ITV takes a new direction

Apr 23, 2001  •  Post A Comment

Only several months after Forrester Research analyst Josh Bernoff proclaimed last July that the American interactive television market would generate $25 billion in revenues by 2005, some new media insiders are now whispering that interactive TV in the United States may be dead.
As if the medium has not confused traditional media executives enough already, the enigmatic industry seems to have furtively slithered away, only to reappear in a new form.
Until the past couple of months, many American interactive TV industry analysts such as Mr. Bernoff had defined interactive TV
as interactive advertisements or
t-commerce enhancements that “pop up” during a television broadcast.
But in a subtle semantic shift heard at trade shows and in conversations between industry participants, the term “interactive television” is now creeping into usage to refer to “video on demand” and “personal video recorders.”
As cable operators and satellite television purveyors delay their near-term plans for deploying digital enhanced programming and accelerate their schedules for introducing video-on-demand and PVR services, the hype surrounding t-commerce providers such as Wink Communications and RespondTV has begun to ebb.
Now Stephen Effros, a prominent cable industry consultant who has long been skeptical of the interactive television industry’s promises, is laughing the contrarian’s hearty laugh.
“I think people are trying to cover their asses,” Mr. Effros said. “Video on demand is not Wink, and Wink is what we were calling interactive television two years ago. We’re changing the word to meet what the market is, rather than explaining what the concept was in the first place.”
Mr. Effros said many proponents of interactive television made the mistake of assuming that technological advances would bear economic fruits.
“There are lots of technologies that are great,” he said, “but that doesn’t mean a business can be derived from them. We could manufacture automobiles that are far superior to automobiles manufactured today, but that doesn’t mean that consumers would pay money for them. Every technology is a compromise.”
Mr. Bernoff, for one, stands behind his original market projections and is even going so far as to suggest that an upcoming Forrester report will raise the consultancy’s estimates of the size of the American interactive TV market even higher.
“The rollout of interactive services such as Wink have certainly happened at the rate we expected,” Mr. Bernoff insisted.
Yankee Group Analyst Adi Kishore, however, is of the same mind as Mr. Effros on the rosy outlook for video on demand relative to the future of other services that have been labeled interactive. “My choice for the No. 1 [cable] revenue generator is video on demand,” he said. “I think in the longer term it could be t-commerce.”
Mr. Kishore said multiple system operators such as Charter Communications are using Diva’s software and server infrastructure to create a platform designed to allow cable customers to view any program in the MSO’s collected library of shows at any time by simply clicking their remote controls. And Comcast has inked a deal with Concurrent Computer for the same purpose.
At present, because American cable operators possess limited film and programming inventories, they can only offer “near video-on-demand” services, which offer customers a restricted menu of films that can be accessed after half-hour delays between clicking and viewing.
Aside from video on demand, personal video recording is another hot cable commodity. On that front, Scientific-Atlanta is developing its Explorer 8000 set-top box, which runs PVR software from MetaByte. EchoStar also recently introduced its PVR 501 set-top receiver, and Microsoft’s marketing its own PVR entry UltimateTV.
Carmel Group Analyst Jim Stroud said Microsoft’s deep pockets will allow the software giant to market UltimateTV more effectively than TiVo or Sonicblue’s ReplayTV.
Still, Mr. Effros dismissed suggestions that the growth in personal video recording and video on demand signifies a boon in the interactive television business.
“The theory behind interactive television was that people would respond to what they were viewing and that people supplying interactive services could make some money,” he said. “If we are now saying that a PVR is interactive television, we have fallen off the edge of the Earth.”