By  on May 17, 1994

NEW YORK -- Realizing it can no longer be a single-note company in an increasingly cacophonous home shopping arena, QVC is diversifying.

The network is rolling out two new shopping services, Q2 and On-Q, which are radically different from any existing home shopping formats -- and getting into infomercials, transactional programming and interactive shopping.

When QVC Network changed its name to QVC Inc. in February, it established a holding company, enabling it to build new divisions separately. Q Direct will produce infomercials and other programming. QVC Interactive will launch an interactive on-line shopping service for personal computers, called Q Online, on a system like Prodigy or Compuserve, in 1995.

Together, the two divisions could contribute $450 million to QVC's bottom line in three to five years.

QVC is approaching the interactive future with caution. The company prefers to deal with the here-and-now technology of PCs rather than broadband interactive television, currently confined to labs and test sites.

But critics wonder whether hedging its bets on an online service is a wise decision for QVC when other companies are testing a myriad of interactive vehicles, including television.

QVC is facing competition from Time Warner and Spiegel's Catalog 1, Fingerhut's S Channel and MTV Networks. In addition, Time Warner will be testing its interactive Full Service Cable Network in Orlando, Fla., by year's end, and Pacific Bell, AT&T, Bell Atlantic and GTE are all working on broadband interactive television tests.

QVC is not participating in any of the tests.

Stephen Tomlin, vice president and general manager of interactive technology at QVC Interactive, said the most compelling reason to launch an online service is that a computer audience is already in place.

"A huge portion of the population has some connection with the computer," he said. "When broadband interactive TV becomes a reality, we'll have a trusted service."

Steven Kernkraut, a managing director of Bear Stearns, said that not participating in interactive television tests "might put QVC behind the learning curve. It always helps to be the first one there in an expanding market. The second and third ones there don't always capture the day."

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