i_9907ahx.jpg finally ready for prime time

Like a persistent zombie from a 1970s horror flick, interactive TV just refuses to die, preferring instead to return time after time from near-death experiences to herald a new age of TV programming. This time around, however, the energized specter of interactive TV is stronger than ever. Plenty of high-profile companies are collectively betting billions of dollars that interactive TV will take its place in the world's living rooms on a mass scale within the next few years. In fact, Josh Bernoff, principle analyst for television research at Forrester Research Inc., predicts there will be 6.7 million U.S. interactive TV subscribers by 2001 and 24.5 million subs by 2005-numbers that content developers, advertisers and cable operators can really sink their teeth into.

After years of hype and vapor, the living room of Joe and Jane Sixpack may finally be the place where prime time involves a rich, interactive experience combining digital video and audio, Internet-based content and "buy-with-a-click" commerce.

And with myriad announcements, mergers, partnerships and trials that have been the buzz of the industry for the past several months, companies are quickly lining up to feed at the interactive TV trough.

All of a sudden, inviting a well-traveled, slightly bruised zombie (aka interactive TV) into the living room may not be as scary as it once was. Of course, the transformed zombie has made some powerful, mainstream new friends along the way, including software behemoth Microsoft Corp.

A zombie meets an 800-pound gorilla

Although not by any means a newcomer to the world of interactivity, software leviathan Microsoft Corp. is effectively breathing new life into interactive TV and high-bandwidth networks through a combination of software expertise, marketing savvy and raw financial muscle. "We can break the dam," says Alan Yates, director of marketing for Microsoft. For interactive TV to move from its approximate 500,000 user base (mostly attributed, says Bernoff, to WebTV Plus users, with WorldGate, Wink and digital TV subs completing the mix) to more attractive and lucrative levels of 20 million and more, a little dam-breaking is in order. "We're going to do what it takes to turn the corner," says Yates.

One doesn't have to look far to find evidence to back up Yates' comments, as Microsoft made several key announcements at last month's NCTA show in Chicago, including the adoption by over 30 key companies of Microsoft's interactive TV client/server software platform, TVPAK (Platform Adaptation Kit). Throw in Microsoft's significant investments in Wink Communications, Comcast Corp., AT&T and United Kingdom-based NTL Inc. (among others), and it's clear the giant from Redmond, Wash. is helping to dress up interactivity for the big time.

The TVPAK platform is already enjoying unprecedented support from vendors. The platform uses an adaptation of the Windows CE operating system and elements of its WebTV Internet access platform to enable such digital set-top box functionality as digital video, access to interactive broadcast and Internet content, e-commerce and telephony. So far, AT&T Broad-band & Internet Services has been the only significant North American operator to announce it will use the platform.

More than 30 companies encompassing hardware manufacturers, network operators, system integrators and others have announced their support of the Microsoft TVPAK platform. Those who announced their support of the platform at the Chicago show include Philips Electronics, Broadcom Inc., Intertainer Inc., Libit Signal Processing, S-A, GI and ATI Technologies Inc. among others.

But despite Microsoft's obvious clout, there are several other factors at play to keep interactive TV alive.

With the memory of Time Warner's Full Service Network interactive experiment and US West Media Group's ill-fated Omaha interactive trial still fresh in his mind, Joe Wetzel, vice president of technology for MediaOne, recalls the immense expense, and small return, involved with these high-profile interactive TV dabblings. He explains that in the case of the Time Warner effort, "every application had to be custom-developed," in addition to creating expensive custom set-top boxes and servers.

Since then, Wetzel says, three powerful factors have contributed to bring interactive TV back from the grave.

First, Wetzel cites the fact that the Internet has given millions of people the opportunity to experience interactivity's benefits. Gary Arlen, president of Arlen Communications Inc., agrees, noting, "The Internet has taught us a lot of what interactive content can be." The roughly 40 million U.S. households with Internet access are now accustomed to clicking on menus and making personal choices about what they want to view.

Secondly, Wetzel points out that digital video has been widely deployed both via satellite and via cable. Together with the meteoric rise in Internet usage, people's expectations for combining interactivity with video in a meaningful manner are well-stoked. And Bernoff predicts that digital cable will become the dominant means by which the consumer will receive interactive programming, outstripping WebTV, Wink, WorldGate and AOL TV. "Once (digital cable TV) is there, to deliver interactivity is relatively easy," says Bernoff. Of the 25.4 million interactive subs predicted for 2005, Forrester sees 19 million receiving interactive content through the digital cable set-top.

Thirdly, Wetzel points to the amount of two-way HFC plant now in existence. In 1996, about 10 percent of HFC networks were two-way, while today that number is between 50 and 60 percent, he says. Today's upgraded plants "make two-way services far more compelling," says Wetzel.

