New York-DirecTV Inc. will soon offer its subscribers a walled-garden interactive television product that could force many cable operators to play catch-up.
The direct-broadcast satellite company showed off its new "DirecTV Interactive" service at a press conference here last week. It also announced deals to launch "virtual channels" later this year with ESPN, NBC, The Weather Channel and Barnes & Noble.com.
The service is powered by Wink Communications Corp.'s interactive-TV software. But the product appeared to be much flashier and more robust than the Wink offering on most cable systems, which is presently distributed mainly through advanced analog set-tops.
DirecTV's virtual-channel product, which is accessed through channel 399 on the company's lineup (one below Home Box Office, at channel 400), is only available on the new RCA DirecTV set-tops produced by Thomson Multimedia.
The satellite provider expects to offer the product to 2 million subscribers by the end of this year and 5 million subscribers by year-end 2001, said president Larry Chapman.
"This is not just a hobby-not just something that will pass when cable comes into its digital tier," said Thomson vice president of broadband digital-product management David Spomer.
Wink's current cable product prompts viewers to click on an on-screen Wink icon for additional information as they watch. For example, it would prompt ESPN viewers to access sports scores.
Though DirecTV's virtual channels can also be accessed through a similar overlay, the company's strategy is to aggregate its interactive-TV offerings into one portal.
Wilderotter likened the DirecTV approach to British Sky Broadcasting's Open Interactive service in the United Kingdom, which has been hugely successful.
DirecTV executives said they don't plan to charge a fee for the interactive services, noting that the company expects to generate revenue through advertising and electronic commerce.
"If you charge for it, it won't be ubiquitous," DirecTV senior vice president of global digital media Brad Beale said.
Charter Communications Inc. spokeswoman Anita Lamont said the MSO plans to test a similar virtual-channel service in Los Angeles. Charter has generated $1 million in cash flow through Wink services this year, which are available to about 200,000 subscribers, she added.
The Barnes & Noble service is currently the only e-commerce product contained in the virtual channels. Barnes & Noble.com vice chairman Steve Riggio was very bullish on the Wink product, noting that most sales in bookstores are driven by impulse buys.
None of the virtual channels demonstrated last week contained advertising. But Wink and DirecTV executives said the channels would contain ads, though they wouldn't specify how that revenue would be shared among the content provider, Wink and DirecTV.
There isn't much of an advertising market for interactive TV at present, said Weather Channel executive vice president of new media Bahns Stanley. "It's unclear how we're going to make money," he added.
The Weather Channel virtual channel on DirecTV Interactive will allow subscribers to access local weather forecasts by using the arrow keys on their remote to select different regions of the U.S. from a map.
Stanley said that TWC and AT&T Broadband are developing an application for next year's advanced-digital rollout which is superior in quality to the DirecTV service, as it will offer fully animated local radar images. He said DirecTV has allocated less bandwidth than AT&T plans to set aside for its weather application, which limits the quality of the display.
Nonetheless, Stanley said DirecTV is taking the interactive-TV lead with its national launch.
"Cable has the capability to catch up and surpass what DirecTV is doing. They just have to do it one system at a time," Stanley said.