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DVS Is the Latest Insertion Dropout

The number of digital ad-insertion vendors shrank recently,
as Digital Video Systems Inc. quietly quit the field.

DVS, the last major marketing push of which was tied to the
National Show last spring, quietly called it quits late last year, according to various
MSO and vendor executives. The company was unable to make a dent in a category populated
by one-dozen suppliers but dominated by three: SeaChange International Inc. -- the leader
by far -- along with SkyConnect Inc. and Channelmatic/LIMT Inc.

"Another one bites the bust," one cable operator
said, summing up the shakeout.

In trade advertising run last May in conjunction with the
National Show, DVS joined the insertion field's trend toward lower pricing with its
"DVS Enterprise" system, pegged at $4,995 per channel.

But its headline -- "In a world where numbers mean
everything -" -- proved prophetic, as DVS could not generate any meaningful
sales to cable operators.

Dave Keller left DVS as vice president and general manager
to join Escient LLC as chief operating officer last month.

In 1997, DVS bought the Digital Video division of privately
held Arris Interactive. Keller, who had been that division's president under Arris,
became its vice president and general manager after that sale. Earlier, he was president
of StarNet Development Inc., which exited the insertion business itself earlier that year.

Also gone is Gary Franza, who had been president of the
new-media division at DVS.

Phone calls to DVS went to an operator at Arris Interactive
in the same suburban Atlanta building that DVS used to occupy.

"Gary Franza is no longer with the company," the
operator said, "and there is no more DVS. It's out of business."

For some surviving insertion vendors, consolidation or
acquisition may be future options. SkyConnect was to have been acquired last year by
Online System Services Inc., but that deal fell through in November due to declines in
OSS' stock price.

That would have been the second acquisition in the
insertion sector since March 1997, when IndeNet Inc. sold Channelmatic to Local Insertion
Media Technology AB, a Swedish company.