For Wetzel and MediaOne, video-on-demand is the one interactive "flavor" that "is most adjacent to digital broadcast." MediaOne, he says, "is very bullish on deploying video-on-demand."

While Wetzel acknowledges "great opportunities to target advertising," he says "enriching the video experience is also very appealing." An important component of making VOD a natural extension to the video experience, according to Wetzel, is integrating the electronic program guide, "the window to choices for video," into the user experience, but this remains an unsolved part of the equation.

New boxes mean more services Not to be forgotten as a significant driver of interactive TV today is the ongoing evolution of the set-top box. As General Instrument Corp. and Scientific-Atlanta's new generation of digital set-tops (the DCT-5000 and Explorer family, respectively) work their way into the homes of cable TV subscribers, greater computing and graphics capabilities plus addressability will facilitate the targeted advertising, personalized on-demand content and datacasting/Webcasting of the next generation of programming.

The advanced digital set-top is key, says Ken Morse, chief technology officer for PowerTV, because these boxes are capable of rendering HTML utilizing a fairly small footprint of memory (about 700 kilobytes) on top of the boxes' operating system. Rendering HTML code in the box, says Morse, is an advance over rendering Web pages at the headend (a la WorldGate's Web over TV service). The new set-tops are able to squeeze quite a bit of functionality out of a relatively small footprint, Morse points out, as 2 megabytes (MB) of memory will hold both the operating system and HTML engine, and 2 MB of flash memory will accommodate so-called "resident" applications, such as the electronic programming guide. In addition, between 4 and 8 MB of RAM, for downloaded applications and content, will be the minimum for any box that will ship this year, says Morse.

An additional benefit to the advanced digital set-top is that it can be upgraded with new software. "What you get in software in the box on day one," says Morse, "is not what will be there in four years."

Software is king

Software is also Microsoft's mantra, and TVPAK addresses both client and server interactive applications. In essence, TVPAK, says Yates, merges Microsoft and WebTV (Windows CE) technologies to create software solutions for both client devices, such as set-tops, and server boxes used by network operators.

Server-side features of TVPAK integrate Windows NT-based back office, SQL server and commerce server technologies to help provision, operate and manage enhanced TV services, according to Microsoft. The software kit also includes a Microsoft-designed electronic programming guide.

Most major set-top box manufacturers have signed on to be TVPAK compliant, as well as AT&T and various VOD purveyors. Microsoft, through its well-developed client/server technologies, is anything but shy about being a prime facilitator (and ultimately beneficiary) of the interactive TV tsunami.

Just as standards have helped drive other advanced services offered by cable operators, an interactive TV (at least in the U.S.) standard for developers is rapidly nearing completion. The Advanced Television Enhancement Forum (ATVEF), which is finalizing licensing issues, is intended to utilize HTML 4.0 standards as defined by the World Wide Web Consortium to give developers a common platform for which to create interactive TV programming (see sidebar).

Open TV's enhanced TV provides detailed information on programs.

The recently completed National Cable Show in Chicago was chock full of evidence that interactive TV software, equipment, and service trials and rollouts are proliferating at a phenomenal rate. Those who've stuck it out since the initial interactive TV hype wore thin in the mid-1990s find they're being joined by a growing number of vendors and service providers in what is quickly becoming a crowded market.

ICTV, which allows operators to narrowcast the output (e.g., high-speed Internet access, e-mail, e-commerce and CD-ROM content) of Windows 95-based PCs located in the headend, demonstrated its solution for one of the missing links in interactive TV services-printing. With its new ICTV Printer Box, subscribers can print e-mails and content off the Web directly from their ICTV-connected television to their home computer. Essentially, the Box establishes a virtual local area network connection that permits printing information from the TV to a printer anywhere in the home without requiring any special in-home wiring.

A team consisting of PowerTV, Canon and Scientific-Atlanta also addressed the printing conundrum of interactive TV. They utilized a Canon Color Bubble Jet USB printer to print photo attachments from a PowerTV interactive application. The images were processed through the PowerTV operating system and sent through the USB port on Scientific-Atlanta's Explorer set-top box. PowerTV also announced it was teaming with Knology, a Georgia-based operator, to beta test its SofaMAIL e-mail application for television in two of the operator's systems. SofaMAIL lets users send and receive e-mail by tuning to a designated channel. It offers multiple accounts per household, password protection, and an address book.

Intertainer, an interactive broadband programming service that provides on-demand entertainment (VOD), interactive advertising and e-commerce, announced its functionality has been integrated with SeaChange International's ITV System platform to enable service on S-A's Explorer 2000 digital set-top.

