American
Broadcasters
Awaken to Interactive TV
by Ken
Freed.
.
The
spotlight was on iTV at NAB2000 as U.S. Broadcaster seek
to emulate ONdigital in UK.
People
were talking about interactive TV at NAB2000, the annual
convention and show in Las Vegas produced by the National
Association of Broadcasters. The closing "Super Session"
devoted to enhanced and interactive TV revealed the state
of the American and world "iTV" industry.
Interactive TV
could not succeed until now, said Liberate Technologies
president and CEO Mitchell Kertzman in his keynote at the
Sands-Venetian Convention Center. Interactive TV was too
expensive to be feasible. There was not a broadband
infrastructure in place. There were no common standards.
There were not enough iTV applications. There was not
enough iTV content. There were no viable business
models.
In the early
Nineties, Kertzman recalled, it took months or years to
develop proprietary applications for interactive TV tests
and trials. "Today's iTV developers, using Internet
tools, can do essentially the same things in days or
weeks, and at a fraction of the cost."
Today this
situation is reversed, he said. A digital infrastructure
is in place (or soon will be) for every delivery
platform. Digital set-top boxes are at the right price.
Third party Interactive TV development tools are
available. Content creators are producing iTV
programming. There are open standards, including HTML,
TCP/IP, ATVEF, DOCSIS, and DVB-MHP.
Most important of
all, there now are viable business models in the UK and
Europe for Americans to emulate. Most relevant, the
digital terrestrial ONdigital broadcasting service in the
UK has 550,000 homes using the Canal+ systems for free
and pay iTV services. Cable & Wireless in the UK
reports 60,000 digital cable customers using the Liberate
iTV system. The SkyDigital satellite service for the UK
now has 2.6 million customers, half of these using the
"Open..." interactive TV service from OpenTV. In Western
Europe, Canal+ claims 4 million iTV subscribers among 13
million digital satellite and cable customers.
"Over the next five
years", said Andrew Wallace, vp global marketing for Pace
Micro Technology in the UK, world leader in set-top
boxes, "as the digital box becomes the home networking
terminal, we will see interactive TV penetration in
Europe grow from today's 15 to 20 percent to 60 percent
and eventually 90 percent penetration".
In comparison,
according to the Consumer Electronics Association, about
200,000 DTV products (set-top boxes or integrated
receivers) have been sold within the U.S. since 1998. Of
these, only 17 percent or 34,000 units are capable of
receiving ATSC terrestrial broadcasts, and most of these
-- 24,000 units -- were sold in 1999. Few analysts expect
terrestrial digital penetration to pass 50 percent by
2006.
"That growth in the
UK and Europe is because there now are so many
competitors in the interactive TV space," he said. " For
there to be the same explosive growth in the United
States, you need more competition from television
operators on every platform -- terrestrial, cable,
satellite, wireless, and phoneline. That's the key to
success."
According to
Kertzman, the key has been development of a "middleware"
layer in the set-top box between the operating system and
the applications. He said the applications interface
(API) of the middeware from Liberate, (40 percent owned
by Oracle) is "OS agnostic". Liberate's ATVEF-based
middeware is being deployed on cable by AOL Time-Warner
for the new "AOL-TV" service.
Liberate
participated in the first meeting at NAB of the Advanced
Television Forum, the next generation of the Advanced
Television Enhancement Forum (ATVEF), founded by
Microsoft, Intel and others to specify an open iTV
standard utilising Internet protocols. (The first act of
the ATV Forum was to cease ATVEF development while
seeking refreshed support within the industry.) "If you
don't use the infrastructure of the web for your
interactive television services," warned Kertzman, "your
competitors will."
Then he hedged his
bet, "No matter how much we pontificate about a
particular technology, everything must stand the ultimate
test of consumer acceptance. The reality is that
consumers do not care about technology. All they care
about is content, what they see on their TV screens.
That's why the highest priority today is providing
compelling content that gets consumers to use the new
technologies."
"Interactive
television is going to happen with you, or it's going to
happen to you" said Kertzman. "It's your choice." His
talking points were echoed in the panel sessions that
followed throughout the day.
One of these
panelists was Jan Steenkamp, president and CEO of OpenTV,
which has one million interactive TV subscribers on 20
services worldwide, mostly in the UK through the
"Open..." service on SkyDigital from BskyB and on the TPS
satellite service in France. OpenTV launches this year on
Echostar's Dish Network, and is now being ported to the
General Instrument digital cable platform.
There are now more
than 6 million digital TV receivers deployed in the
world, Steenkamp said. Although only a fraction of the
billion-plus TV households worldwide, the market is
growing steadily. Datamonitor predicts 67 million digital
TV subscribers on all platforms by 2003, he said, and
Forrester Research predicts that 80 percent of all
European households will have interactive TV by
2010.
To show what can
happen with consumer acceptance, he reported that the
"Open..." system on SkyDigital is generating USD $1.6
million in revenues every week. Steenkamp said this is
expected to reach $20 billion annually by 2004.
T-Commerce sales
will pass e-commerce by 2004, said Larry Marcus,senior
new media analyst at Deutsche Banc Alex Brown. The man
who coined the term "T-commerce" predicted broadband
access in the U.S. will grow from 2.6 million household
at the end of 1999 to 36 million by 2004.
Marcus also
foretold the five "killer applications" that will propel
the popularity of interactive TV -- electronic program
guides (like TV Guide), enhanced broadcasting (like
Wink), virtual channels or walled gardens with exclusive
content (like the Canal+ content on TPS), time shifting
(like the PDR from Tivo or VOD from nCube), and bundled
telecommunication services (like email and web browsing
on AOL-TV). "The sixth 'killer app' is the one we don't
yet know about that some genius is inventing in a
basement somewhere."
The rapid fall of
Internet stock valuations during the week of NAB seemed
to please Marcus. "I've been expecting the bubble to
burst", he said, "and its' good to bring down the
valuations to reasonable levels. Look for the weaker
players fail as the leaders pull away."
The key stocks to
watch, he said, will be those at the intersection of
broadband service providers, electronic commerce, and
Internet access. "Invest in companies on the cusp of
rapid deployments that deliver the value proposition for
iTV to customers. Look ahead, but focus on the here and
now success of any venture."
"Build on what the
interactive TV market is today", said Jean-Marc Racine,
CEO of Canal+ U.S. Technologies, "and leverage the legacy
systems as the technology improves. I expect a big
explosion once Hollywood discovers what it can do with
interactive TV content."
"We risk alienating
consumers if we throw too much at them too fast", warned
Brian Seth Hurst, managing director of convergent media
for Worldwide Pittard Sullivan. "We tend to worry too
much about the back end technology and not enough about
how it will affect the consumer."
"Your competitors
will walk all over you unless you learn how to make
interactive TV work for your customers", concluded
moderator Jimmy Schaeffer, president of the Carmel Group
consultancy. "In a world where all the interactive TV
platforms share an Internet backbone, when everything
comes down to choice, true convergence is only a click
away." 
.
