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Execs at Western Show Betting on iTV

But What Exactly Do Consumers Want, and How Much Will They Pay For It? By Denise Turner
itv: What do consumers really want?Digital TV networks are here and online. Interactive television is a quickly becoming a reality. What does it mean? Well, different things to different people. What people want from iTV is up to individuals, and companies are trying to figure that out. Regardless of what they conclude, iTV is being mentioned by many industry insiders as the next "killer app."

According to the 2001 Pace Report, a Gallup survey of US adults, American viewers want digital TV to provide better quality pictures and sound, and more choices in TV content. They would also like to shop from home on a TV, rather than a computer. OK, but iTV takes it one step further, doesnt it? Maybe several steps. With iTV, theres movies or shows on demand, local restaurant guides, or email via the TV. Theres also Enhanced TV, Individualized TV, Personal TV, Internet TV, On-Demand TV, Play TV, Banking & Retail TV, Educational TV, Community TV, and Global TV. How did we ever get along without all of this? Whats it going to cost? Is it worth it?

Those are some of the questions TV executives had in mind last week at the Western Show convention in Anaheim. They are betting iTV will boost growth in this decade, but are still puzzling over what services to offer, how much to charge, and how to market the two-way capabilities of iTV. Chairman Glenn Britt of Time Warner Cable said, "We can now do all the things weve dreamed about and thought about for 20 or 30 years." He added, "But, weve got to focus on what it is were selling, and what is the (value) proposition for consumers."

What is it theyre selling? A bundle of digital services, called interactive television. The form of the iTV content produced will vary. "Were very focused on content," said Mitch Kertzman, CEO at software maker Liberate Technologies Inc. "That will make the difference in acceptance of this technology." Current hot iTV products are video-on-demand (VOD) and subscription video-on-demand (SVOD).

Video-on-demand is a lot like present pay-per-view shows, but instead of watching a movie at a certain time and ordering it over the phone, VOD lets you watch a movie at any time, with just the click of a remote control, because movies are stored on computer networks.

Subscription video-on-demand is similar, but with SVOD, consumers pay a monthly fee, and receive a group of shows. So, you could buy a package of several episodes of your favorite show, and then watch them anytime you want to.

Insight President Michael Willner said viewing local restaurants menus before reserving a table is another popular option, as well as continuous local weather and news coverage. What is all of this going to cost? Insight offers four bundles of iTV services, ranging in content and price from $7.95 to $19.95 a month. Industry officials said the recession should not slow the digital business too much. Cable TV, historically, has been recession proof because it is cheap entertainment. Also, with the digital technology now in place, cable is in a better position it compete with the booming satellite TV business.

According to the Consumer Electronics Manufacturers Association, about 200,000 DTV products (set-top boxes or integrated receivers) have been sold in the U.S. since 1998. Analysts expect digital terrestrial penetration to reach 50 percent of all homes by 2006.

Meanwhile, the U.S. cable industry, with 68 million subscribers, had 5 million digital customers at the end of 1999, with projections for 10 million homes by 2001 and 40 million homes by 2006. The iTV roll-out will only pick up steam in 2002, as cable companies look to the new digital services to reduce "churn" of customer disconnects, increase revenue per subscriber, and enhance their competitive position against satellites.

Theres been a lot of talk about the potential to include DVD or personal video recorder (PVR) technology in digital set-top boxes. These features may be one or two years away, according to industry leaders. They emphasized the importance of these features being user friendly. "We have to learn to integrate DVD and recordable devices into one single application," said Pat Esser, Executive Vice President of Operations at Cox Communications, Inc. "We have to get to the point where we havent confused consumers."

Still to be resolved, too, are issues relating to shifting viewing times for TV shows, royalties for copyright holders and changes in how advertising dollars are spent and justified.

In the past, the question regarding interactive television had always been: Which comes first, the digital broadband networks to carry the interactive TV content, or the interactive content that justifies building the networks? The debate is now moot. iTV is here to stay!

DMN Reporter Denise TurnerDenise Turner is a Digital Media Net staff reporter working out of the companys Midwest Test Facility. Have a comment about the article? Send Denise a note at [email protected].

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Related Keywords:DTV Professional, Denise Gagliano, Western show, iTV, consumers want, interactive television, TV, killer app


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