Interactive TV: Failing to fulfil

April 2002

Due to its lack of a subsidised multi-channel TV service -- and because it was the first country to issue digital TV licenses -- the UK has inadvertently found itself in the vanguard of interactive TV developments and the focus of much attention from other broadcasters throughout the world. But can they learn anything?

A flick through the nearly 400 channels available in Britain via any digital multi-channel package will confirm that interactivity is advancing with enormous speed in the UK and that broadcasters are taking its development very seriously.

For example, the 2002 Winter Olympics in February had the BBCi treatment -- splitting the UK's BBC1 into two virtual channels with constant coverage via three video feeds for the duration of the games. Alternatively, viewers can turn to Channel 4 and play along with Banzai, an interactive, spoof Japanese game show or 'Pay-to-Play' a version of a popular quiz show called Fifteen-to-One.

Furthermore, if viewers have a cable or satellite subscription, they have a range of interactive features to choose from including: banking, betting, shopping, gaming and email, as well as numerous interactive programming features.

This highly competitive broadcasting environment has precipitated a straight fight for viewers, with interactivity being seen as way to both win over new market share while simultaneously buttressing an operator's bottom line against a drop in advertising revenue.

Debate

The question is, however: 'are they right?' Aside from a huge desire on behalf of all interested parties to believe in an interactive panacea, is there any evidence to suggest that interactivity is not just an expensive example of broadcaster hubris?

While it is difficult to say if the audience for a programme or channel increases due to an attached interactive application, Sky says that it is happy with its experience to date. It says that 86 per cent of Sky Sports subscribers have used Sky Sports Active at some time, and that over two million votes have been cast on the Sky News Active service since its launch in March 2001. But whether this translates into additional revenues remains a moot point.

And while broadcasters are trying desperately to come up with that elusive 'killer' interactive TV application that will see new revenues pouring in, their attempts -- thus far -- have underwhelmed. After years in their respective 'think tanks', broadcasters have failed to come up with anything more imaginative than charging their viewers to play along with their favourite game shows or vote. 'There are no 'wow' interactive applications in the UK,' says Rob Begg, director of EMEA at iMagicTV, a software solutions provider. 'Interactive pages don't have instant gratification and advertising revenues are minimal.'

According to some industry insiders, one of the main reasons for this is due to the limited functionality within the set-top boxes provided by all the networks. More problematical is the fact that broadcasters -- in their haste to establish a market lead -- have heavily subsidised these boxes and are now stuck with them.

Walls - come tumbling down

Only two years ago when digital TV was just beginning in the UK, commercial broadcasters believed that the wining formula for iTV would be to offer a suite of services contained within a 'walled-garden'. Yet according to a recent report by Forrester Research, 30 per cent of companies featured in digital TV walled gardens in the UK want to pull out. The report reveals that for a combined investment of approximately €245m, they have only realised €81m in iTV revenues.

Despite this, the networks have not given up on the idea of commerce through iTV; they have just realised that a TV audience is not willing to go to a separate channel to shop. The new plan is take the shops to the viewers. TV viewers will be given the chance to make purchases related to the programme that they are watching.

Sky is incorporating the mobile phone programming language WML into its 'Open' software platform in order to make it possible to shop while still watching the broadcast stream. 'We can wrap interactivity around the picture now and we're encouraging our partners to author using WML. It's fast and it means you can do things like place a bet during the match or buy a team shirt from a retail partner. It's about offering the right product at the right time,' says Robert Fraser, Sky's corporate communications manager.

Sky even goes so far as to admit walled-gardens are on the way out. 'There are certain applications where walled-gardens are more apt, such as games. But nearly every kind of interactivity works best in conjunction with programmes,' says Fraser.

Cable tries

The UK's two cable firms NTL and Telewest have played second fiddle to Sky in iTV rollout. Cable was groundbreaking in developing games for TV, but its use of the Liberate software platform has left it unable to keep up with Sky in placing interactivity within programmes. A new version of Liberate that will address these issues is due this year although, according to sources, it is already several months late.

Competition with Sky has pushed NTL and Telewest ever closer together, and at the end of 2001 they announced the 'Broadband Treaty of Rome'. Under this 'Treaty', they vowed to work together to modify their software platforms to allow play-along game shows, on-screen shopping, multiple video streams, betting, voting and digital text.

And cable has other strengths. Telewest has announced plans for a Playstation 2 broadband network. The nation's youth will be able to plug their consoles into the back of their set-top boxes and download games and anything else it makes available over its fast, two-way network. Video-on-demand is another service that cable rather than satellite can do particularly well, and it is something that Telewest has in development.

Many commentators believe that initiatives like these are the second front in the iTV battle. 'The Playstation deal will push iTV because it builds a community,' says Henderson of NDS. 'If there's one area where the UK is lagging it's in Internet-style services such as chat, emailing and community building. The game player market is ideal because it is young and dedicated. Telewest has been very creative.'

While there are obvious advantages of attaining 'first mover' status within a new market, it is contingent on being successful. Otherwise, those companies waiting eagerly in the wings will discover exactly not what to do and move in and clean up. The UK's situation is not as desperate as this, but many other European broadcasters that -- for one reason or another -- have had to postpone their own iTV plans will not be rueing the decision.

For the UK, however, the situation is beginning to look glum. Aside from the well-documented problems currently facing ITV Digital, take-up of digital TV services across the sector have levelled off. And consumers will continue to give digital TV and iTV services a lukewarm reception until they perceive 'real' value in them -- or until there is no other choice.

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