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Cable World, April 4, 2005

The competitive imperative of getting (inter)active...what will it take for cable to get out in front?

By Mavis Scanlon

Cable's biggest competitors are proving to be big supporters of ITV, sparking concern that DBS distributors and telcos will use these interactive services to steal subs from cable. DirecTV and EchoStar are pushing the promise of interactivity. And telcos have pledged lots of interactivity once they finish building their robust two-way networks.

Cable says it's ready for the onslaught, but so far its overall offerings have been lacking. After fits and starts, cable once again is zeroing in on interactivity. The difference this time? Interactivity is not simply the next item on the industry's to-do list; it's become a competitive imperative.

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"I don't know if it's at the top of the list, but [interactivity] certainly is climbing the list rapidly, in fair measure because of competitive pressures," says Jim Chiddix, CEO, OpenTV. "Interactivity is clearly part of the value chain that [satellite companies] think that their product is going to have and something that cable is thinking hard about responding to."

There's no doubt that interactivity is climbing the list for DirecTV, which made a big splash at the Consumer Electronics Show in January. Its launch of a new suite of interactive services, DirecTV Active (weather, horoscopes, stocks), was imminent at press time.

DBS particularly shines with its interactive applications for sports. At CES, DirecTV touted an application for its popular Sunday Ticket NFL package that allows viewers to watch six games on six screens at once and toggle the audio among them.

EchoStar's been getting into the interactive act as well. In February, it launched an interactive shopping channel (powered by OpenTV) for the Sharper Image retail chain. That channel, along with TVG Interactive Horseracing, which Dish launched in March, is among 26 interactive channels offered by Dish.

Still, cable has an inherent interactive advantage over satellite, thanks to its two-way network, which allows for an instant return path. (Telcos will have the same advantage.) Early on, some operators, such as Charter and Insight, started rolling out interactive services. And, of course, VOD is a form of interactivity. But this year the two biggest cable operators are gearing up for far wider deployments of interactive applications, from interactive advertising to more comprehensive search functionality for program guides. And where Comcast and Time Warner go, the industry will follow.

Cable's Interactive Two-Step

Comcast's recent moves to take control of the technology in its set-top boxes underscore its desire to do more through the set-top. It will gain far greater influence over the development of conditional access technology in its set-tops as part of a $1 billion multi-year deal it announced with Motorola in March. It will be able to more easily integrate the head-end functions that enable interactivity and VOD set-top functionality, thanks to the $82 million purchase of middleware provider Liberty by a Comcast and Cox joint venture. And it gained more freedom and control in developing interactive programming guides following last year's formation of a joint venture with TV Guide.

Time Warner Cable also has been at the forefront of testing and deploying interactive services in its Hawaii, San Antonio, Rochester, N.Y., and Maine divisions. It has used a variety of interactive software vendors, including Navic Networks, Biap Systems, Buzztime Entertainment and Gotuit Media. In San Antonio, the MSO recently launched Instant News & More, an interactive service enabled by Biap that features news, sports and weather info, as well as stock updates and local updates.

"It's well-used, it's popular," says Dan Levinson, EVP, marketing, Biap. "All the consumer needs to learn how to do is push the 'A' button."

Time Warner Cable also is rolling out a new navigational tool, called Compass, that will have some interactive software built in. The company will deploy Compass more widely this year, meaning the pace of its interactive deployments will quicken.

What Are We Waiting For?

To date, interactivity from cable operators has been more of a trickle than a flood. Multiple set-top boxes, various middleware suppliers and the lack of standards to which developers can write interactive applications have kept growth at bay. Further, many applications seeking homes today are still in test mode, as cable operators continue to evaluate the services that will stick.

"Interactive television is kind of like the Loch Ness Monster," says Mark Hess, SVP, digital television, Comcast. "There have been a lot of sightings out there."

Comcast views interactivity as both a churn buster and a revenue generator. But Hess says Comcast's recent deals were made with the simple premise of trying to improve viewers' television experience--a critical step that has to occur before interactive applications can be layered on top. "This has been a long strategy that's coming together for Comcast--to get a little more influence over the user's experience. Now that we've got that, people will naturally be able to build to [our technology platform] and deploy," says Hess, whose experience with interactivity dates back to the Sega games channel of the mid-1990s.

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Another Reaction

Cable World, April 4, 2005

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