reflected in the television experience. That's for the cooking show, but it's your point. We do repurpose. [...If] you look at the development of a standard television program, the vast majority of the primary research that you do for the product gets chucked, ends up on the editing floor. And in most cases, that stuff would be largely seen as the primary research material for the interactive.

Voldeng: There certainly are a lot of people setting themselves up in the interactive arena and there are a number of different business models that are being played with. You know, everybody's talking about interactivity, but in terms of true interactivity, most of the models that we look at are basic "surfing, click, buy" kinds of propositions. How do you differentiate yourselves from most of the players in this space?

Kocho: You mean on the product level?

Voldeng: Yes.

Kocho: That's a good question. I wouldn't suggest for a second that we're not providing those basic functions too. The idea of enabling some form of television program with a transactional component is the juice really. I mean, you have to do that. That's what creates the new revenue model, makes it possible. So while we're designing programming and integrating it so that it creates commercial opportunities, we're also doing some things with...what you might think of as a standard approach to narrative extension. You know, real time information on the plot, character backgrounds, a little bit of exploration of side story items. We just launched, a couple weeks ago, a hip hop TV program called 'Drop The Beat.' It's a half hour drama that highlights a bunch of black youths who have a Web radio station, and the whole thing is about urban culture, so the interactive components are all over the place. In the first one, [which aired last week], they get pulled over by a black police officer and there's a little tag that pops up and says, do you want to know about discrimination from this perspective? And, do you have an opinion and that links into chats and has a whole bunch of collateral information and so on? attached to it. I hesitate to say it's rocket science. I think what we're trying to do is experiment to some extent with what would be incremental interactivity to the television experience and try to provide a value add to the audience as opposed to transitioning their experience with the medium in the short term.

Voldeng: Do you have focus groups set up, or test groups?

Kocho: Yeah, we have a usability practice in the company. That's one of the things we do pretty formally. In fact, in the new build-out that we've got going on in the floor below us. We have a usability set-up with a two-way mirror and testing center. And we do this with most of the products we do - not just the TV products - but the Web-related things as well.

Voldeng: And how many shows are currently on your roster?

Kocho: Oh, I don't know, three or four. In terms of stuff that's up in the air right now, we have upwards of ten development deals in progress and some of them are close to distribution.

Voldeng: Okay. Let's sort of broaden out a bit and look at the industry overall. How do you see television evolving over the next few years?

Kocho: Pretty radically.... Insofar as the way the industry is structured and geared, it is going to change pretty dramatically, pretty quickly. The end user experience isn't likely to change that dramatically in that there'll be the introduction of a lot more synchronized programming, the kind of stuff that ABC is doing with football and the Go Network. A lot of two screen experience stuff, so people who are building television programming with the idea that their audience has access to a computer and will go online and use it at the same time. And, obviously, greater penetration of some of the digital platforms both the DBS and the digital cable stuff and Web TV. And as that starts to proliferate, there's going to be some pretty dramatic changes to the production and distribution landscape. It's going to impact a lot of the companies we're dealing with really quickly because they're really not, though they're getting geared up for it, but traditionally they're certainly not used to dealing with the kind of sponsorship and transactional opportunities that relate to the programming. They'll sell their ad space that way. They certainly don't, in most cases, consider the development and distribution of their programming in that light.

Voldeng: That's true.

Kocho: And, generally, at least in the last 40 or 50 years, they really haven't had to do any R&D. ...[T]he real key difference, and a lot of broadcasters have been experimenting with this, with the Web,... [is that the idea] of product management in a broadcasting environment is non-existent. Do you know what I mean? You build a product, you distribute it and then maybe you do some syndication work with it but you don't have to worry about it once you put the thing together and put it on the air. With this kind of stuff, you've got a 24/7 relationship with an audience member that you're trying to create. It really changes the dynamic of what your business has to do.

Voldeng: Now do you think that the traditional television industry is really prepared to adapt itself? Certainly there are players within it, people who I think really understand the shifts that are occurring, but most of them...

Kocho: I would say no. I would say that most of them are not. Most of the big players clearly are. You know, NBC, CBS, Disney... they're very clearly.... With what NBC's been doing with their vertical integration and spinning out NBCI, they're absolutely saying, we've got that stuff. We're buying valuevision, we're going to provide a fulfillment engine on the back of our programming. But, you know, that's just three companies. Most of them in the landscape out there are ranging from the various cable networks to the production companies who serve them, distributors, library owners. It's an unclear landscape for most of these companies going forward. How much do they invest? Do you try and do it internally? Do you do it through a strategic partnership with someone? Do you outsource it?

