iTV: A prescription for success?
Thanks to growing competition from DBS and the specter of it from the telcos, interactive television appears to be on domestic cable's front burner again.
We're talking, of course, about services and applications that resemble the early visions of iTV, not necessarily video-on-demand and digital video recording. Although VOD and DVR are interactive, we need only look back a few years to see where the next stage of cable iTV might be headed.
"Five years ago, the conversation about iTV was very PC-centric. It was about doing e-mail, Web browsing and instant messaging," recalls Lydia Loizides, principal with Paphion Inc., a research firm. The time was also marked by a drive toward the "t-commerce" model.
"Back in 2000, it was also about shopping," she adds, recalling one of the most popular examples of the time—offering viewers the opportunity to buy the sweater Jennifer Aniston was wearing on "Friends."
Though operators such as Insight Communications and Susquehanna Communications pioneered the early stages of iTV, many others shifted their priorities significantly. Instead of focusing on the original visions for ITV and PC-like applications for platforms such as the original Motorola DCT-5000, many MSOs turned their attention to services like VOD—services that could run on (and perhaps extract revenue from) millions and millions of deployed thin-client set-tops. They also put much more emphasis on the high-margin high-speed data business.
Today, several factors are contributing to cable's second foray—or first real foray, depending on how you want to look at it—into iTV: MSOs have built out their two-way networks, cable modem service availability has reached near-ubiquity, and DBS has supplied plenty of competitive grist.
"Certainly, the 'Rupertitis' issue is a factor," says Microsoft TV Director of Marketing Ed Graczyk, referring to the iTV success BskyB has enjoyed in the U.K. "Cable operators want to be well prepared to offer a competitive product."MSOs get interactive
Several large MSOs are responding to the DBS challenge by ramping up or expanding their iTV offerings.
In technology years, Insight Communications amounts to an old hand when it comes to interactive television. Since 1999, the MSO has been running its own SourceGuide app and the Liberate 2.4 middleware platform on DCT-1000 and 2000 boxes.
Insight also has been very active with video-on-demand, but the VOD app and the apps that run on Liberate's middleware are not fully integrated. In this "ping-pong" setup, the Liberate component is active when a customer plays a game like Blackjack or Solitaire, but the SeaChange International app takes over for VOD, according to Patrick Forde, Insight's vice president of new technologies integration.
"We're at a crossroads at this point," Forde says. "We have to pick what our next platform is going to be. We want it to be constant across all of our set-top boxes."
Insight presently is looking across a matrix of software providers to find out how they pair up. But that exercise is difficult, considering the number of approaches available. Liberate is focusing on an OnRamp to OCAP product. Microsoft TV has Foundation. The Comcast/Gemstar GuideWorks joint venture offers another option. OpenTV is still a player.
"We're looking at everything and evaluating them and ranking them," Forde said.
Insight won't make that decision as independently as it did years ago with Liberate, but will instead base its decision on those made by the larger MSOs.
"We need to be in step with their decisions. Could we do it? Yes. Do we want to do it? No. Everything now is about operational efficiencies," Forde says. He expects that Insight will make its decision and be on the way to implementation by the first half of 2005.
Charter Communications has also been one of a few MSOs with some significant iTV field experience.
Charter, which offers iTV to nearly 1 million homes, delivers two services: "virtual channels" through a partnership with corporate cousin Digeo Inc., and enhanced TV via the Wink (now OpenTV) platform, according to Page Shaper, Charter's director of new products marketing.
While the Wink functionality enables viewers to request more information from ads, the virtual channels offer a range of weather, sports, news and games.
For 2005, Charter has been reworking the look and feel of its iTV platform. It's also extending the capabilities of VOD (enabling a viewer to click and watch a clip of a VOD title, for example), and looking at adding some real-time, two-way apps such as voting and shopping.
The iTV future at Time Warner Cable, meanwhile, will be linked to the work being done at MystroTV, the division tasked with creating the MSO's new range of interactive program guides and navigation tools.
But in the interim, the MSO has been doing plenty of other things, including the initial deployment of Compass, a tool that provides subscribers with shortcuts to interactive applications.
Time Warner Cable initially is using Compass to offer news and information, though some MSO properties are also using it to deliver a range of casual games.
Comcast shed some light on its iTV plans
after deploying Microsoft TV’s Foundation
platform in Washington State.
Comcast, which has tested the iTV waters in Baltimore with the Buzztime Entertainment Trivia Channel, shed some light on its iTV future last month as it began deploying Microsoft TV's Foundation Edition in Washington State.
The software supports an interactive program guide, DVR navigation software and extensions for a range of interactive applications.
Comcast SVP of Digital Television Mark Hess said products such as Foundation will serve as the "glue" for VOD, DVR and other advanced, interactive services that Comcast is rapidly deploying across its footprint.
The deployment follows an earlier deal under which Comcast agreed to purchase 5 million Foundation licenses. The MSO, however, is taking a multi-vendor approach to IPGs and set-top software. Comcast is also readying deployments of i-Guide, the latest and greatest IPG product from the GuideWorks joint venture.
