A British company that is providing an interactive TV service over ordinary phone lines -- including movies on demand and a tailor-made newscast -- is paying the phone company almost twice the amount of money per subscriber than subscribers themselves are paying for the service, the Wall Street Journal reported today (Tuesday).

Moreover, the company, Video Networks Ltd., is paying British Telecom a hefty price for each installation, is subsidizing the cost of settop modems to receive the service, and is also paying content providers a hefty price for programming. The WSJ said that the company could run through its original $180 million investment by the second half of next year.

The Journal indicated that the financial predicament of Video Networks has discouraged other companies seeking to launch interactive TV services from proceeding with their plans.

Source: Studio Briefing