Interactive TV Unchained
How Web-Created Habits Are Stoking Interest in Participatory TV — Finally
By Matt Stump -- Multichannel News, 10/30/2005 5:00:00 PM MT
Before the Internet browser made it easy to view pages found on computers across the globe — and before Time Warner Cable in Orlando, Fla., began experimenting with letting viewers order pizza through their TV sets, electronic mail became the Web’s first “killer” application.
By 2002, 84% of individuals connecting to the Internet were doing so to send e-mail or instant messages, according to RHK Inc.
Now, managing mountains of e-mail could be the first application to apply for killer status in interactive television.
| Interactive TV Options |
|---|
| A sampling of what’s offered now: |
| Source: Multichannel News research. |
| CABLEVISION: |
| • iO: Interactive Optimum includes Optimum Autos classified service — subscribers can view new and used car listings, and request more information from dealers with a click of a remote. |
| • A “click to upgrade” feature lets subscribers upgrade programming packages or order services such as Optimum Online with their remote controls. |
| • MSG Game Director lets viewers choose from up to six camera angles in New York Knicks basketball and New York Rangers hockey games. |
| • News 12 Interactive includes on-demand broadcasts and content that isn’t available on the News 12 regional TV channels. |
| DISH NETWORK: |
| • Offers an interactive news mosaic channel powered by OpenTV software, which allows subscribers to view feeds from six networks at the same time through a single grid, including CNN, The Weather Channel and E!. |
| • An interactive Karaoke Channel allows subscribers to sing along to more than 20 songs from two music genres. |
| • Interactive triggers are placed in commercials from Mercedes-Benz and other companies, allowing subscribers to navigate to long-form ads that run on another channel. |
| DIRECTV: |
| • DirecTV Interactive includes DirecTV Active, with such offerings as daily news and weather reports, daily horoscopes, local lottery results and interactive advertising. |
| • DirecTV Mix Channels groups services in a single on-screen grid by genre like DirecTV News Mix, Sports Mix and Kids Mix. |
| • Designed to help viewers quickly find the game with the most action, “SuperFan” subscribers of DirecTV’s NFL Sunday Ticket package can access two “Game Mix” channels which allow them to view eight live NFL games on a single screen. Subscribers can also access a “Short Cuts” feature which condenses each NFL game on Fox into 30 minutes or less. |
In a Cox Communications Inc. ITV trial involving 50,000 customers in Florida’s panhandle, viewers are eliminating unsolicited email from their Cox cable-modem service mailboxes on a mass scale while watching TV, but the MSO declined to provide any specific numbers, saying results were too preliminary.
Of all the interactive applications Cox is testing — news, weather, horoscopes and local movie information — killing e-mail messages stands out.
“It surprised us,” said Steve Necessary, Cox’s vice president of video-product development.
FINDING THE RIGHT BLEND
The unexpected outcome makes Cox executives happy, because customers were blending two of the MSO’s applications — video programming and high-speed Internet access — into a single experience.
This cementing of a “blend” of data and video services is what may make interactive television finally useful to a cable operator. More than two decades after QUBE — the first ITV service (from Warner Communications) — and 11 years after Time Warner Cable’s trial of the Full Service Network in Orlando, the business of telling a TV to do something is still in its infancy.
While approximately 75 million U.S. households now subscribe to some form of pay television programming, less than half as many — 34.1 million — subscribe to some form of interactive service, from home shopping to games to direct-response advertising, according to Kagan Research.
Even if that doubles in four years, to 69 million households, total revenue from interactive games, shopping and direct-response ads will only amount to $2.4 billion, Kagan estimates.
By contrast, Internet-search giant Google Inc. — now 10 years old — will record nearly $6 billion this year in advertising revenue. That can be considered an interactive application, because viewers only respond to ads specifically targeted to the subject matter on their screens.
Google and other search services have put consumers into the habit of interacting online. Now, cable operators hope consumers will learn to click on interactive ads on their TV screens, for instance, by using their remote controls.
Among major operators, Cablevision Systems Corp. and Charter Communications Inc. have been at the forefront of figuring out how to make interacting with a television pay off.
More than 1 million Cablevision customers can receive the iO: Interactive Optimum service, which includes such games as Bingo, Backgammon and Speed, as well as video news stories from the company’s stable of localized News 12 channels.
It also lets viewers choose different camera angles from which to view basketball games, hockey matches or other sporting events televised by its Madison Square Garden Network.
An automobile channel allows subscribers to view text, still pictures and video of new cars. A real estate channel produces text and pictures of homes on the market. And customers can also act as their own service representative, ordering pay channels such as Home Box Office or Showtime or subscriptions to video-on-demand services.
Digeo Inc., the interactive-TV service deployed by Charter Communications Inc. in 2003, became a modestly active “site” last year, logging 600 million total TV screen views.
Modest? The popular genealogy site on the Web, myFamily.com, by comparison, logs 600 million page views each month.