Other activity within the realm of VOD included the selection of Concurrent Computer Corp. as the vendor of choice by a "top-10 U.S. cable operator" (widely understood to be Time Warner Cable) for a trial/deployment. The deal calls for a customized architecture that includes Concurrent's MediaHawk server and BackOffice Software Suite to be tested on S-A's digital platform. The deal also taps the expertise of Prasara Technologies, a company that was started by personnel who worked with Time Warner in the Orlando Full Service Network, and which is providing design and support services for the software solutions.

Time Warner also said it would test a VOD system from nCUBE. That test involves the MediaCUBE 4, which nCUBE says scales from 40 to 44,000 simultaneous 3 Mbps video streams. General Instrument debuted a new VOD architecture, one that it says incorporates pre-encrypted content for storage on multiple vendor file servers. The benefit of that is a reduction in costs and a savings of rack space because the encryption hardware is removed.

With this architecture, VOD suppliers have the option of integrating upconversion and digital modulation directly into the file servers, effectively placing the encryption process ahead of the content storage. Content is encrypted with GI's VML 2000 encryption product, and the VOD vendor can choose the optimum transmission solution, GI officials said.

S-A and Peach Networks Inc. announced they would integrate Peach's Access Channel product onto the Explorer 2000 set-top platform. Peach Network's product provides a plug-and-play connection to Microsoft Windows applications, games and the Internet without requiring a PC or an additional phone line. Peach also announced it and an Israel-based MSO, Matav, are entering into field trials for the delivery of Internet services to cable subscribers.

The Weather Channel is one of the most aggressive adopters of interactive TV platforms, designing content for nearly every single flavor of interactive TV. Above is a screen capture from its ATVEF-compliant programming.

Meanwhile, Scientific-Atlanta boosted its interactive digital set-top box stable when it unveiled three new Explorer units during the show. The Explorer 2000S is a slightly more economical version of its 2000 set-top (about $20 less) due to the fact that some features resident on the standard 2000, such as some input/output interfaces, have been stripped away.

The Explorer 3000, which is slated for debut sometime in January 2000, offers the same interactivity capabilities of the 2000 platform, but has twice the central processing unit power and twice as much DRAM for things like video graphics. It will also offer an optional hard disc drive. The company also announced the expected arrival of the Explorer 6000 sometime in the middle of next year. It has been designed to deliver more than 300 MIPS processing power, while supporting HDTV and the Microsoft TV platform. Other options include a DOCSIS modem and an OpenCable-compliant POD.

WorldGate Communications Inc., flush with funds after a successful IPO in April, announced deployment of WorldGate service in two MSO systems. Charter Cable will launch the service in Lanett, Ala. later this summer via already-deployed S-A 8600 advanced analog set-top boxes. Comcast Communications Inc. will launch WorldGate service in a Philadelphia-area system later this fall. The service will include Internet access, e-mail, "Channel Hyperlinking," and local content. It will be deployed using General Instrument's DCT-2000 digital set-top box.

WorldGate also demonstrated its ability to enable television partners who create interactive content for the TV platform to enrich picture-in-picture capabilities with its proprietary hyperlinking technology. Hyperlinking enables TV viewers to use the Internet to access information related to TV programs or ads while they are watching television. The company recently announced it has been awarded a United States patent covering 62 claims specific to the technology. Comcast also announced it had signed an agreement to license Liberate Technologies' client and server technology for the delivery of interactive television to Comcast customers. Implementation of the interactive digital service though advanced set-top boxes is expected in the first half of 2000.

Use it or lose it

Despite the flurry of activity and announcements in Chicago, there is still some skepticism in the industry on just what constitutes real interactive TV, and whether any of it has the power to generate long-term revenue. Those in the trenches, whether it be trials or actual deployments, seem to be convinced that interactive TV, however it's defined, has success written all over it.

ICTV President Wes Hoffman says his company was pleasantly surprised by results of its trial in Santa Barbara, Calif. and even more delighted with results of its rollout in St. Joseph, Mo. that began this past March. "We originally went into Santa Barbara with a price point of $6.95 a month," reports Hoffman. "That included five hours of access on the service and additional hours were sold for either $1 or $2 an hour.

"Within about 10 weeks, we had hit just under 10 percent penetration of the service in the two nodes that were authorized for ICTV deployment. The take rate was very good. The receptivity of the customer base was very good.

"Using the initial pricing formula, the initial, first-month incremental cable billing was about $18, which reflected some novelty usage. It came down after the first month to a very steady $13 to $14 a month for the remainder of the six-month trial."

