In the not-so-distant past, dot-coms and broadcasters proclaimed all manner of Web and interactive innovations that would usher in the home computer as a broadcast delivery device to enhance and even challenge traditional forms. In recent months, however, pie in the sky has fallen to earth with a splat.

The struggle of Internet-based companies, be they content or service providers, has been well documented. Toronto's ExtendMedia seemed to represent the convergence vanguard, helping to develop the interactive programs Drop the Beat and Dish It Out, produced by Alliance Atlantis Communications (the former with Back Alley Film Productions). But the iTV company recently slashed staff to 55 from 160 in a four-month span, closing its New York and Los Angeles offices.

"The interactive entertainment sector hasn't emerged as quickly as we thought it would," ExtendMedia PR manager Caroline Verboon explained at the time of the cuts.

Then there is the case of Toronto's Nikolai.com, an Internet community for children, whose flagship website offered interactive stories, games and an animated series. At one time company president and CEO Isabel Hoffman could boast of partnerships with CBS, Apple Computer and America Online, but the April 14, 2000 dot-com stock crash set Nikolai.com on a financial spiral from which it did not recover, and its doors are now closed.

All that remains at www.Nikolai.com is a message from Hoffman explaining that independent dot-coms cannot compete with media giants that both create content and control the outlets for programming. She adds that government agencies, in their efforts to safeguard "Canadian content," are out of touch with the digital landscape and unable to help new media content providers.

What's become clear, as the dust from the interactive whirlwind settles, is that Internet companies connected to brands established in traditional media - or those that can successfully extend into those platforms - will be the last ones standing. Whereas months ago everyone was swept up in a tidal wave of cyber-hype, it is now stigmatizing to be known as a "dot-com." Instead, you must promote yourself as proficient in a variety of platforms.

In the mad rush to launch an online presence, many traditional media companies perhaps invested too much trust - not to mention funds - in some dot-com startups.

"There was a real herd mentality where nobody wanted to be left out, and you see a lot of the fallout from that now - people who didn't think things through," says Nathon Gunn, president of Bitcasters, a Toronto Web, interactive and broadcast development firm whose clients include ChumCity and Miramax Films. "They brought in youthful visionary types who were just self-proclaimed experts whose energy was much desired, but maybe over-application of that was detrimental."

One industry insider who left the world of TV production for the greener-looking pastures of an online brand extension company observes that many dot-coms are built on a shaky foundation:

"They talk the big talk but there's no business plan and no financial accountability. I think that if anyone did due diligence they would have a heart attack. [Web companies] know a lot about the technology, but they don't have any business experience - and they want you to [invest] $20 million. Eighteen months to two years ago you might have gotten it, but these days, forget it."

Then there are webcasters, bold companies that try to seduce couch potatoes into believing they would rather watch video on their computer screens. A prime example is Toronto's BlackholeTV.com, which launched July 20, 2000, with a splashy party and pervasive billboard campaign. The company says it has film crews in more than 17 countries producing original content for channels entitled Lifestyles, Street Stories, Music and European Odyssey.

Currently the site is "upgrading" and the only channel surfers can access is the Animation Channel, essentially a link to BlabStudios.com, an animation enterprise of Toronto's Blab Media.

"Right now we're madly working away on some technology," explains Jay Litkey, president and CEO of BlackholeTV.com, who adds that the revised site will be up and running in a couple of months. "It will still be BlackholeTV, [and] it will have a lot of new added stuff."

Litkey is a self-described techie, having cut his teeth during a four-year stay with Nortel Networks before cofounding BlackholeTV.com with Jon Martin. Although BlackholeTV seems Web-exclusive on the surface, Litkey acknowledges that such a narrow approach has led to the premature demise of some of his competitors.

"I won't speak for our specific case, but for an Internet broadcaster in general, many people relied on advertising alone," he notes. "I think there's a real future in being well-rounded. We have partners in [offline media], and they may become more apparent in our next phase, but we've always had them in the background."

For an exec whose company offers video on demand at no subscription cost, Litkey remains vague about how BlackholeTV.com can make a buck.

"You definitely need to find other revenue streams, and that's the Holy Grail everybody's shooting for right now," he says.

Until the quality of video streaming improves with the massive broadband rollout Litkey projects for 2003/04, animation produced with Flash technology is better positioned to make an online impact. But in the case of BlabStudios.com, eyes remain on the prize of good old reliable TV. President and CEO Vince Commisso explains that while the company generates revenue from the sale of electronic greeting cards and some banner ads, the Internet functions primarily as a "low-cost enabler for licensing opportunities."