Meanwhile, Time Warner Cable is testing a variety of interactive applications — including bill payment, trivia and other services — from such vendors as Navic Networks Inc., Buzztime Entertainment Inc., Biap Systems Inc., Gotuit Media Corp., eBay Inc. and GoldPocket Interactive Inc.
Navic Networks brings back some of the promise of the Full Service Network. Its software allows viewers to pay bills, respond to polls, click on interactive ads and order pizza using a remote control. Navic has been rolled out before 2.5 million digital-cable customers nationwide.
Buzztime has been deployed in 10 markets, across Time Warner Cable, Comcast Corp. and Susquehanna Communications. It tries to give cable systems “buzz” by allowing operators to offer easy-to-play games such as TV Trivia, History Trivia, Kids Only Trivia and Sports Trivia.
GoldPocket Interactive syncs TV programming and PC activity into a single viewing experience. Time Warner’s Oceanic system has launched a GoldPocket application that allows viewers to play along with the game show Who Wants to Be a Millionaire.
Gotuit Media of Woburn, Mass., provides an indexing service, that acts, in effect, as a search engine for programs that can be retrieved with the press of a few buttons.
Viewers can, for instance, search for all U2 or Blink 182 music videos and play them in succession. Consumers can also search for takes from National Hockey League games, retrieving the best forechecks or key goals they may have missed. Gotuit says its service reaches 500,000 digital homes.
Biap, which also makes search software, provides a service that acts as an information “agent” for Austin viewers. The agent scours local-news Web sites and sends out news reports, sports scores or other information to the subscriber, based on preferences they’ve entered into the search engine. MyCable, you might call it.
But the payoff from ITV can be hard to see. Time Warner, which spent at least $100 million in the mid-1990s on the Orlando experiment, now doesn’t even charge for interactive features. They are considered part of their digital-cable experience.
Time Warner Cable executives such as senior vice president of software development John Callahan have said interactive applications will hopefully keep subscribers paying the extra $6 to $12 per month for digital-cable service — and prevent them from defecting to the satellite or telephone competition.
THE MURDOCH FACTOR
What is driving renewed interest in interactive television? For starters, Rupert Murdoch. The Australian media magnate purchased satellite programmer DirecTV Group Inc. for $6.6 billion at Christmas 2003.
That move made cable operators fear Murdoch or other new competitors might figure out how to take advantage of interactivity and, maybe, steal away millions of monthly subscribers.
Both DirecTV and EchoStar Communications Corp.’s Dish Network are using interactivity — or at least the appearance of it — to distinguish the experiences that their customers get on screen.
DirecTV topped its “NFL Sunday Ticket” out-of-market pro-football package this fall with a $99 “SuperFan” offering, a split-screen channel on which fans can see eight different games at the same time. The mosaic channel is similar to a service Murdoch launched several years ago in the United Kingdom, for fans of soccer’s English Premiere League.
The SuperFan package also includes a highlights channel and an edited version of completed National Football League games, sent to the subscriber’s digital video recorder.
Using DirecTV’s interactive service, viewers can access a page of local weather information or see state lottery results . On some DirecTV ads, viewers can click on an icon using a remote and watch a short video of the product being advertised.
EchoStar offers a similar lineup of interactive news, sports results, weather information, games, horoscopes, shopping and ads. Clicking on an icon in a Jeep ad takes the viewer to another channel, to watch a two-minute video about the runabout.
That video is being broadcast in a continuous loop over one of eight advertising channels programmed by Turner Media Group of Denver.
Those who watch TBS’s college football games this fall will be able to choose a view from six different camera angles. Each vantage point is delivered on a separate Dish channel.
Then there’s the looming competition from telephone companies. So far, Verizon Communications’ FiOS TV service looks just like cable. Its main features: video programs on demand and digital video recording.
SBC Communications Inc., which has yet to roll out the U-Verse TV component of its Project LightSpeed, has talked of allowing customers to use cell phones to program a digital recorder or change parental control settings. But such capabilities won’t be in SBC’s first multichannel systems.
THE REAL THING
With intense competition coming, giving customers more and more ways to choose what they see on their TVs — and then do something once they’re there — is one reason interactive television is getting another push from cable operators.
“This time it’s the real deal,” said Time Warner’s Callahan, at a conference in Atlanta in mid-October sponsored by Itaas Inc., an interactive-television software supplier. “The cable industry is seriously going to pursue those capabilities.”
In pursuit of those capabilities, firms such as Comcast, Cox and Tandberg Television are buying up software suppliers, said Buzztime president Tyrone Lam.
Comcast and Cox bought Liberate Technologies Inc. for $82 million in January and MetaTV Inc. for an undisclosed sum in July. Both companies, which make software to run interactive television applications, were folded into TVWorks, a joint venture of Cox and Comcast. Tandberg Television, which made its name selling television encoders, paid $78 million for GoldPocket Interactive last month.
