Interactive TV? It’s Coming, but Not Soon : Technology: Industry study finds video revolution is not just around the corner. Except for pay-per-view, it is years away.
The market for interactive entertainment won’t be as big or as profitable in the near future as the recent frenzy of corporate alliance-making and sweeping technology announcements might suggest, according to a report commissioned by the industries involved.
Except for advanced games, a combination of resistance to the oxymoronic idea of interacting with one’s TV set and significant technological hurdles will prevent any of the much-heralded digital, video-based services from reaching more than 10% of U.S. households over the next five years, the report from SRI International concludes.
Even movies-on-demand, often touted as the one interactive service sure to gain quick popularity, is likely to attract no more than 2 million subscribers by 1997, the Menlo Park-based consulting firm predicts. “In other words,” said Ed Christie, who headed the SRI research team, “don’t believe the hype.”
That’s contrary to the message being spread by the nascent interactive entertainment industry, which promises a new age virtually around the corner where Americans will happily employ their televisions to shop, play, follow the news and select movies. Revenue predictions for the amorphous “interactive multimedia” business have spiraled into the trillions.
Meanwhile, demand is hard to predict when study participants have never bought or used anything like the products described.
The SRI report, third of a series commissioned by IBM, Apple Computer, AT&T;, Sony, Walt Disney Co. and 30 other major companies, used a database of 20,000 households to predict behavior based on current attitudes and activities. Another 1,500 households identified as “early adopters,” or those most likely to try new things, were also included.
Nearly 5 million of these cutting-edge families will be using advanced, pay-per-view services by 1997, the SRI report says, but they will tend to be affluent, novelty-seeking people who watch television less than the rest of the population--a characteristic that undermines the economics of a system that generates revenue on a fee-for-use basis.
Advanced pay-per-view, in which the starting times of given movies or programs are staggered every few minutes, will be widely available in the near future as a result of digital compression technology. But SRI says that true video-on-demand, offering subscribers a vast menu of programming, will take to longer catch on.
Cable giant Tele-Communications Inc., which has vowed to provide nearly all of its 10 million subscribers with some element of video-on-demand by 1996, challenged the findings.
“Many billions are being bet on the advent of entertainment on demand sooner rather than later--and they’re being bet by people who have been right more than they have been wrong,” TCI spokesman Bob Thomson said.
But even if video-on-demand catches on faster than SRI predicts, the report’s authors note, a host of other interactive services will be competing with it for a finite amount of viewer time.
Many players and would-be players in the interactive entertainment industry are looking to pilot programs, planned for next year, to glean more accurate information about what consumers want and how the technology holds up. Home shopping, for example, was not covered in the SRI report. But for those trying to discern the future now, the report offers a voice not often heard over the din of an industry just taking shape.
“I think the SRI report is a lot closer to reality than some of this Silicon Valley hype,” said Dan Slusser, manager of Universal City Studios and one of the study sponsors. “A lot of these people are selling ice to Eskimos.”