Hoffman says during the trial, about 60 percent of the time spent online by subs was on the Internet. About 30 percent of the time was spent on CD-ROM content and the remaining 10 percent was spent on the e-mail application. The real surprise came at the end, however. That was when subscribers "told us they would have subscribed for a higher monthly fee, say in the $10 to $15 range because they thought the service was worth it," says Hoffman.

ICTV took that advice to heart when it rolled out in St. Joseph. Hoffman says they created a two-tiered service offering that increased the baseline fee (for CD-ROM, Internet and e-mail service) to $9.95 a month for five hours of access. Access to all the CD-ROM content, but not the Internet, goes for $5.95 a month for three hours of access. Incremental charges for additional hours of either service range from $1 to $2 an hour, depending on the time of day. "Based on current subscriber levels, we have just over five percent penetration of the addressable set-top market in St. Joe," says Hoffman. "Our average incremental cable bill has exceeded $40 for every one of the three months we've been out there deploying service."

Mitch Berman, OpenTV's senior vice president of worldwide marketing, says his company's extensive experience in Europe only bolsters the argument for interactive TV. He says to date, more than 3 million set-top boxes with OpenTV software have been shipped. One of the company's earliest deployments (at the end of 1996) was with satellite TV provider TPS ( in France with nearly 800,000 subscribers. They now have more than 30 interactive services underway and predict that total to reach 50 such services by the end of this year.

Berman expects interactive TV to get another big push when Rupert Murdoch's plan to distribute free OpenTV-enabled set-tops kicks in in conjunction with his British Sky Broadcasting concern.

With Murdoch and company giving away an estimated 10,000 boxes a week, the result, says Berman, is almost a foregone conclusion. "This is completely different than the Internet on TV model. We believe News Corp. is going to lead the way worldwide for this new form of what we call interactive television. It's video. It's not text. It's very, very visual because that's what television is all about."



Standard helps revive interactive TV

Repurposing content for the next generation of interactive TV applications presents many challenges for developers-challenges which the standards group Advanced Television Enhancement Forum seeks to solve. Version 1.1 of the specification is complete (and may be found at and will be released pending licensing issues. Comprised of a core group of 14 "founders," including broadcast and cable networks, cable and satellite service providers, consumer electronics and personal computer and software companies, ATVEF has been embraced by 65 "adopters." According to Catherine J. Fredricksen, director of ATVEF, who is with the home products group for Intel Corp., the spec is intended to create authoring tools and enhanced browser guidelines that will work for both Web and broadcast content and serve as the foundation for interactive TV development.

Jerry Bennington, executive consultant to Cable Television Laboratories Inc. and one of the original participants in ATVEF, says early in the evolution of interactive TV, both Intel's Intercast service and Microsoft's technologies appeared to be the two platforms that had the most support. It became clear, says Bennington, that the two needed to be integrated to facilitate a means for content creation "focused on one set of rules." This integration was one of the founding principles of ATVEF.

Built around the HTML 4.0 spec as outlined by the World Wide Web Consortium (W3C), ATVEF 1.1 references Cascading Style Sheets 1, ECMAScript (a royalty-free version of JavaScript 1.1), DOM 0 (Document Object Model, an application programming interface for HTML and XML documents) and multicast IP. The ATVEF spec outlines minimum requirements for support for compliant receivers (set-top boxes) and is intended to be displayed on both analog terrestrial and digital broadcasts, as well as satellite, cable and Internet PC and TV delivery media.

A series of "announcements" in the spec, Fredricksen explains, notifies the receiver that a stream of content is coming, causing the screen to change through the course of programming. Screen size will expand or shrink to accommodate a living room environment, as opposed to a desktop environment familiar to Web users. Text sizes will be altered to accommodate living room viewing (from 10 feet away).

Fredricksen emphasizes that it's critical for the spec to be compatible with Web standards as outlined by the 3WC and extend them to broadcast. In addition to establishing a technical spec for developers and hardware manufacturers, ATVEF has considered "lots of different business models" to offer adopters of the spec "clear paths to return on investment," says Fredricksen.

Technical trials of ATVEF-based content have been conducted by Intel and Public Broadcasting Service involving the simultaneous delivery of data content with programming via digital terrestrial transport. The transmission included 230 MB of data content sent in the background along with video and audio signals.

One major interactive TV company not involved with the spec is OpenTV, which is deployed in Europe and the United Kingdom. Mitch Berman, senior vice president of worldwide marketing for OpenTV, says "ATSC (Advanced Television Systems Committee) is going to be the entity that really sets the standards for the country." Citing the perceived domination of Microsoft, Sony and Intel in ATVEF, Berman believes "Java is going to play a central role in standard technologies."