Interactive TV Nearing Reality?

Most of the early marketing studies done on the potential of interactive TV demonstrated that most consumers wanted nothing more than to order movies and possibly pizza. Most of the interactive features currently available to cable subscribers are low-key offerings like local movie schedules.

Despite the lukewarm reception in test markets, interactive TV remains a sort of Holy Grail among programmers and cable providers, who believe that services such as enabling viewers to click on a performer's jacket and order it online will prove to be vast new revenue streams. That sort of intimacy with televised entertainment may be closer than ever, according to reports issued in January.

The prime mover for the next level in TV: News Corp.'s recent takeover of direct broadcast satellite (DBS) service DirecTV. News Corp. chairman and CEO Rupert Murdoch already provides interactive features to million of subscribers to his British Sky Broadcasting Group (BskyB) service in the UK, and hopes to do likewise for DirecTV customers here in the US. Among the services BskyB delivers are gambling on sporting events—something not precisely legal in many US communities. Many US "gaming enthusiasts" get around the legalities by pursuing their interests online.

That may change this year. Competitive pressure from DirecTV—and from competitor EchoStar, which already offers 15 interactive features—could prod many cable providers to expand their nascent interactive offerings. The best bet for success still appears to be video-on-demand (VOD), which gives cable subscribers the opportunity to order up and watch movies whenever they wish. VOD is the biggest interactive priority for large cable companies like Comcast and Time Warner, according to industry analysts. "Video on demand is the best interactive application," Comcast senior vice president Dave Watson told reporters recently. "That's where our focus has been and will be in the near future."

Perhaps so, but interactive TV ultimately may prove to be a product without much of a market. A flurry of investor interest in makers of interactive hardware and software came and went after the News Corp.-DirecTV deal was announced. A hot topic in technology circles for more than a decade, the subject still stirs plenty of promotional and executive passion despite a big shrug from the buying public. Better implementation and a new generation of Internet-savvy cable subscribers, of course, may change that.