Voldeng: Plus you're dealing with such ingrained legacy development models and business models.

Kocho: Yeah, they generally, if they're doing a good job with them, make a fair amount of money. So it's hard to take your eye off that ball and say, "Well, I'm going to jump into this bizarre interactive thing and lose lots of money for a few years in order to protect the future of my business." And there are not a lot of companies that have the capital or wherewithal to do that. Clearly the major networks do, but they also recognize that if they don't [they have] the potential to get, I don't know what you call it, Amazon'd, right?

Voldeng: That's true. Now, are you guys watching what's happening with the wireless world?

Kocho: Yep. The initial platforms for us, that we're focused on clearly, are the Internet and television, insofar as the Web or just IT in general, finds its way onto different devices. We'll be playing there as well. For us, it's all about how do we extend a brand into an appliance that achieves some form of transactional consumer experience. So if I can do syndication of some of the data elements from our cooking show, as an example, onto a display phone or a pager, where a recipe is sent to an audience member, underwritten by a sponsor that pays for the television program, everybody wins. The issue today is that the number of those devices that are actually interconnected, where there's any level of standardization for the data, is still really small. It's much smaller than set-top boxes.

Voldeng: Absolutely. And certainly in the U.S.

Kocho: Yeah, Europe's getting a lot more prevalent. Yeah, you're right, the U.S. market is not huge.

Voldeng: Nokia has a phone in Finland that does 384 kilobits per second on the download.

Kocho: Neat stuff. We've actually worked with various wireless protocols and things in the past. But you know, from a content standpoint the kind of stuff that Nokia's doing in Finland is cool but they've got it set up within this little area as a test band, right, so you can go to a coke machine and buy coke. There's no question, that's the future. And we really want to be in a position where...our world view is really simply that we want to take that branded television product, as an example, and nail the target elements of it, either in its entirety or pieces of it, to any kind of appliance that we want to publish to. We find different style templates for these things and have an asset management system that underlies it, that says, "this asset is suitable for this platform and not that one."

Voldeng: So are you working fairly extensively with XML right now?

Kocho: Yes, and have been for a while.... We've actually built a fair amount of core technology to support what we're doing, and we had commercial software experience in the past. We have really strong relationships in the industry with people like Sun, Wink, Open TV, Liberate and Microsoft. The technology players that we deal with on a regular basis don't see us as a content player all that much at the moment. Which will change... but where they do see us having a lot of strength is both in our publishing tools approach and having a greater capability for a lot of their target customers. So we're getting brought into these opportunities in two directions, really.

Voldeng: Interesting. What's your strategy over the next few years?

Kocho: Grow like crazy. Take over the world. Crush our fledgling Americans.

Voldeng: Oh, that was it. Speaking of fledgling Americans... What do you think of what is happening with iCraveTV right now?

Kocho: Well, I could have expected that to happen. I don't frankly understand who in their right mind would have given those guys the money to build the thing in the first place because there's no real business model attached to it.

Voldeng: Yes. I have said so before myself. No, there's nothing. There's just grabbing...

Kocho: Maybe they didn't know they were going to get shut down. That's kind of the statement, frankly, that there's a lot of money out there and a lot of people getting money to do things that are just brain dead and I don't understand it. Sure it's an interesting regulatory copyright issue but, you know, I could think of something else that could use $50 million bucks...

Voldeng: Sure, absolutely. And from a consumer's perspective, who the hell cares?

Kocho: Exactly.

Voldeng: Who wants to sit and watch broadcast content streamed over the Internet?

Kocho: It's an odd thing at the moment, frankly, a lot of the broadcasters... who came out last week...think they're targeting the business customer at their desktop. Frankly, Pointcast tried to do this, and there was interest in it for a while, but the reality is that in the business environment, you don't have the latitude to sit in front of your computer and watch TV all day.

Voldeng: Unless you're working in some sort of media environment where it's expected that you're sitting and doing that.

Kocho: Right, if you were you'd have a satellite feed - not a cheapie little thing in the corner of your computer screen. And also, that chewed up your whack of your backbone. I don't understand the focus there either, frankly.

Voldeng: I really believe it's just a way for people to try to extend currently existing assets into a new medium.

Kocho: ...[Someone] at CAA said [to me], "You know what I love about you guys? You're not one of these interactive companies that come in here and say that they effectively want to do narrowcasting on the Web." You know, it's a business in cable that increasingly doesn't make a lot of sense; why the hell would it make any more sense online? He said, "What I love about you is you take television programs and turn them into businesses." And I said, "Yeah, exactly, and I'm going to quote you on that." Really, our focus isn't so much about oh, you know, how can we build a DEN or Wirebreak or any of these kinds of things. Or for that matter, shockwave.com. Our view is to try to take someone from a traditional media experience and help the person who is the purveyor of that experience actually create a relationship with the audience.

