Wed, Jan 02, 2002 page19

• In the US, interactive television may finally make its appearance

  After years of dawdling and hand-wringing, the largest media and technology companies insist that this is the year America will embrace interactive TV

  • NY TIMES NEWS SERVICE
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  It has become a familiar refrain the last decade: This is the year for interactive TV. It has not happened.

  But media and technology companies say this year may be it. Really. Cable companies, satellite television services, media conglomerates and Microsoft have all made interactive television a key part of their strategic visions. They are pouring billions into a flurry of deals.

  In recent weeks, Vivendi Universal put US$1.5 billion into EchoStar Communications, an investment that will allow Vivendi to introduce its interactive television software to EchoStar subscribers. Microsoft, continuing its forays into the digital entertainment world, backed Comcast's US$47 billion bid to acquire AT&T's cable unit, hoping to gain access to 23 million television households.

  The only problem seems to be that viewers in the US are slow joining the parade.

  So far, Americans remain largely apathetic about interactive TV, and not many even understand quite what it is.

  In the US, interactive television -- a catch-all term broadly used to describe everything from video on demand to digital video recorders to television commerce -- has been driven more by corporate competition than by consumer demand.

  "Viewers in the US can't even define interactive television, much less demand it," said Arthur Orduna, vice president for marketing at Canal Plus Technologies, a subsidiary of Vivendi Universal that creates interactive television technology. "No one in the US has ever stood up and said, `I want interactive television."'

  Still, companies remain optimistic because across the Atlantic interactive television is already gaining critical mass in Europe, particularly in Britain. Viewers there can use their televisions to do such things as place bets on races, change camera angles on sporting events, interact with game shows and get more information on what they are watching.

  But in the US, companies have tried since the 1970s to convince viewers that they want to do more with their televisions than watch. The last big wave of interactive television experiments came in the early 1990s and included a much publicized failure in Orlando by Time Warner Cable, a unit of AOL Time Warner.

  Even devices like SonicBlue's ReplayTV and TiVo, personal digital video recorders that make it easier to collect, reschedule and play desired television shows on demand -- have achieved more brand recognition than they have sales. Only 300,000 of the TiVo products have been sold since they were introduced in 1999.

  In part, analysts say, the different response to interactive TV among Europeans and Americans stems from the relatively higher penetration of PCs and Internet access in the US: tasks that Europeans might do on the television, Americans perform on their desktop PCs.

  Much as Europe leads the US in cell phone use, it has also developed an 18-month head start in rolling out interactive television, say analysts, with more than 15 million European television sets already receiving some type of interactive service. As of the end of 2000, 7.2 percent of Western European households had access to interactive television service, according to IDC, a research firm.

  In France, horse racing's first year on interactive television generated 61 million euros in revenue for Pari Mutuel Urbain, the state-owned wagering service. In Spain and Italy, viewers regularly check weather before going outside or traveling.

  British Sky Broadcasting, a satellite television provider, takes in more than US$1 million every week in commissions from television orders through Comcast's QVC home shopping network.

  Britain has interactive content on the widest variety of programs, including educational documentaries, sports events and reality shows.

  This fall, a popular British Broadcasting Corp documentary series, Walking With Beasts, presented those with the appropriate cable or satellite service options for normal or more scientific commentary about the evolution of the animals shown. Extra facts would appear at the bottom of the screen, which viewers could explore by pressing buttons on the remote control.

  Since 1999, soccer fans have been able to watch games by picking from a variety of camera angles, including "playercams" that follow specific athletes. The viewers can also request real-time game statistics and trigger their own instant replays.

  The popular British reality television show Big Brother kept a continuous live broadcast of four cameras for Sky's digital satellite subscribers. Michaela Wood, a 23-year-old suburban London resident, would watch it at 2am. "You could switch between the rooms or watch them at the same time," she said. "People got quite obsessive about it."

  One cult hit has been a comedic game show spoof called Banzai. Viewers can vote by remote control to predict which contestants will triumph in bizarre faceoffs like the Magical Midget Climbs, in which two contestants try to climb a basketball player, or the Old Lady Wheelchair Chicken Challenge, in which two old women in electric wheelchairs drive toward each other. A viewer's accuracy is tabulated at the end of the show.

  "On one hand, it's kind of meaningless interactiveness," said Dov Rubin, a vice president of NDS, an interactive television company that helped develop Banzai. "On the other hand, people are laughing, and it gives them a sense of viewer participation."

  Besides the relatively smaller number of PCs in Europe, another factor helping interactive TV there is that Europeans have had some level of interactivity on their televisions for years.

  For example, Teletext, a one-way information service that resembles pre-Web versions of Internet browsing, has been available on some European televisions for more than two decades. And satellite television companies, which can more rapidly roll out new technologies than can cable systems, are more of a force in Europe than in the US, where cable companies dominate 80 percent of the pay television market.

  In England, where half of all television sets are equipped to receive teletext, over 22 million television viewers still use teletext every week to view news headlines, weather reports, movie schedules, and flight arrival and departure times.

  "It's not very pretty, but it's useful," said Angela Ip, 22, of Surrey, England, who has been using teletext for as long as she remembers. "What time should I be going out? Let's check on teletext. What should I be wearing today? Let's check on teletext."

  Teletext never took off in the US because the marketplace was never able to agree to a universal set of standards.

  Many of the popular interactive television applications in Europe -- like weather reports, shopping and gambling -- are ones that Americans look for on their computers, rather than their televisions.

  The dominance of the PC in the US has been a stumbling block for a number of new technologies that have become popular in other parts of the world. For one, Internet access on cell phones has not gained traction in the US, even though cell phones are Japan's most popular Web-access platform.

  It becomes a chicken-and-egg problem: There need to be enough subscribers to make interactive programming worthwhile for media companies, but at the same time interactive TV cannot attract new subscribers without compelling content.

  Nonetheless, in Europe it is the media conglomerates like Vivendi and the News Corp that have led the interactive charge, said Orduna of Canal Plus Technologies. In contrast, it has been technology companies, not media concerns, that have driven efforts in the US.

  Interactive television in the US is likely to take a divergent path, said Josh Bernoff, an analyst for Forrester Research. The interactive applications that are being rolled out to millions of American homes, like video on demand and interactive program guides, rely less on coordinated efforts with broadcasters and more on the discretion of individual pay-television providers.

  Television, unlike the Internet, is fundamentally about entertainment and not technology, Orduna said. DVDs took off not so much because of the technology, but because they offered additional content not available on video tapes, like extra scenes and music.

  "Here we were focused on building a better mousetrap," he said. "In Europe they were figuring out what the mouse really wanted to eat."
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