Sony and Cablevision Form Interactive Video Alliance

An ambitious plan to bring high-speed interactive video services to cable subscribers in the New York area has been announced by Sony Corporation and Cablevision Systems Corporation. Sony will supply approximately 3 million set-top converter boxes to Cablevision customers.

The two companies plan "to develop and deploy a digital entertainment and broadband communications platform throughout the New York metropolitan area," according to a joint press release. News of the alliance appeared on Thursday and Friday, September 16 and 17—the same week that Motorola unveiled its plan to purchase General Instrument for $11 billion in stock—and followed on the heels of the announcement of the CBS-Viacom merger. Cablevision services to be delivered with Sony electronics include Internet-enhanced TV, video on demand, e-mail, and interactive games.

Cablevision expects to launch the service next year, and will pay Sony about $1 billion to make the 3 million digital set-top boxes. Company executives say they will begin marketing the boxes next summer with an "aggressive" distribution campaign. The deal is a new venture for the Japanese consumer-electronics giant, which has never before gone out with its own name into the market for cable-television set-top boxes, a category long dominated by General Instrument and Scientific-Atlanta. Sony, interestingly, has a 5% interest in GI, which it bought as a way of easing into the American market.

The agreement stipulates that, in addition to making the boxes, Sony Corp. of America will provide system and software design and integration. The basic set-top boxes will be priced at around $300 each. Cablevision serves about 3.4 million households in the New York metropolitan area, making it one of the biggest players in the cable industry.