TCS Daily

Is There Life After Television?

By Edward B. Driscoll - November 4, 2002 12:00 AM

In his 1992 book, Life After Television, George Gilder wrote that it was only a matter of time before television - that static, one-way, top-down couch potato medium - would be replaced with something interactive, fluid and flexible, shifting at least a little of the power from the networks back to the consumer. Of course, a few years later, the invention of the graphical Web browser running on PCs essentially rendered the concept of interactive TV superfluous.

Or did it?

While the Internet exploded with a bang, interactive TV has taken a much quieter path to its current state, where it's going through plenty of experimentation, and only so-so customer acceptance.

Two Trends That Have Worked...

Adi Kishore is an analyst of media and entertainment strategies with The Yankee Group, a Boston-based technology consulting and research firm. He says that the most obvious area of success for interactive TV has been interactive program guides (IPG), which "are going extremely well, in that pretty much every digital cable set-top box that goes out has an IPG in it, as does every satellite receiver. So they have penetration. Our consumer data shows pretty clearly that consumers like using them, and that they appreciate the convenience that the IPG offers."

IPGs help to facilitate another area of success for interactive TV - pay-per-view movies and sporting events. Here, two models are rapidly emerging: cable companies are using video-on-demand as a key differentiator between their services and those of digital broadcast satellite (DBS) providers such as DirecTV and Dish Network. The current architecture of the satellite system makes video-on-demand impossible to add. So DBS providers are using a strategy based around hard drive-equipped personal video recorders such as those marketed by Sonic Blue's ReplayTV brand and TiVo Inc. to prerecord material, which the customer can purchase if he wants to.

For years, when a television viewer purchased a pay-per-view movie, he had to wait for its viewing time to watch it. The current strategy for cable companies is to create a video-on-demand system that starts as soon as the customer purchases the show. Once the purchased show begins, thanks to the interactive features built into his set-top box, the viewer will have full VCR functionality over it, and can watch the show, including starting, stopping and re-starting it, whenever he wants.

How quickly are cable companies rolling out that system? Kishore says, "It's moving very quickly. Cable companies are very keen to roll them out, primarily to face the threat from DBS."

Because cable TV has long been essentially a geographic monopoly, digital broadcast satellite is the first real competition that they've had. Kishore says that cable companies have "started to lose some of their higher-end subscribers, who wanted more channels, wanted digital quality, and were unhappy with customer service."

And that sort of competition continues. Cable is hoping that video-on-demand will be the killer app that allows them to best satellite television. The technology behind DBS creates a great platform for providing users with hundreds of channels, each with the potential for a limited amount of interactivity, but Kishore says that DBS "is not very good for individual streams of video-the bandwidth sums very quickly, and it's difficult for them to manage that."

...And Two That Haven't

As we said, because video-on-demand won't be available via satellite anytime soon, the DBS broadcasters' solution is to put a hard drive in every home. Along with being built-into high-end TV sets, this top-down push may eventually be the way that personal video recorders (PVRs) such as ReplayTV and TiVo become accepted, as they're proving to be a much tougher sell to consumers as stand-alone products than originally anticipated. Already, Microsoft has announced that they're discontinuing their UltimateTV set-top box, which ran on the DirecTV system (they'll continue to support existing boxes, however-and look for similar technology to eventually appear in their more successful Xbox video game system).

Anybody who owns a PVR loves it (and I'm no exception). So why have they been so slow to catch on? Because they're a product caught in a classic Catch-22 situation. The Yankee Group's data shows that many consumers (especially those who watch television during primetime between 8 and 11 p.m.) just aren't interested in time-shifting. And the ones who do time-shift already own a VCR and don't see the convenience of digital boxes such as TiVo and Replay.

Advertising hasn't helped much. Curiously, many of the ads run by the PVR manufacturers have been terrible. They've rarely done a thorough job of explaining why a consumer needs a hard drive in his living room, especially when the manufacturer only has a 30 second TV ad to do so. But Kishore thinks the PVRs' reluctant acceptance by consumers goes beyond that. When consumers do buy PVRs, they generally love them, but Kishore adds, "it's very difficult to get it into the consumer's home. Because that benefit is not easily recognizable by the overwhelming majority."

However, PVRs have spread like wildfire compared with the retail aspects of interactive TV, which is a concept that simply arrived 20 years too late. If it were possible to buy products interactively off TV in the 1980s, it would probably have been wildly successful (just look at the revenues of channels such as QVC and The Home Shopping Network, and they're simply built around 800-numbers). However, the rapid growth of broadband has rendered interactive TV shopping as somewhere near DOA. "This whole concept of television commerce hasn't really taken off," Kishore says, "and the reason is that in some cases, it's easier to buy products off a broadband connection. In all cases, it's easier to navigate a Web site, and really look around and kind of figure what you're really interested in." And that kind of comparison-shopping provides a comfort level to many buyers that is far superior to the crude 'point, click and buy the hot product of the day' style of typical interactive TV commerce.

Truly Interactive TV Will Happen-Someday

Which brings us back to where we started: the current state of interactive TV is a lot of experimentation, with decidedly mixed results. In time, of course, Gilder's prognosis will really come true, and television and the Internet will likely eventually merge into one unified system (something the folks at Internet2 are more than keen on). However, it will be years before the Web is fast enough to sustain streaming DVD or HDTV quality video. But when that level of technology is reached, truly interactive TV will be available.

And then we can worry about life after television.



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