Conference highlights cable’s technology stars

Nov 26, 2001  •  Post A Comment

The promise of interactivity on the television has been just that for the last few years-a promise. But now the hype surrounding this new type of TV medium is finally morphing from cable show banter to deployment. At this year’s Western Show in Anaheim, Calif., interactivity and the potential profitability of such applications will be key themes.
Several of the show’s sessions will address interactive TV, including Tuesday’s kickoff session, “See Change! The Many Flavors of Interactive TV.” In addition, CableLab’s technology showcase, CableNet, will include 19 ITV demonstrations.
ITV is garnering so much attention because the industry finally stopped waiting for the next-generation set-top boxes to arrive and decided to focus on developing interactive applications that run on the current legacy boxes in the field, said Michael Collette, senior VP of marketing and business development at Open TV, which supplies ITV solutions and middleware. There are nearly 20 million legacy boxes in the field, according to Phoenix research firm Kinetic Strategies.
When AT&T Broadband said last spring that it planned to redirect its ITV efforts toward its current DCT-2000 boxes, that announcement refocused the ITV industry in that same direction.
“Interactive TV is one of those technologies that is going to happen-the only question is when and in what form,” said Jim Louderback, VP and editorial director of TechTV. Mr. Louderback will moderate the Western Show’s ITV kickoff session.
The key issue going forward is where the money will be made in this medium. Most experts point to t-commerce and video-on-demand. Mr. Collette breaks down ITV into three categories; applications that generate direct revenue, applications that generate indirect revenue and affinity content.
T-commerce is the best example of how ITV generates direct revenue, he said, pointing to such services as buying a pizza or music CDs on the TV.
Selling products on TV is a proven business. According to the Direct Marketing Association in New York, $117.6 billion was generated from sales from direct-response television in 2000.
Cash cows
T-commerce is certainly not revolutionary, but it is a moneymaker, said J.R. McKechnie, CEO for Filter Media in New York, a strategic consulting firm for interactive television. “We are talking about doing the same old things in new ways-gaming, shopping,” he said.
While t-commerce will likely be the cash cow of interactivity, it cannot exist in a vacuum. Applications like enhanced TV, which include such offerings as different camera angles at sporting events, generate indirect revenue by attracting new customers, Mr. Collette said. Affinity content, or “coffee cup content” as he calls it, includes local weather, news, information and games. Such content is a necessity in developing usage and retaining customers, he said. A year or two ago, those types of interactivity were considered core services. Today they are seen as retention tools, said Nicholas Wodtke, senior technology adviser with Rogers Cable .
Sports and finance applications will drive initial interest, but t-commerce will likely drive revenue, said Jim Stroud, analyst with the Carmel Group in Carmel, Calif. The research firm estimates there will be 4.3 million ITV users in the United States at the end of the year and more than 50 million by 2006.
Perhaps the ultimate form of t-commerce is video-on-demand. While not technically considered a form of “television shopping,” VOD is just that-purchasing a movie on TV.
VOD will be the primary revenue generator for interactivity in the near term, since the consumer demand exists, said Nicholas Wodtke, senior VP of interactive television for Sony Pictures Digital Entertainment. SPDE produces interactive programming connected to such shows as “Wheel of Fortune” and “Jeopardy!” “The first and most logical is the consumer habit to pay for movies,” Mr. Wodtke said.
After VOD, the next category to drive revenue will be games, such as trivia and puzzles, he said.
Game Show Network, which reaches 40 million homes, offers many of its shows with interactive play-along components. “Games are the slam dunk in this area,” said John Roberts, senior VP of interactive and online entertainment with the network.
Mr. Roberts will be a panelist on the Western Show’s “From Couch to Interactive Potato” session on Wednesday. He expects the network will launch in late 2002 a virtual channel and an additional channel devoted solely to interactive games.
Learning by doing
Since interactive TV is still in its infancy, today’s projections on future revenue opportunities will likely change. “As with any new technology, there are lots of new companies and technologies popping up hoping to become one of the two to three default platforms that will end up winning in this space,” said Mr. Louderback.
“It’s like the dot-com boom-lots of startups, lots of things tried, and now we end up with Amazon, eBay and Yahoo! as winners. In five years we’ll have a much clearer idea of what consumers want, what technology will end up winning and what the rollout will look like. But for now, the brass ring is hanging there for almost anyone with a good idea, great marketing, great technology and enough financial backing and staying power to hang in there.”