I Want My iTV

Savvy solutions providers are tuning in to interactive television.

The entertainment industry is a gold mine for solutions and service providers. There are boundless nuggets of content and everything associated with it, including creation, management, distribution and storage. There are emerging areas, like digital-rights management, in which a player can still make inroads. And theres confusion.

"The media industry is going through a major transition now, from analog to digital, and from a business model of one to many," says Steve Canepa, VP of marketing and strategy for IBMs Global Media and Entertainment division in Santa Monica, Calif. "From a service perspective, there is a tremendous opportunity for consulting on what they need to do, but more importantly, how to go about doing it."

Interactive television, or iTV, is a case in point. The technology has been around for ages. A series of disappointing trials in the United States has left even its most die-hard fans a bit defeated. But iTV finally is starting to come together slowly, and there is excitement—albeit with caution—in the industry.

"Interactive TV delivers to the advertiser what the Internet was supposed to," said Marty Yudkovitz, president of NBC Digital Media, during a panel on enhanced TV content at the Consumer Electronics Show (CES) 2001 earlier this month in Las Vegas. "Were very enthused, but were also very concerned about the technology incompatibility issues that dont seem to be moving forward."

Those technology issues are primarily about the competing middleware platforms from Liberate Technologies, Microsoft, OpenTV Inc., PowerTV Inc. and WorldGate Communications Inc. Microsofts middleware (Microsoft TV) powers UltimateTV, its follow-on to the unpopular WebTV service. Customers for Microsoft TV include Canadas Rogers Cable Inc.; Portugals TV Cabo; UPC, a broadband communications company thats based in Amsterdam and is partially owned by Microsoft; and AT&T Broadband, in which Microsoft invested $5 billion last May.

AT&T, however, has deals with several vendors, including WorldGate and Liberate. And Liberate has a deal with AOL Time Warner, as well as financial backing from Cisco, which invested $100 million in the San Carlos, Calif., software developer.

"We chose Liberate, the most open platform out there, and we encourage people to look into it," said Rod Nenner, director of business development at AOL-TV, during a CES 2001 panel session. "We chose an open standard, and were committed to it."

Those standards are primarily HTML and JavaScript, as are the Advanced Television Enhancement Forums Enhanced Content Specification (ECS) and a developing standard from Cable Television Laboratories Inc. called OpenCable Application Platform (OCAP). Most industry participants, including Microsoft, OpenTV and PowerTV, adhere to ECS. Sun Microsystems, Liberate and Microsoft are coauthoring OCAP, a middleware specification, which is being reviewed by OpenTV, PowerTV and Canal Plus, a French iTV software developer. The spec includes an Execution Engine, being developed by Sun, and a Presentation Engine with support from HTML and ECMAScript, being developed by Microsoft and Liberate.

Liberate also has an extensive partner program called PopTV, which it launched about a year ago. According to Liberate VP of marketing Charlie Tritschler, the program encompasses the "end-to-end ecosystem" and its goal is to "push standards." PopTV participants include infrastructure providers such as Cisco, network cache provider Inktomi Corp., and video-streaming hardware and software maker SeaChange International; device manufacturers such as set-top makers Philips Digital Networks, Pace Micro Technology plc, Scientific-Atlanta Inc. and TiVo Inc., a provider of video recorders and services; and content developers such as Bloomberg, Fox Sports and PBS.

Another company, RespondTV, provides all the transaction processing at the heart of iTV, or t-commerce—the feature that most excites advertisers. For example, RespondTV did a national ad campaign with Coca-Cola. For that campaign, the click-through rate on the interactive portion of the ad was close to 50 percent, and of those respondents, half completed the transaction, according to Margaret Buckley, VP of programming alliances at RespondTV in San Francisco. That compares with an average click-through rate of 1 percent on Internet-based ad banners, says Buckley.

Granted, the number of iTV viewers is miniscule compared with the number of Internet surfers. But that will change soon, say most industry participants. And what will trigger that avalanche of iTV viewership? "More [set-top] boxes need to get out there," says Alex Thompson, CEO at Mixed Signals in Culver City, Calif. "Thats the bottom line."

That should start happening this summer, when set-top boxes, which now are provided to subscribers by cable operators, will start to go on sale in retail stores. Then, notes Thompson, advertisers and content providers wont care whether there are standards and whether they have to develop content for multiple platforms. "Its something people bark about a lot right now," she says, "but when those boxes are all out there, they will be able to reach millions of viewers."