Even with such investments, it may be hard for system operators to put the $2.4 billion that Kagan projects for 2009 into their pockets.
Cable and satellite customers have yet to show they’re willing to pay extra to use their credit cards to shop from their handheld remotes or play games with other TV viewers, according to executives such as Gotuit vice president of business development Gabriel Berger.
The only “interactive” applications with proven interest are cable’s on-demand video systems, in which a user pays $4 to watch a movie; and the deployment of digital video recorders, which may pull in $10 a month from a subscriber, who is allowed to watch anything that the machine stores.
Comcast in October said it passed the 1 billion mark in video streams sent to customers this year. Together, cable and satellite video system operators say they have deployed 8 million digital video recorders.
Gotuit’s Berger believes advertising is the key to making interactive television viable. Gotuit is trying to sell ads for its indexing service, but it’s a tough go. Gotuit’s 500,000 homes is “just a rounding error” for some Madison Avenue ad buyers, Berger said. Advertisers like Gatorade find it easier to reach athletes on broadly watched ESPN than unrated services, like an interactive TV index.
GOING ON TRIAL
Until sizable revenue emerges, Lam will tell application developers to keep costs in check. One big cost to wrestle with is the number of different operating systems that developers must take into consideration when writing their interactive applications.
All told, a single interactive application may have to work on 20 different combinations of set-top boxes, video-on-demand servers and interactive guides for any single cable operator.
An operator like Cox faces this dilemma: It has two sets of headend and set-top equipment, one each from Motorola Inc. and Scientific-Atlanta Inc. It has two interactive program guides: S-A’s native guide and Aptiv Digital’s Passport. It has two different VOD-server vendors: Concurrent Computer Corp. and SeaChange International Inc.
Within Cox’s set-top platform, there are several iterations of Motorola and S-A boxes, from low-end DCT 2000s and Explorer 2000s that can’t handle complex interactive applications to higher-end DCT 6412 and Explorer 8000s, Necessary noted at the Itaas conference. It isn’t economical to develop software that works reliably on all possible combinations, he said.
The answer: middleware, a kind of software which sits in between the software that a system operator uses as the brains of its data center and the software that runs a device being operated by a viewer. TV Works is developing software, for instance, that allows an application provider to write one piece of code for any combination of headend systems, set-top box, interactive guide and VOD server a system operator might have. The middleware translates instructions so they can be handled properly by any set-top box.
But until TV Works completes its OpenCable middleware project, interactive services will be confined to tests and trials, at least for Cox and Comcast.
Cox, for instance, has launched a number of interactive television applications, besides e-mail, on its Gulf Coast system. But wider deployments based on OpenCable Application Platform specifications won’t get tested until 2006 or get deployed widely until 2007, Necessary said.
The open standards established by CableLabs will, in theory, provide a national footprint for developers to write to. No longer would an interactive-gaming company have to write software code a dozen times for the same game. One software code for one game would run on all cable systems that adopt the CableLabs software standards.
“There is still a ways to go for this whole platform to be ready, but the good news is, I have it in-market today,” said Cox director of ITV technology Michael Pasquinilli.
Time Warner Cable is in search of a “common structure” for deploying interactive services. That will let it “track more quickly the root cause of any problem,” said Glen Hardin, director of hardware development in its advanced technology group. “That’s of extreme importance to allow us to troubleshoot applications more quickly.”
There’s a way around this: custom-built interactivity. The nation’s sixth-largest system operator, Cablevision, uses just Scientific-Atlanta set-top boxes. Thus, developers can write code tailored to Cablevision’s combination of server and set-top hardware. (The MSO is phasing out its Sony Corp. set-tops. Subscribers still using the Sony boxes get a more limited ITV service.)
“We have had great success developing native applications for the platform,” said Leon Rivkin, the Bethpage, N.Y.-based operator’s vice president of software development.
This “native” approach allows Cablevision to get applications such as its car-buying service to consumers without waiting months for programmers to write and test code across multiple set-tops and guides, Rivkin said. With just one combination of hardware and custom applications, he said, “you are the master of your universe.”
WHY CARE?
So, with technical issues still to be overcome and no big payday on the horizon, why does cable bother with interactive television at all?
The answer comes in the form of small victories. Necessary said 10% to 15% of Cox’s Gulf Coast subscribers access its menu of interactive services, such as weather and e-mail every day — a figure that has held steady since launch.
And there will be more “blending” of services. Next year, Cox will launch caller ID on the television. Viewers will see who’s on the phone before they get off the couch.
Such reinforcement of the video, voice and data service bundle is what will turn interactivity into a competitive weapon, Necessary said.
Interactive television “isn’t a single application, it’s a bundle of applications,” he said. “We are fighting a battle for our customers and we need differentiated offensive weapons and defensive weapons to achieve parity.”
Or an edge.