Hess, noted, however, that Foundation will give Comcast the ability to tack on additional products. "That's one of the advantages," he says.
In addition to Microsoft TV, cable's iTV insurgence has spurred hope for other vendors that have had trouble cracking cable's deployment code.
OpenTV, an iTV software company that has made it through the sector's hype-filled beginnings, believes its deployments and overall experience in the sector will play well as cable operators move ahead on their interactive television strategies.
"On the middleware side, we're seeing increased interest in the North American market," says Steve Reynolds, deputy CTO for OpenTV's North American cable division. But OpenTV is also interested in offering applications that can run on other middleware platforms.
"Some operators are moving to a middleware solution or building their own, or looking at applications instead. I don't think there's a single one-size-fits all strategy for the industry," he notes.
ICTV Inc., another iTV vet, also figures to benefit as cable operators shifts gears and figure out ways to squeeze as much interactivity as they can into legions of deployed thin-client boxes.
"In a lot of ways, the technology hasn't fundamentally changed over the last five years," says Jonathan Symonds, vice president of marketing and business development at ICTV. "The primary change is competition."Finding the killer app
As operators roll out interactivity, they will be challenged to introduce applications that resonate with consumers. Early indications are that games will top that list. Charter's Shaper has been astonished to learn that consumers don't necessarily need fancy "twitch" games to have a good experience. "It's been surprising how much people like parlor games," she says.
Symonds agrees, noting that ICTV, which aggregates games through partners like TVHead, has seen close to 70 percent of traffic in the games area. "The casual gaming market has been underestimated by cable in the last four years," he says.
But not all things interactive will be about fun and games. Operators also have generated a keen interest in apps that enable customers to pay their bills or upgrade to a new tier of service.
"We are looking at some interesting customer care applications that are all part of this," Time Warner's Armstrong says. "All of them may not generate revenue, but they can provide an immediate help to our [CSR] costs."
But even in the iTV world, content will be king. And that means programmers will also be required to place a priority on interactive and enhanced television (eTV) elements that synch up with live broadcasts.
In the U.S., Turner Broadcasting has focused its eTV efforts on the two-screen (PC and TV) model for shows such as "Crossfire" and "Outback Jack," and has inked sponsorship deals with companies like Xerox to help pay the freight.
Advertisers are becoming more enamored with eTV sponsorships because of strong viewer recall, according to Kevin Cohen, SVP and GM of interactive/enhanced TV at Turner Network Sales.
Although Cohen likens Turner's early work with iTV as "experimental," one goal with these trials is to "find out how [viewers] are using the platform and to remind people of our brand and to get them to spend more time with our networks."
Some programmers might be hesitant to migrate to a one-screen model because building interactive content for the PC for two-screen mode is considerably easier than it is to develop content for set-tops. PCs use standard Web technology. The set-top environment is much more varied.
Ensequence’s iTV tools allow advertisers
to drag-and-drop interactive elements
onto a timeline.
GoldPocket and Ensequence liken their tools to Avid in the video editing world, which enables producers to drag and drop information onto the timeline. Once the interactive elements are in place, producers can publish them to one of many platforms.
"If you deploy on an [OCAP] OnRamp box versus an S-A box with no middleware, something will have to be different," explains Scott Newnam, CEO of GoldPocket. Its StoryTeller platform has created interactive elements for shows like "Last Comic Standing" and "CSI."
"Up until now, developing applications was expensive and took a lot of time. Just because EchoStar does a cool application, it doesn't mean it works on cable systems or DirecTV," adds Ensequence CEO Dalen Harrison.
Ensequence, which counts BBC and Discovery Networks among its clientele, markets a platform called on-Q Create, but also builds in a small client that runs alongside applications to ensure that the graphics run with the proper richness on thick and thin set-tops. A low-end box, for example, can produce fewer colors than a high-end DVR box, which might do millions.OCAP's role
So where does the CableLabs-specified OpenCable Application Platform (OCAP) fit into the world of iTV? Not in very many places yet, as it turns out.
Starz! and a group of technology partners
recently showed how an OCAP-based
“mini-guide” could be embedded with
a primary program satellite feed.
There, Starz Encore and a host of technology partners demonstrated a satellite television feed paired with a "mini-guide" application designed to run on OCAP. The demo featured the Advanced Digital Broadcast (ADB) iCAN3200 digital set-top and an OCAP stack from Osmosys.
Starz also hopes to add interactive applications further down the road, according to Rebecca Lim, director, interactive television technology for Starz Encore. The ability to tie an OCAP application with the video signal will help programmers "define the interactivity," she says.The big payoff?
For iTV, operators will certainly move at different speeds and take different paths in 2005. But it's abundantly clear that interactivity has moved back on operator agendas, and holds much more substance this time around.
"Certain operators will take advantage of their platforms and they'll be doing experiments, but I think there is a heightened interest in this that I haven't seen in several years," says Scott Teissler, CTO and CIO for Turner Broadcasting.
For a company like Microsoft TV, that payoff can't come soon enough.
"Out of all these years of work, we're starting to see the fruits of those efforts," Graczyk says. "TV will change more in the next five years than it has in the last 50."