primer on the bundle of digital services
together being called interactive television.
arguing the business case for interactive television, the
key question has always been -- which comes first, the
digital broadband networks to carry the interactive TV
content, or the interactive content that justifies
building the networks? This chiken and egg debate is now
Digital TV networks
are here and online. TV programmers are now playing
catch-up to feed the widening maw of that growing bird
called public demand for interactive TV (iTV).
savvy enough to enter the iTV game early deserves a basic
primer. Offered here is a condensed crash course.
The form of the iTV
content produced will vary with the bias of your iTV
definition. How we perceive the world decides how we
interact with it, and proprietary "solutions" are common
in the iTV market. If we only have a hammer, every
problem looks like a nail.
As an open
definition of interactive television, therefore, think of
iTV as an entire bundle of activities, not any one
specific thing. Broken down into major categories, here
are the main types of iTV content and
-- Any type of programming can be enhanced with
icon-driven access to embedded information, usually
displayed as an overlay with text and simple graphics,
yet doable as a full screen or "page" of text and
graphics. (Those outside the US may think of enhanced TV
as refined teletext.) Enhanced content in an analog or
digital signal sits waiting to be accessed by viewers, so
a return path is not needed. Key vendors in this space
include Wink, Worldgate, WebTV, Open TV, and
TV -- Modifying a program to match your individual
desires includes changing camera angles at will and
calling up instant replays in sports and live news,
guiding the plot in dramas and comedies, having the TV
host respond to your answers on a game show. As with
enhanced TV, individualized TV content was first
developed one-way broadcasting, but now can be two-way.
The technology first came from ACTV, but now OpenTV is
-- This is the term coined for the personal video
recorder (PVR) that records programming by title,
timeslot, rating, actors, or theme. With full VCR
functionality, the PVR can pause during a broadcast as
content is cached on the disk, plus an ability to skip
over commercials. If the PVR has a return path, it can
support pay-per-view billing. Once a hard disk is full,
the PVR records over older content. A replacable hard
disk, like a video casette, is expected one day. Leading
vendors are TiVo and Replay; others include Echostar,
WebTV and Pace.
-- All the functionality of the Internet, especially Web
browsing and email, can be delivered to a TV screen. The
visual quality of text is poorer on analogue than digital
(video lines vs. pixels). If a phoneline is used for the
return path, Internet access is temporarilly suspended
for incoming calls. Key players in this market are WebTV,
Worldgate and Liberate.
-- Any kind of programming can be offered on-demand, from
movies to news. A video file servers plays back content
on request within a digital two-way system. Ideal for
pay-per-view services, content can be seen whenever
viewers wish. No more "appointment TV" schedules. Many
see video-on-demand (VOD) as the "killer application" for
interactive TV. Major vendors include DIVA, Concurrent,
Oracle/Liberate, and Seachange.
Play TV --
Interactive video games on television encompass both
single and multiplayer competitions. The Sega Channel was
one example, with games downloaded over cable to the Sega
player device at home. Another example is the NTN system,
where bars and lounges nationwide compete head to head.
Look for this to become a major factor in iTV popularity
within 3-5 years.
Retail TV -- All the electronic banking and
e-commerce applications on the Internet are being ported
to the television. Interactive advertsing will allow
viewers to request e-mail brochures and actually order
products on screen. The broad range of shopping services
eventually amy eclipse VOD as the killer app. Look to QVC
and the Home Shopping Channel to lead here.
TV -- All the forms of interactive TV described above
can be applied to educational services for every grade
level, preschool to univesity. Distance learning for
lifelong learners will reach new heights. Cable in the
Classroom leads here, yet the Educational Satellite
Consortium is a major player, too.
-- Interactive TV lends itself to local community
involvement, everything from town council meetings to
electronic voting to interactive Welcome Wagon services.
Also, just as the Interent is host to evolving "virtual
communities" of shared interest among scattered people,
we will see the same on iTV with the additiona of two-way
video telephony to the mix. Look for the phone companies
and IP cable telephony to promote such services.
Global TV --
As the network builds out globally, look for increasing
on-demand access to international programming with
automated language translations. In a decade, we will see
iTV come into its own as a mass medium for
local-to-global cultural exchange.
differnt types of current and pending iTV activities,
television content production companies have many options
ahead. Think stategically about branding and fresh
distribution channels. To see what's ahead, go study the
SkyDigital "Open..." service in the UK and the Canal+
Media Highway deployments in Europe.
The key to success
is having versitile interactive TV production facilities
with full access to broadband distribution networks. For
this reason, conglomerates like AOL-Time Warner are being
formed. Hollywood studios controlling both iTV content
production and distribution, in effect, are both the
goose and the golden egg.
explain why the media is getting so excited about iTV.
In the UK alone,
NewsCorp's BskyB has deployed 2.6 million SkyDigital
set-top boxes from Pace in the UK. Among these SkyDigital
households, Millward Brown reported that 45 percent of
those with a Pace digital box have used the "Open..."
interactive service from OpenTV at least once.
Also in the UK,
Cable & Wireless has deployed more than 60,000
digital Pace boxes enabled for interactive cable services
using the Liberate ITV system based on Internet
interactive terrestrial service in the UK has 552,000
Pace boxes in homes, using the Canal+ MediaHighway and
MediaGuard CA systems for free and pay iTV services.
Across the Channel,
Canal+ leads the world with more than 4 million iTV
subscribers among its 13 million digital satellite and
cable customers across western Europe. Add in the UK
numbers and that's conservatively six million actual iTV
users in Europe.
"Over the next five
years", said Andrew Wallace, vp global marketing for Pace
Micro Technology in the UK, world's largest set-top box
manufacturer, "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".
For a domestic
comparison, according to the Consumer Electronics
Manufacturers Association, about 200,000 DTV products
(set-top boxes or integrated receivers) have been sold
within the U.S. since 1998. Of these, 17 percent or
34,000 units are capable of receiving ATSC terrestrial
broadcasts, and most of these HDTV products -- 24,000
units -- were sold in 1999. Analysts expect digital
terrestrial penetration to reach 50 percent of all homes
no earlier than 2006.
Meanwhile, the U.S.
with 68 million households subscribing to cable, had
about 5 million digital customers at the end of 1999 with
projections for 10 million homes by the end of 2000 and
40 million homes by 2006. What may delay this grow is
that the rollout of interactive TV services keeps being
delayed by the ongoing development of a standardized
platform, so a box bought in one American city will work
equally well in any other U.S. city.
In the digital
broadcast satellite (DBS) ballgame, GM/Hughes' DirecTV
reports about 7.5 million customers. Echostar's Dish
Network reports almost 4 million subscribers today, but
those numbers will bounce up after they launch
interactive OpenTV services later this year. DirecTV is
still planning its iTV play.
There are other TV
competitors emerging that are converting their analog
customers to digital services. The SMATV (satellite
master antenna television) services have 1.4 million
customers. The MMDS "wireless cable" industry has almost
a million video customers. And local telephone companies
have about 400,000 customers receiving multichannel video
over copper wires using ADSL (asynchronous digitial
subscriber line) services.
"The growth in the
UK and Europe is because there are so many competitors in
the interactive TV space," said Wallace. "For there to be
the same explosive growth in the United States, you'll
need more competition from television operators on every
platform -- terrestrial, cable, satellite, wireless, and
phoneline. That's the real key to success."
NCTA, Paul Kagan Associates, A.C. Nielsen,
Multichannel Video Program Distributors
Cable Program Investor, SkyREPORT,