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Boob Tube No More
Interactive TV market may top $17 billion in '05.
For the rest of the December 2000 issue of CRM magazine please click here
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It started with Winky Dink and You, a kid's show with a gimmick--a low-cost kit (a sheet of plastic, erasable crayons and an eraser)--with which viewers helped host Jack Barry fill in gaps in the hero's animated adventures by putting the plastic on the picture tube and drawing on it. Good morning, children. Hello, Interactive TV.

Ever the pioneer, Barry went on to create a different type of ITV in the '60s as co-producer and emcee of the game show Twenty-One. In this variation, contestants interacted with producers to "download" questions and answers before each show.

About 10 years after Barry was scandal-swept off the air, Warner Cable launched the first two-way ITV experiment, Qube TV, in Columbus, Ohio. Viewers could "vote" on civic issues, do limited home shopping and order pay-per-view programs. Technical and cost control problems mounted, major investors dropped out and Qube was aborted as cable operators focused on adding subscribers, channels, and premium services such as HBO.

Today, ITV is a boomer on NASDAQ, but a baby in deployment. OpenTV, founded by Sun Microsystems and Thomson Multimedia way back in '94, is the world's largest ITV "middleware" provider. Its 20 licensees had delivered a global aggregate of only 10 million receivers by October 12, 2000--many to people in areas not yet served by an ITV provider. In the U.S., only 7.5 of 102 million television households receive ITV services of any kind.

Defining ITV

Even the definition of "interactive television" is under debate. Is it live or is it Internet? Do interactive electronic program guides(EPGs) an interactive service make or does there also have to be interactive program content? For now, let's define ITV as broadcast television enhanced with back-channel technology that allows users to respond to embedded programming cues in real time.

Hard drive video recorders like TiVo and ReplayTV are primarily time-shift devices, not Interactive TV appliances. There are interactive features, like TiVo/Encore's iPreview system--which allows users watching a movie preview to automatically schedule the film to be recorded--but models that will decode and deliver full interactive program content are still on the boat from Taiwan. Fear not, however; both DBS and Echostar licensees will have combo ITV/hard drive recorders in stores by Christmas.

WebTV, born of Sony and raised by Microsoft, has proven to be much more child of Betamax than Walkman. Basically a very limited Web browser that uses a TV screen in lieu of a CRT or LCD monitor, its sales after almost five years of high-powered hype and heavy discounts barely total one million in a land with more than 60 million at-home Internet users.

WebTV Plus, the newly released designated savior of the system, adds several legitimate interactive TV features. Viewers can, for example, summon up extra information about network news stories encoded for Plus and play along with game shows. Other enhancements include an interactive EPG and simultaneous picture-in-picture Web browsing and TV viewing. WebTV Plus will be available as a standalone box or in a combo unit with an Echostar (Dish Network) receiver.

Microsoft, in conjunction with Sony (a TiVo licensee), RCA and DirecTV, is also introducing UltimateTV, an integrated DirecTV receiver, hard drive recorder and upgraded WebTV Plus system. The hardware should be available for Christmas shopping, with the interactive programming phasing in during Q1. Also due to appear under at least a few Christmas trees is AOLTV. Basically a WebTV clone for users who prefer the AOL Web interface, it does not offer ITV features and will be available as both a standalone and in DirecTV receivers.

Marketing on ITV

DirecTV also owns 4 percent of Wink Communications, which began providing "pure" (non-Internet) Interactive TV content in Japan in 1996 and expanded into the U.S. two years later. Currently reaching about 350,000 U.S. households, Wink's goal is to allow viewers to "purchase products and obtain advertising and program information while they continue to watch TV programming."

As an example, Wink subscribers watching TBS' "15 Days of 007" James Bond marathon last October could access biographical data on Bond actors and actresses, view information about gadgets and locales, find little-known facts about Ian Fleming's original characters and order DVD or VHS copies of the film then being shown...all while continuing to watch the movie.

Up and running from Austria to New Zealand, OpenTV may be the blue-chip gorilla of interactive television. In addition to its leadership in ITV receiver technology, its Open studios subsidiary is a pioneer in creating ITV content, ITV enhancements for existing programs and corporate marketing channels best described as Web sites sans Web.

OpenTV's content-authoring tools are licensed to more than 100 independent developers, and its recent acquisition of Spyglass gives it access to world-class technology with which to integrate Web services into its system. It has also generated some of the most startling real-world, real-time ITV events yet, such as live sporting events in which the viewer can change camera angles and call up replays as if he or she were watching a well-made DVD.

Despite its Silicon Valley world headquarters and investors like Sun, AOL/Time Warner, Motorola, Liberty Digital and other major players, OpenTV will not be available in the U.S. until an Echostar roll out in 2001.

As recently as Q3, keynoter and industry analyst Jack Meyers warned attendees at an ITV OpenRoads Developer Conference that "we won't see ITV further develop until the advertising, financial, cable and broadcasting communities increase their involvement and support to ITV providers and developers."

With support on the way from such giants as Microsoft, AOL/Time Warner, Hughes DirecTV, Echostar, Motorola, Sun, Thomson and AMD, ITV may become the biggest bonanza since NBC and CBS found more gold selling radio time than radio receivers: a bonanza generating U.S. revenues over $17 billion in 2005 and $32 billion in 2010, according to Paul Kagin and Associates.

But the gold rush hasn't started yet; system incompatibility and diverging philosophy roadblock the mining trails and where the ore will eventually be found is any prospector's guess.

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