Interactive Network Inc was founded in 1987 by Amercian inventor, David Lockton. Born in Indianapolis, on March 28, 1937, Lockton obtained his J.D. from the University of Virginia Law School in 1962 after graduating from Yale in 1959. In 1965, he started its own sports management firm called Sports Headliners. Lockton then leveraged his position as the driver’s representative on the Board of United States Auto Club (USAC), to develop in the Ontario (California) area the first modern multitrack super speedway. As President and CEO of the Ontario Motor Speedway (OMS), Lockton oversaw the construction, the marketing campaign and launched the first year of racing . Ten years after having sold his interest in the OMS, Lockton joined Data Broadcasting in 1981. Formally Dataspeed, Data Broadcasting was the firm behind the wireless technology used by the OMS to manage the real-time timing and scoring system. It is there the Lockton invented QuoTrek, the first product to utilize “push” technology and wireless data, to deliver real-time stock and commodity trading information. In 1984 Lockton designed and developed the prototype of a multipurpose handheld device, the Informa, with a backlit LCD screen and alpha/numeric keyboard, designed to use the nationwide real time wireless data network of FM radio stations Lockton had assembled. In addition to user specified stocks and commodities quotes, news, weather and sports information in real time, the user could send wireless email and messages via a built-in phone modem instantly received by the addressee wherever they were.
n 1987 Lockton founded Interactive Network (IN) based upon a patent received for the use of wireless push technology to control TV viewers in real-time games of skill based upon unfolding televised sports, game shows and entertainment programming. Financed by NBC, Cablevision Systems, TCI, The Grenada Group (Great Britain), Le Groupe Vidéotron (Canada), United Artists, A.C. Nielsen, Gannett, Sprint and Motorola, Interactive Network developed a device similar to the Informa, the Interactive Control Unit (ICU). With the backing of telecommunication and entertainment giants, IN went public on the NASDAQ exchange in 1991.
Interactive Network Inc released their services in a small test market of 250 families in the Sacramento area. At the time, the company was testing a baseball game licensed with Major League Baseball Properties Inc., and has deals in the works with the NHL and NBA. In 1991, the control units were then made available in retail stores of the Sacramento area such as Montgomery Ward and Sears.From 1990 to 1995, IN conducted four increasingly successful test markets from in Sacramento, the San Francisco Bay Area, Chicago and Indianapolis. The reason behind these extensive test market was the innovative nature of the products. Home entertainment products are marketed around Christmas, and the IN service was driven by football. It was so new that consumers could not understand it without a hands-on demonstration. But little by little, the product was conquering the test markets. By 1992, the company decided to air a thirty-minute infomercial starring OJ Simpsons (a former client of Lockton) around Christmas which resulted in massive increase in subscribers, with an astounding 4% buy/subscribe. In 1993, all units were sold in Indianapolis and Interactive Network was getting ready to roll out nationally in 1995.
After the inventory was sold out, IN began leasing unit for a $250 deposit. For a $19.95 rental fee per month, the system allowed subscribers to interact with specific television programs. As an example, the device could be used to guess the next play in a football game or answer the same quiz question as the contestant in Family Feud. Interactive Network also included a competitive service, which was basically the same as the basic service, but with the chance to win prizes. To compete for prizes, the subscribers would buy tokens (20 tokens for $10, 31 tokens for $15 , 42 tokens for $20 or 53 tokens for $25) through their device and use them in selected broadcast. Prizes for winning included merchandise and trips to see major sporting and entertainment events. The system also came with a few games not related to any television broadcast such as Maze Runner, Submarine Chase and Word Sleuth. The system also allowed to take the SAT preparatory classes with their devices. In total, over 50 games of skill to play along with live TV sports, news, and entertainment were developed.
Interactive Network Inc had big plans for its services. The technology had a huge potential in advertisement revenues as more details could be sent directly to the customers via the Interactive Network devices. Exclusive promotion could be sent to the subscribers or subscribers could request more details directly from their devices which would be then relayed to the advertiser for fulfillment. IN established a Charter Interactive Advertising Consortium with P&G, Chrysler, Pepsi, American Airlines, and the Ad Council to develop and test the first real time interactive and lead generating two-screen TV commercials.
At this point, many opportunities presented themselves to Interactive Network. One plan was to incorporate the Interactive Control Unit directly into the box of the many cable partners. On January 27, Kathy Lockton who had been VP marketing of Mattel (Intellivision) before Apple, manage to reach a deal with Sega to provide services to the Sega Channel service. Replicating their offering into the Sega Channel, the technology would allow players to compete for prizes using their Sega Genesis. The Interactive Network patented technology would enable players to report their scores and learn within minutes how well they did in competition. With that new deal, Interactive Network Inc had to provide a reliable global infrastructure, so the time was right to expend their test market. The plan was to go nationwide by September 1994.
In August 1994, on the eve of the national roll-out of the Interactive Network Service, IN suspended operations and the board of directors subsequently file litigation against the lead investor, TCI for conspiring to wrongfully acquire title to IN’s patents and intellectual property through a financing scheme. The litigation put a hold on the services and any plan to expand nationwide. The deal with Sega was also put on hold. But although, the litigation was settled in IN’s favor in April 1998, this was too little too late as the services had been interrupted for almost 4 years.
The system worked using FM radio. The company leased spaces from the unused portion of the FM radio subcarriers and then send their signal simultaneously with the broadcast of a television station. The signal would contain the necessary information to present questions related to the show content (as an example, guess the next play in a football game or answer the same quiz question as the contestant on television. The user would then need to connect their device to a phone line which would then initiate a 20 seconds local call to send the information entered in the local unit to a central server. The nationwide result would then be published and send back to every device.