Voldeng: ... the whole broadcast model makes zero sense to me. And shockwave.com, that's another obviously bizarre thing: they've signed a couple of big deals with prominent edgy entertainment people. What do think their plan is? Their business?

Kocho: They start in a good position, one in which they have a huge install base of players so they can reach, let's say, 10 million people, just because there's that many people using shockwave. Now the whole issue with that is does that a qualified audience make? I personally don't think so.

Voldeng: I agree.

Kocho: And the other challenge they have is that they're doing a Microsoft. They're a technology company that is starting to compete with its primary customers.

Voldeng: That isn't very smart.

Kocho: Well, it depends on how you look at it. What they've done is they've said we've created a spin-out to go do this, and clearly that's what Microsoft was trying to do with MSN when they got started, and they ran into the same resistance, which was the studios and everybody else basically saying, "That's nice, but we're not going to let you take over our business." So I don't know. I think frankly they'll grow like crazy, they'll sign a bunch of deals because their value proposition is attractive to people like,... what's his name? The guy they signed? The director?

Voldeng: Tim Burton?

Kocho: Yeah, Tim Burton. For him, he's got a couple scripts he hasn't done anything with in a few years and he can say, "Here, take these and go do something with them." He doesn't have to spend any time on it and he doesn't really lose anything. They assign all the rights back to him anyway. He gets a bunch of his ability and maybe some revenue out of it. Then they'll go off most likely and continue to grow their audience base, take the thing public, and take a run at trying to be a portal in the space. I don't know if you can sustain a portal based on a technology. If you're Microsoft, you can get away with it because your technology is fairly broad. Anyway, in some ways, it's good to see that companies like those guys are making things happen, they're doing deals... It certainly does speak to the Hollywood community and says, "Look, there's potentiality in them thar hills."

Voldeng: Yeah, they're shaking things up a lot...

Kocho: It's a pretty straightforward model. We've got this many eyeballs we think we can deliver to the sight. You give us an exclusive deal and we'll do some press. ...[W]e worked on MSN three years ago - did all these shows - and frankly, the technology hasn't improved all that much. It's okay and I'm not saying it's bad but we were doing some full screen animation with synchronized audio three years ago. ...I was trying to show [my father] this thing we did, this hockey game. He walked into what I had on the computer and said, "Oh, that's interesting," and turned on the TV and watched the hockey game. I thought that was the definitive statement of what was the potential attraction of our site, right?

Voldeng: Not only that, but that exactly summarizes, in general, the consumer attitude towards interactive television. For the most part, I think the industry's gone through some big lives because there has not been a compelling enough picture yet for consumers.

Kocho: I think the issue, [and] I try to remind most people I talk to about this, from a client/partner perspective, really has little to do with technology and a lot to do with programming models.

Voldeng: I agree with that.

Kocho: If you get the people who create the programming to get their heads around the idea that you can have an interactive construct tied to your show, then you can change things. Have you heard of these guys, Digital Convergence?

Voldeng: Yeah, I remember seeing them at NATPE [2000].

Kocho: You know, what they're doing... amounts to poor man's interactive television and it's pretty cool stuff. I think a couple of little ideas like this that are effectively about the synchronization of Web content with television programming. At least that's one part of what their business does, the other part is a barcode thing which is equally pretty cool... The beauty, I think, of interactive television, unlike the Web when it first got started, [is that] there's a ready-made revenue model sitting there waiting to be exploited. Whereas when the Web first got started it took people a while to kind of go into advertising and they could never really attach a value to the CPM anyway.

...If you can get a few million people to hit a site within a short period of time, you're Yahoo, you know what I mean? That's what I find so compelling about this business.... The surfing to me is always the odd thing. I don't know too many people who actually do that.

Voldeng: That's true.

Kocho: Like they're just sitting there saying, okay now I'm booking off two hours to just fart around on the Internet because it's so cool. They go there because they have something to do and they end up going some place. And the context for that activity is set by something in the real world. In our case, what we're pursuing is using television to set that context. [We want] to drive a qualified audience from the TV to a Web destination - and know that they're there, [because] that's a huge value. Not just advertisers, it's a totally different world. I think when the programming people start to get their head around that, this industry is going to grow like crazy because they'll suddenly go, "Hey, we can now dip into the advertising dollar that we could never really qualify before."