April 9, 2009

Interactive TV Is Back

Cable pledge: ‘we really mean it this time.’

By Peter D. Shapiro

The reemergence of interactive TV at this year’s NCTA Cable Show offered a touch of déjà vu. It was in this context that an MSO speaker at one of the sessions assured the crowd, “we mean it, we really mean it, this time.”

Interactive TV apps were discussed in several sessions and were on display in multiple booths on the exhibit floor. There were demos showing how viewers could purchase DVDs of TV episodes, or buy movie theatre tickets. As an example of a non-TV-commerce app that is nearing market introduction, Integra5 showed its MediaFriends^TM TV Chat that will enable viewer buddies to share SMS comments on-screen while they watch the same TV show. In another booth, Motorola demonstrated a similar product still in conceptual stage. Just before the Cable Show, Canoe Ventures and CableLabs announced their Advanced Advertising 1.0 specification and standards that will support viewers’ voting, requests for information (RFIs) and telescoping to retrieve related on-demand content.

Earlier interactive TV ventures were unable to get traction on cable, depriving subscribers of opportunities to purchase pizza, T-shirts and sweaters worn by actors on-screen. As the saying goes, those who forget history are doomed to repeat it. So, what’s different now?

This question was asked at the Cable Show and several answers were offered. People are much more comfortable now with remote purchases via the Internet. People have become more accustomed to interacting with TV programming, for example, voting via SMS on American Idol. VOD, now commonplace, has increased viewers’ familiarity with using TV remotes for more than flipping among linear channels.

Probably the most important change has been the cable operators’ implementation of CableLabs’ EBIF (Enhanced TV Binary Interexchange Format) specification to support interactive TV apps on millions of legacy set-top boxes (STBs). The interactive TV concepts shown at the Cable Show were designed to run on EBIF-compatible STBs and also will run on devices with tru2way middleware when these become more available.

EBIF provides much larger scale to justify development and deployment of interactive TV applications. In addition, the bar has been dramatically lowered to get on cable systems. Pre-EBIF, an interactive TV venture faced a daunting task of accommodating to the particular individual requirements of each cable system’s STBs. This task was a burden for the interactive TV venture, but also and more significantly for the host MSO. In the past, an MSO decision to commit its limited technical resources to support one set of interactive TV apps would have the effect of excluding others. This was a hard choice and it paralyzed MSO decision-making. As a result, prospective interactive TV partners were consigned to a hell of endless trials. Now the decision is much easier: If the business case makes sense and subscribers seem likely to benefit, the interactive TV app can be carried and offered to subscribers at relatively low risk to the cable operator.

Some interactive TV ventures will surely fail. Cable subscribers may shun some providers’ little on-screen bubbles or icons that invite purchases or offer more product information and instead use their remotes to click them off the screen. But that’s just the point: Interactive TV’s lowered cost of entry means that there will always be room for other ideas that have more appeal. So, when the MSO speaker assured the crowd that interactive TV is real and “we really mean it, this time,” it may even be true.

Peter D. Shapiro is founder and principal at PDS Consulting (www.pdsconsulting.net), which specializes in cable and telecommunications assignments. His clients include operators, financiers, attorneys, industry associations, and government agencies. He provides opportunity assessments, due diligence analyses, competition monitoring and evaluation, and industry expert litigation support. He can be reached at Peter@PDSConsulting.net.