The Revolution May Be Televised

Interactive TV starts to sizzle

The latest research shows that most cable customers are "very" OR "somewhat" receptive to interactive television features. And thats before theyve even seen the "e-cliner" — a La-Z-Boy recliner designed for Web-enabled TV.

The reclining armchair comes with a built-in keyboard, a Sony receiver for Microsofts WebTV Networks and two free months of the interactive TV (iTV) service. Prices start at $1,049.

If thats not the "killer app" that pushes iTV into the dens of American consumers, Microsoft has another product that just might do the trick. UltimateTV, a satellite service that allows customers to record TV shows onto a hard drive, surf the Internet or play along with game shows, made a splash at an iTV-heavy Consumer Electronics Show in Las Vegas last week. Designed to compete with personal video recorder pioneer TiVo, UltimateTV ups the ante with two tuners and the ability to record two programs at once.

Prices for UltimateTV, a successor to Microsofts anemic WebTV, will begin at $9.95 and include three hours of Internet access per month. Unlimited access will cost $29.95 per month.

Microsoft Chairman Bill Gates demonstrated UltimateTV, along with the new Xbox games system and a variety of handheld personal computers. "Were finding the demand right now for the powerful devices weve built far exceeds what the manufacturing capacity is," Gates said at the show.

With Microsoft playing Bigfoot in the iTV market, rivals struck back with devices designed to draw consumer attention.

EchoStar Communications rolled out its Dish Network Pro 501 satellite TV receiver featuring 30 hours of digital video recording and tools designed to give couch potatoes more control over their set-top boxes.

Rival satellite broadcaster DirecTV showed a receiver equipped with TiVos personal video recorder that won Best of Show in the satellite systems category.

While some companies are tweaking set-top boxes, others are building the capabilities into TV sets. A company called Ch.1 expects to begin selling its iTV sets this month. "After working in front of a computer all day, I didnt want to go into my study at home to use a PC to surf the Web," said Ch.1 Chief Executive William Wang. " So, we started designing an Internet/TV system that any family member could use with the same resolution they are familiar with from their desktop PCs."

While the degree to which U.S. consumers are willing to interact with their TVs remains to be seen, major players are making their big push this year. A cable TV marketing study says the time is right.

Using video demonstrations of current services, the Cable & Telecommunications Association for Marketing found that 79 percent of digital cable and 55 percent of analog cable customers are very or somewhat receptive to iTV.

In the research project, eight iTV services were demonstrated to 263 digital and 262 analog customers in six major markets across the U.S. Asked to rank the services, the participants placed video-on-demand and personal video recorders on the same top shelf. Both won top marks: video-on-demand from 58 percent of digital and 55 percent of analog customers, and personal video recorders from 59 percent of digital and 53 percent of analog customers.

The study showed that cable customers drawn to interactivity are already creating their own iTV systems, with 86 percent of digital customers putting PCs and TVs in the same room.