The vultures that have been circling over NetChannel Inc, the internet-over-TV service provider for the past few weeks have finally got their wish. The service that provides the only competition to Microsoft Corp’s WebTV Networks Inc is being discontinued. President and chief executive Philip Monego confirmed to us that operations will cease this weekend, but not the company, he said. However, he was not prepared to elaborate yesterday on what he or the company would be doing in the future. We have reported over the past few months that the company was in trouble and that America Online Inc was a likely suitor, and yesterday the Wall Street Journal claimed AOL is set to snap up the technology and key personnel in a deal worth $20m. AOL declined to comment about any part of the deal. Users who have forked out the $250 or so for the set-top box will apparently be refunded by the manufacturer, Thomson Consumer Electronics SA’s RCA division, according to the Journal. AOL apparently lent the San Francisco company $5m back in November, just two month after NetChannel launched its service with great fanfare in New York. The Journal says AOL will pay an additional $15m to secure the key technology, but it is not interested in maintaining the service as it stands. NetChannel said at the start of this month that it was looking for financing and denied reports at the time that it was seeking Chapter 11 protection from its creditors. A couple of weeks later it sold its UK operation to NTL Inc a couple of weeks ago for just $1m and said it was still looking for funding. We said last September when Microsoft launched the second generation set-top box that Redmond has very rarely, if at all, started with a lead in a market and lost it, and that it would make life very difficult for NetChannel. But to go under after just seven months of operations is quite spectacular even by the technology sector’s standards, and points to how difficult it must be to make money in this particular market. NetChannel only ever got about 10,000 subscribers, while WebTV now has 300,000. The news will also come as a blow to Oracle Corp’s Network Computer Inc (NCI), which provided the software for the set-top boxes. RCA apparently asked retailers to return unsold boxes to it last week.
