Getting Interactive Over Here


Many in the communications industry think interactive TV will be the next big technology, but when it will arrive is still the stuff of contentious debate. The slow conversion to digital TV, as well as arguments over technical standards, have delayed a mass-market rollout in the U.S., leaving iTV trailing far behind Europe. There, couch potatoes can order a pizza or gamble from the comfort of their own living rooms via TV.

Recently, BusinessWeek Online Technology Reporter Jane Black sat down with OpenTV (OPTV) CEO James Ackerman to discuss what will make iTV take off in the U.S. Ackerman, who led the charge for iTV in Britain at Murdoch's BSkyB (BSY), says the wait may be over sooner than many believe. Here are edited excerpts from the conversation:

Q: What does OpenTV do?

A: We supply the technology that enables interactive TV to be possible. So if you look at leading interactive-TV platforms around the world, like Sky Digital, TPS in France, and others, what you see is that the core technology underlying their applications is provided by OpenTV.

Q: Which are the most popular services in use in Europe?

A: Games on television have proven to be very, very popular. And I mean gaming in its fullest range. [From] simple games for children to full betting alongside sports channels -- that's now available in Britain. Another area is impulse purchasing -- seeing something that you like, maybe seeing a video, deciding that you want it, pressing a couple of buttons, and you've ordered it.

The third thing that has taken off is e-mail on the TV. It's mass-marketed, it's easy to use, it's available for everybody. You can imagine watching Sex in the City and chatting with your friends while you're watching that program, or a football game, or whatever it may be. It's fun, and it enhances the TV-viewing experience.

Q: One of the things that made iTV take off in Britain is that Murdoch gave away all the set-top boxes for nothing. It's more likely that people will try a service they get for free than one they have to pay for, no?

A: Yes, the rapid growth of Sky Digital is a product of having given the set-top boxes away. The take-up and usage in interactive TV, I believe, is down to the fact that we were very viewer-focused in the creation of interactive-TV services. We made them very easy to use, secure and simple, and TV-focused, very tele-visual. That separated our interactive services from a lot of other interactive-TV trials that have been conducted in the world where the focus was on technology.

Q: When will iTV take off in the U.S.?

A: It really is in its infancy. But that's going to pick up. We already have 1 million OpenTV-enabled set-top boxes in the U.S. through our relationship with EchoStar's (DISH) DISH network. If [EchoStar CEO] Charlie Ergin hits his own targets of between 4 million and 5 million OpenTV-enabled boxes in the U.S. by the end of this year, we're not that far away from having an interactive-TV platform in the U.S. that's nearly as big as Sky Digital in Britain.

Q: You obviously have experience from BSkyB in figuring out what does work. Does OpenTV develop applications?

A: We do both. One of the reasons I joined OpenTV was to help OpenTV move up that value chain. To help it move from just being the base middleware, upon which interactive-TV services and applications run, to providing the underlying technology behind interactive TV and the applications that operate on top of it.

So it's very much our move. If you look at our EchoStar relationship, we are their interactive-TV partner. We are there to help them run multiple interactive services across their platform. Some of these individual applications will be created by us, such as our interactive weather services, and some will be created by others where we integrate that functionality into our technology.

Q: Where do you expect most of your revenues to come from?

A: Our revenues are broken up between royalties for set-top box deployment, licenses for other pieces of technology, like our interface [called Mosaic], or tools.

We also get revenues from our professional-services organization that goes in and does set-top box porting, launch management, test integration, maintenance, support, and all that stuff.

And then there's applications revenue. I'm growing -- aggressively growing -- our applications revenue line while at the same time focusing the sales staff on getting as many operators signed up as possible.

Q: What looked like a great idea for iTV but has flopped?

A: I would say the one thing that stood out as unproven is the whole area of provisioning, doing your clothing shopping or your grocery shopping, things of that kind.

Q: What about sports? I've heard anecdotally that people don't care for multiple camera angles.

A: I think it depends on the sport. At Sky Sportsactive, they learned that what the consumer really wants is the replays and less the camera angles. So a director who specializes in covering live sporting events knows how to cover that field. I might want to sit the camera behind the net during a penalty shootout. That might be kind of fun as a novelty. But I can't navigate my way around the field better than the director in the truck.

But if I can keep going back and seeing replays -- say, my friends come in the room and say, "You have to see this goal that happened two minutes ago." I can go into the replay section -- that's kind of cool.

Q: If Rupert Murdoch's News Corp. (NWS) were to buy DirecTV [from General Motors Hughes Electronics unit], do you think that would be the real kicker?

A: I think it would. Mr. Murdoch has said that BSkyB was their interactive-TV lab. In many respects, a lot of the work that BSkyB has done in Britain would be -- could be -- transferable to the U.S. if Mr. Murdoch owned either DISH network or DirecTV.

And so obviously, he'd want to take a lot of the work that had been done there and transfer it across and start generating those same kinds of revenues here that he's been able to there.


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