The Other Next Platform: ITV Gaming Takes Its Time

Electronic Gaming Business, Jan 28, 2004

Like video phones and flying cars, interactive television has been that invention that was supposed to change everything...any day now. While ITV took deep, fast root in Europe and the UK, the U.S. seems to have been in R&D mode for at least a decade now. But with the rise of more robust digital cable boxes, video on demand, and personal digital recorders, both TV providers and viewers are slowly slipping into interactive mode. One of the chief beneficiaries of this emerging platform could be the gaming industry, which has familiar properties waiting to be licensed into the space and which continues to look for ways of monetizing the casual gaming audience that ITV gaming seems to target. According to Datamonitor, online gaming (gambling included) is the single biggest revenue stream for ITV providers in the Europe/UK market.

In the U.S., ITV continues to be a patchwork of technologies and service providers in trial mode vying for the attention of cable and satellite companies for carriage. Nevertheless, gaming is already a lead-in feature for the platform. "[Rupert] Murdoch has had tremendous success with games in the U.K.," says Sangita Verma, CEO, TVHead ( http//www.tvhead.net ), which recently created an interactive games channel for set top boxes that will include Pop Cap's Bookworm and Midway's Gauntlet.

Murdoch initially included games in ITV as a freebie but its wild popularity convinced them to make it a premium service, says Verma. TVHead has partnered with ICTV, which provides platform agnostic middleware for ITV cable systems. The TVHead channel will be ready early this year for initial trials, probably with a $4.99 to $6.99 initial monthly fee structure. Verma thinks that interactive gaming on ITV could be more popular than many premium movie and sports channels, which typically garner about 10% of a system's subscriber base. "I don't think getting a 20% subscriber base is unreasonable," says Verma. "That's what we're shooting for." "Gaming revenues via interactive television have been projected to be as high as $2.7 billion by 2006," adds TVHead chief creative officer Robert Craig.

Among the first real world ITV gaming rollouts, OpenTV's gaming division PlayJam, was made available to 7 million Dish Network customers last month. Subscribers ($4.99/month) to the games channel choose from five puzzle, arcade or casino-style games, which rotate each week. Creative director and executive producer Kevin Furuichi won't give subscriber numbers only a month into the project, but he will say, "we're doing twice what we anticipated, and we haven't actively promoted it." OpenTV/PlayJam are owned by major media conglomerate Liberty Media, and some analysts consider it to be on the fast track for wide deployment in the U.S.

Indeed, gaming might be ITV's killer app and a monstrous force in the U.S. Research firm BMRB discovered that 59% of European Sky Digital customers had participated in interactive games. OpenTV claims that PlayJam is the most widely deployed interactive channel in the world, available to 27 million users in Europe and the U.K., generating 1.6 billion games played in its first year and 500,000 daily visits in the U.K. alone. This has led at least one market analyst, Jacob Hayler of Datamonitor, to declare in early 2003 that "Interactive TV will overtake the PC as the platform of choice for casual gaming, and it will be imperative that games' industry players focus their strategy on the TV audience."

Found Money?

For game publishers who license properties into ITV, the emerging platform may be slow in coming but it could prove to be a risk-free investment. In the case of TVHead, game publishers simply license in their property and the company usually doesn't even need source code to translate the gameplay into its own Java and Flash applets. For the time being, of course, ITV interaction is done with a common TV remote, so basic arcade and puzzle games will be the norm for the foreseeable future. Nevertheless, the model favors familiar properties since a publisher's share of that monthly fee is determined by the amount of play time its game attracts among a menu of perhaps two dozen available games at any time. Brands may stand out for the users and also for the aggregator who is trying to sell the channel to cable and satellite providers. Verm says publishers will typically get 70% of the revenue from her deals, however.

Publishers may also get access to that elusive casual gaming demographic, because as Verm says, "What we're doing is no threat at all to the console market. We're after the casual gamer, many women over 25. They may have ten minutes to play before the next show starts." Early trials suggest that people will tend to game on ITV in much the same way they game on the Internet, in short bursts playing quick in-and-out games with familiar rules. The big difference, of course, is that ITV has a built-in billing system (the cable bill), and an audience already used to paying for premium content. "The message is clear," says media consultant Gary Arlen in CTAM Magazine. "It's time for cable and game companies to play together."