Ready to Interact With TV?

Propelled by the introduction of broadcast digital television in the top U.S. markets last fall and the coming of digital cable systems, interactive TV is poised to move from regional experiments into living rooms across the nation this year.

Products and services that allow consumers to personalize their TV experience will provide much of the buzz at this week’s Consumer Electronics Show in Las Vegas. CES will see a raft of announcements by software and hardware suppliers racing to form partnerships and release interactive-TV products.

Interactive-TV services allow viewers to use their remote controls or wireless keyboards to get more information during a broadcast or to treat their TVs somewhat like a substitute computer monitor to get e-mail and surf the Web. For example, a viewer might be able to get profiles of players while watching a soccer match by pressing a button on the remote.

Set to debut this year are TVs with software built in that allow viewers to interact with their TVs without needing a set-top box, and VCR-like boxes that record programs and save them to an internal hard disk, rather than tape, for later viewing. In some markets, consumers will be able to test-drive interactive TV by using digital set-top boxes from their cable company.

In addition, satellite TV providers are beefing up their digital offerings this year with advanced interactive services such as EchoStar Communications’ recent partnership with OpenTV. EchoStar plans to use OpenTV’s software this summer to provide specialized weather forecasts and other services such as home banking to its 1.6 million subscribers.

Analysts expect the number of subscribers to interactive-TV services to more than triple this year, from about 400,000 in 1998 to about 1.3 million. Digital cable services will hold about a third of this market, with analog cable hosting 200,000 subscribers and non-cable devices serving about 700,000.

This is still a tiny slice of the TV audience in the U.S. In the next few years, however, interactive TV will be introduced to more than half the 100 million TV homes across the nation as cable operators build out their digital networks.

“If it works the way we think it will, we’ll see a substantial percentage of the U.S. population that will have access to digital interactive networks in 1999,” said Steve Necessary, vice president of marketing for Atlanta-based Scientific Atlanta, a provider of communications networks and set-top boxes. “It will be toward the second half of the year when we’ll see the second wave of services like video on demand or e-mail coming into the home on these platforms.”

A consumer doesn’t have to have a digital TV to get electronic programming guides, video on demand and other services. Analog systems and services that aren’t delivered through a cable provider, such as those offered by TiVo Inc., will also be available.

“There will be a lot of different applications, like gaming and video on demand. But a lot of people have a false impression that we’re only talking about sitting down at TV and surfing the Internet,” said Randy Littleson, vice president and general manager of Spyglass Inc., which makes software that allows interactive-TV applications to run on set-top boxes. “I don’t think that will be the winning paradigm. It’s ultimately about adding value to the existing experience. Those that figure out how to do that first will be the ultimate winners.”

The real fight will be to determine who will ultimately provide interactive TV, or be the gatekeeper, for the consumer, said Josh Bernoff, an analyst with Forrester Research Inc., a Boston-based market research firm. Cable operators will act as gatekeepers initially, although they will delegate a lot of this power to service providers such as WebTV Networks Inc., Wink Communications Inc., @Home Corp. and WorldGate Communications Inc.

Also at stake is how these services will be delivered to the home, whether via cable, satellite, traditional analog services, phone company or non-cable service.

As one of the pioneers of interactive TV, Microsoft Corp.’s WebTV is a leading contender to act as a gatekeeper for interactive-television services. WebTV has seen its subscriber base surge to about 700,000 in 1998 from approximately 200,000 at the end of 1997. Microsoft has licensed its WebTV software to Scientific Atlanta for use in the company’s next generation of digital set-top boxes. Scientific Atlanta, one of two major set-top box manufacturers in the U.S., can either use WebTV’s content or create a range of software options for each customer. WebTV hopes agreements such as these will help its platform reach a wider audience.

Also jockeying for viewers’ attention will be personalized TV provider TiVo. Early this year, it will offer two versions of its set-top box directly to consumers. One version can store a minimum of six hours of programming and will be priced at $300 to $500; a second model that holds a minimum of 20 hours of programming is expected to retail for less than $1,000.

Users plug this box in between the TV and antenna, cable box or satellite dish. Services provided through the box for a monthly fee of less than $10 include a programming guide that’s updated each night when the box dials into a TiVo database. Viewers can use the guide to program the box to record their favorite shows.

A hard disk in the box also remembers a viewer’s preferences--which the viewer indicates by clicking on thumbs-up or thumbs-down buttons on the remote during a show. Each day the viewer receives a list of shows for that day that includes their choices, plus other shows TiVo suggests based on the viewer’s preferences.

The TiVo system also allows viewers to pause, rewind and run in slow motion any live-action broadcast. TiVo executives hope to eventually license their technology to set-top box or TV manufacturers to embed inside their products.

“We’re trying to marry the computer and the TV in a way that enriches the TV experience for the TV viewer and hides the complexity,” said Michael Ramsay, president and chief executive.

Another potential service provider for interactive programming is New York-based ACTV Inc. Cable subscribers with digital cable boxes in Los Angeles will be able to personalize their sports viewing experience when ACTV rolls out its service here this year.

ACTV has an agreement with General Instrument Corp. to incorporate its software into the company’s set-top boxes. The service allows viewers to press a button on their remote to choose a camera angle for watching a sporting event.

Viewers can also request instant replays, statistics on each event and player profiles. ACTV will provide its service in Los Angeles using programming from Fox Sports West.

Although it’s concentrating on sports programming now, the company hopes to branch into other areas once digital cable and digital TV are more widespread.

An area of particular interest to ACTV Chairman and Chief Executive Bill Samuels is educational programming. For example, “Sesame Street’s” Big Bird could help a child solve math problems and then reward him or her for the right answers by letting the child change his color.

“What you see and hear on TV is totally individualized and yet it’s regular TV,” Samuels said. “So for prerecorded programming, this means programmers could do totally individualized instruction over the air, which has tremendous implications for educators.”

Wink Communications, which sells products that allow broadcasters to add interactivity to their programming as well as software that allows data to be viewed on set-top boxes, has licensed its technology to several television manufacturers.

Last month, Toshiba Corp. released three analog TV sets--ranging from 36 to 55 inches wide--with Wink technology that allows consumers to interact with programming developed by broadcasters that have partnership arrangements with Wink.

In Las Vegas this week, Wink will announce partnerships with TV manufacturers that plan to design Wink-enabled TVs for the U.S. market, said Michael Baehr, director of communications at the Alameda, Calif.-based start-up. WebTV is also collaborating with Thomson Consumer Electronics to install its platform in Thomson’s TVs.

Industry watchers agree that no matter how many alliances software and hardware suppliers sign, content providers won’t be able to accurately determine exactly what services consumers want until the infrastructure is firmly in place to distribute interactive TV.

“The critical component missing in the alliances with hardware and software providers is content,” said Jeff Craig, vice president of interactive technology at the Discovery Channel. “We don’t know what the real revenue model is yet. We’re going to spend the majority of 1999 experimenting and doing research.”

Times staff writer Jennifer Oldham can be reached via e-mail at jennifer.oldham@latimes.com.

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Interactive Information

With the arrival of digital TV in the nation’s largest TV markets and the impending roll-out of digital cable, analysts expect the number of interactive TV subscribers in the U.S. to skyrocket from 400,000 in 1998 to 24.5 million in 2005. The expected increase in interactive TV services in the next seven years, in millions of U.S. households:

2005

Non-cable devices: 2.6

Analog cable: 2.8

Digital cable: 19.1

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Source Forrester Research