multichannel connect
careers
all access

Technology

ITV Time’s Coming — No, Really

4/03/2005 8:00 PM Eastern

Mark Hess likes to compare interactive television to the Loch Ness Monster. They’ve both generated a lot of hype over the years. And since few cable operators have rolled out interactive TV services, many U.S. viewers have had as good a chance of seeing an ITV application as they would the beast from Loch Ness.

That’s going to start to change, according to Hess, Comcast Corp.’s senior vice president of digital television, and other industry players.

The latest to wave the ITV flag: Cox Communications Inc., which plans to announce the launch of ITV services supplied by MetaTV Inc. in up to five markets by the end of the year.

Cox will offer customer-service applications that will let subscribers pay their bills with a click of the remote or upgrade to new programming packages. It will also offer local weather, news and movie-theater listings, beginning with systems in the Gulf Coast of Florida.

“Eventually, we’d like to launch in all of our markets. I think it will happen over the coming two years,” Cox director of ITV product development Vince Groff said. (Cox first announced a plan to deploy MetaTV services in February 2002.)

Cox is going after the “low-hanging fruit” of ITV services, and hopes to drive sales of its product bundle by letting cable-modem customers read e-mail messages on the TV screen, he said.

Of course, the definition of ITV has morphed over the years. Major cable companies, like Comcast and Time Warner Cable, now say they’re focused first on using interactive applications to make it easier to watch more TV through improved video-on-demand functionality and new interactive program guides.

Cable operators — including Cablevision Systems Corp. in New York — also are beginning to roll out interactive advertising and other ITV services. Those applications are coming at a slower pace than those of satellite rivals EchoStar Communications Corp. and DirecTV Inc., though.

ENHANCING IPGs, VOD

Operators might eventually roll out some other innovative ITV services that would respond to voice commands that are picked up with a remote control or set-top.

But most U.S. cable customers will get their first glimpse of ITV services via VOD programming or an IPG.

“I think it’s mostly about that television experience and making that better, easier, faster, and creating greater control over what you’ve got. And this is coming from a person who spent many years pitching the idea that TV could be used for something else,” said Gerard Kunkel, the former president of ITV firm WorldGate Communications Corp. Kunkel is now developing next-generation IPGs as the head of GuideWorks, a joint venture between Comcast and Gemstar-TV Guide International Inc.

Some observers might have expected the first interactive-TV services from adult programmers such as Playboy Television would give subscribers a way to interact with performers. But Playboy’s initial ITV application is instead designed to make it easier for customers to order its video-on-demand content and the linear channel.

Through a deal it cut last month with interactive-TV middleware and applications vendor OpenTV Corp., Playboy plans to launch a PG-13-style virtual channel featuring an on-air Playmate host pitching its programs, VOD offerings and 24-hour channel to viewers.

Customers too bashful to call their local cable operator to order the channel can use a self-provisioning feature to order the channel via remote.

“We see this as a way for both of us [Playboy and its cable affiliates] to make more money,” said Playboy Entertainment Group president James Griffiths.

None of Playboy’s cable affiliates have yet signed on to launch the virtual channel. But Time Warner Cable, which plans to roll out its own self-provisioning system, is one likely target.

NAVIC MILESTONE

Time Warner said last month it was expanding an agreement with interactive TV vendor Navic Networks to use the company’s ITV systems on a third of all Time Warner systems nationwide.

Among the Navic applications Time Warner is deploying: a feature that allows customers to view and pay their bills with a click of their remotes, plus the ability to upgrade to new programming packages.

Hess said the first interactive TV applications Comcast plans to roll out will involve simple games; caller ID that can be accessed on TV; and self-provisioning applications.

“We’re looking at applications that make it easier to get information about customer-service type information,” Hess added.

While major cable MSOs have spent much of the last year working on adding voice-over-Internet protocol phone services to video and high-speed Internet bundles, DirecTV and EchoStar have turned their attention to rolling out new ITV services.

EchoStar’s ITV offerings include a home-shopping channel that lets subscribers buy products from The Sharper Image, and interactive ads that let customers request more information about a product in a commercial, or virtually test drive a Mercedes.

Using OpenTV’s middleware platform, EchoStar also recently rolled out an interactive version of Gemstar’s TVG horseracing channel, encouraging customers to place bets with their remotes.

In January, DirecTV launched three new mosaic channels — Sportsmix, Kidsmix and Newsmix — that group various channels from the same genre on a single screen.

Beyond that DirecTV, using a system supplied by News Corp. sibling NDS, is expected to roll out a new slate of interactive-TV services in the next few months.

The company also plans to add interactivity to its National Football League “Sunday Ticket” out-of-market package, including giving subscribers the ability to select camera angles.

