for Interactive TV
iTV boom in the UK and Europe proves the market. Now the
question is what to do about it.
the exhibit floor at Cable2000 reveals enthusiasm for
interactive television. The catalog for the National
Cable Television Association annual show lists more than
250 vendors selling interactive TV hardware, software and
content. Does this mean the dream of "iTV" is a reality
Yes and no. Ask a
different question. Is anyone today making money from
interactive TV? Where and how?
In the past,
according to Liberate Technologies president and CEO
Mitchell Kertzman, "Interactive TV was too expensive to
be feasible." A broadband digital infrastructure was not
yet constructed. There were not enough iTV applications.
There was not enough content. There were no common iTV
standards. And most vital of all, there were no viable
Today the situation
is reversed, he said. A digital infrastructure is now in
place. Digital set-top boxes are finally at the right
price. Interactive TV development tools from third
parties are available. Content creators are producing
interactive programming. There are open standards (e.g.,
HTML, TCP/IP, ATVEF, DOCSIS, OpenCable, DVB-MHP)
competing for adoption. And there are working business
models in Europe for Americans to emulate.
In the early
Nineties, Kertzman recalled, it took months or years to
produce proprietary applications and content for the
interactive TV tests and trials. Developers today using
Internet tools can do the very same things in days or
weeks, at a fraction of the cost.
Nothing is cut and
dried, however, for the industry is evolving.
Liberate is backed
by Oracle and allied with Microsoft and Intel in the
Advanced Television Enhancement Forum (ATVEF), the trade
coalition developing and promoting a PC-centric operating
standard for interactive TV. American ATVEF is competing
with Europe's Digital Video Broadcasting Multimedia Home
Platform (DVB-HMP), a TV-centric approach to interactive
"No matter how much
we might pontificate about a particular technology,"
Kertzman said, "everything must stand the test of
consumer acceptance. And the reality is that consumers do
not really care about technology. All they care about is
content, what they see on their TV screens.
"That's why our
highest priority today needs to be providing the
compelling interactive content that gets consumers to use
the new technologies," he added. "Thinking about how to
make money from this interactive content adds a whole new
dimension to television rights and carriage
As an example, he
pointed at the interactive programming on digital TV
services in the UK, such as the show, "Supermarket
Sweep," which has enjoyed a 70 percent increase in
viewership since the interactive elements were
introduced. Increasing the audience raises the CPM (cost
per thousand) for advertising rates, and it creates
opportunities for collateral marketing.
ATVEF-compliant middeware will support aggressive
marketing to AOL customers of Time-Warner's interactive
TV service, now called "AOL-TV." So, customers will keep
their AOL usernames on the new iTV service, which will
ease adoption of electronic commerce over the TV --
dubbed "T-Commerce" by financial analyst Larry Marcus and
television is going to happen with you, or it's going to
happen to you," cautioned Kertzman, " If you do not use
the infrastructure of the web for your interactive
television services, your competitors will. It's your
will walk all over you unless you learn how to make
interactive TV pay off for you," echoed Jimmy Schaeffer,
president of the Carmel Group, a consultancy specializing
in the direct broadcast satellite (DBS) industry. "Cable
is stepping up to digital, because if they don't, given
the growth of digital satellite services, they will die."
DBS and cable are
about neck and neck in terms of U.S. digital customers,
now past 10 million each, but DBS keeps signing up new
digital subscribers faster than cable, and this trend
scares the cable industry. However, DBS
does not have an easy road ahead, for its worse enemy may
the animosity and lawsuites between DirecTV, Echostar and
the satellite trade association, Schaeffer conceded that
cable has an edge over the DBS industry in the realm of
regulatory affairs. "The NCTA and NAB have more success
in Washington than the DBS industry because of the unity
within the cable and terrestrial broadcast
Yet Schaeffer is
quick to warn against overoptimism by cable or anyone
else. "People may say it will be this way or that way,"
he said, "but they are wrong. The interactive television
marketplace will have many winners, not just one.
Consumers want the ability to choose among service
providers, and in a world where all of the interactive TV
delivery platforms share an Internet backbone, it all
comes down to choice. Convergence is only a click
The most vital
trend in the evolution of interactive multimedia
services, he asserted, is the change in attitude within
the entire digital television industry from a realization
that they can make money from interactive TV. "Whether
you are talking about cable, satellite, ADSL, fixed
wireless, or any other platform, enhanced and interactive
TV services will forever change the television business."
Now consider the
world according to 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 in the USA with an initial weather-on demand
application. OpenTV currently is being ported to
Motorola's (GI) digital cable platform.
"There are now more
than 6 million digital television receivers deployed in
the world," said OpenTV president and CEO Jan Steenkamp.
"While only a small percentage of the one 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 services by 2010.
"Open..." iTV system in the UK is generating $1.6 million
(USD) in revenues every week, Steenkamp reported, this
expected to reach $20 billion annually by 2004. These
revenues break down to $11 billion from advertising, $7
billion from T-commerce, and $2 billion from
subscriptions. The potential for iTV is indicated by
SkyDigital's home banking service attracting about 400
new customers every day.
business case for interactive TV is harder than with the
other forms of mass media because all the nascent
platforms are still proving their viability," said IXL
president Ken Papagan, who's guiding the Internet
e-commerce developer into the iTV business. "The ones who
do not understand the potential of interactive TV are the
ones who will be left behind."