ITV SET-TOP STATS

GoldPocket Interactive CEO Scott Newman said there are about 15 million ITV-capable U.S. set-tops, and 13 million of those boxes are in EchoStar homes. He expects DirecTV to add interactivity to another 8 million to 9 million set-tops in the next few months, while cable operators will have an additional 5 million ITV-capable boxes in the field by the end of 2005.

“We’ll be at 30 million set-top boxes by year-end that will be interactive, based on the deals that I know are in the marketplace,” said Newman, whose company supplies a system to Time Warner’s Oceanic Cable in Hawaii that lets viewers of GSN shows such as Who Wants to Be a Millionaire? compete at home.

Most of GoldPocket’s current deals are for so-called “two-screen” interactivity, allowing viewers of Food Network, CBS, Court TV and other networks to respond to polls during certain programs through Web sites, or to interact with a program via a text message sent from a mobile phone. It’s also working with HSN on a buy-by-remote application for the home-shopping channel.

Adding interactivity to a program also helps keep subscribers from changing the channel. Millionaire viewers who play along at home lose all of their points if they change the channel during a commercial, and GSN gives home contestants an additional 1,000 points for requesting more information from one of the ads during a commercial break.

GSN plans to announce this week that its schedule will increase from 12 hours to 24 hours per day of interactive programming, and several other major cable networks plan to unveil ITV plans during this week’s National Show in San Francisco, according to Newman.

MIDDLEWARE IS KEY

Cable operators can’t offer their customers ITV services without installing some type of middleware — or other software that enables interactivity, such as Comcast’s GuideWorks platform — on digital set-tops.

In January, Comcast and Cox agreed to buy struggling middleware vendor Liberate Technologies Inc. for $82 million. To consummate the deal, the MSOs formed a joint venture, Double C Technologies.

Liberate had filed for Chapter 11 bankruptcy protection last April, and Comcast will own the majority of the company.

ITV vendors say the Liberate deal bodes well for them.

“I think it means good news for interactive TV and everybody who is in the field,” OpenTV CEO Jim Chiddix said. “What it signals is that those companies [Comcast and Cox] think that interactive TV is important, and that having a software platform to support it is important.”

While OpenTV markets a competing middleware platform, Chiddix said his company should still benefit from the Liberate deal, as OpenTV also sells dozens of ITV applications, ranging from games to the mosaic guides used by EchoStar, that could roll out on Comcast, Cox and other MSOs’ systems.

In addition to pitching cable operators middleware that could run on legacy digital set-tops from Motorola Inc. and Scientific-Atlanta Inc., Chiddix said OpenTV would look to supply local ITV systems and content. Among his ideas: adding yellow pages or local classified ads to cable; giving subscribers the ability to design personal home pages, as they would on the Internet; and giving local organizations the ability to post information, pictures and video to local cable ITV interfaces.

“One of cable’s strengths is localism — the fact that they service communities and subsets of communities. So there are ways to use interactivity that really haven’t been available to satellite operators because of their national footprint,” said Chiddix, who left his post as chief technical officer at Time Warner Cable last year to join OpenTV.

Games are also beginning to gain some traction as interactive-TV applications.

Buzztime Entertainment Inc., which makes most of its money through game consoles installed in about 3,600 bars and restaurants in North America, also supplies games such as poker to several cable systems, including Susquehanna Communications Inc.; a few Comcast systems in Maryland and Virginia; and Time Warner systems in Alabama, Louisiana and Maine.

Operators that use Motorola set-tops run Buzztime on ICTV Inc.’s platform. At the National Show this week, Buzztime plans to pitch cable operators on multiplayer versions of billiards and Texas Hold ’Em, which could allow subscribers from systems around the country to play against each other.

Buzztime president Ty Lam said the company doesn’t look to compete with the advanced game consoles such as Microsoft Corp.’s X Box and Sony’s PlayStation, but instead would supply games that could draw families into the living room.

“We’re not trying to turn the cable set-top into a game console,” Lam said. “The purpose is to cater to family oriented community gaming that works on the TV.

“It’s not to replace the game console in the kids’ rooms; it’s, how do you put family oriented, fun gaming on the TV, where it’s safe, and the door is not closed?”

FEES FOR ITV?

While most operators are supplying games and other ITV content for free to all digital customers as a way to retain subscribers, some operators might soon begin charging additional subscription fees for interactive content.

Time Warner Cable plans to begin charging $4.95 per month or $1.95 per day for access to games from Sesame Workshop on one of its systems that uses ICTV, said Jonathan Symonds, the vendor’s vice president of marketing and business development.

ICTV has found that many of the 27,000 subscribers that have access to its games are heavy users. From December through January, 64% of all digital set-tops tied to ICTV accessed the interactive services at least once, and 48% of the subscribers that used it at least once used it 10 times or more.

“Some of the most loyal users are using it, literally, for days or weeks at a time,” Symonds said.

September