Interactive TV: New Potential, New Profits
Interactive TV (ITV) is just one of many attractive entertainment options for content providers and Direct-to-Home (DTH) and Direct Broadcast Satellite (DBS) operators alike. Satellite-based ITV opportunities include rich interactive programming guides (IPG), home shopping opportunities, interactive games, advertising, reality TV voting and remote betting, which in the United Kingdom and elsewhere is often referred to as interactive gaming.
According to Yankee Group Analyst Adi Kishore, ITV via satellite is all about having a competitive edge, driving customer satisfaction and opening up new potential revenue streams, while satisfying the demand by content providers for multiple avenues of distribution. He emphasizes that satellite is far ahead of any other technology in the delivery of ITV, and that U.S. readers in particular might be unaware that other satellite service providers in Europe, such as BSkyB in the United Kingdom and Televisione Par Satellite in France, offer ITV applications.
"The forces shaping the ITV world include the emergence of Liberty Media as an ITV powerhouse due to the ongoing consolidation of ITV intellectual property there [at Liberty media] under the Liberty Broadband Interactive banner. This includes OpenTV, Wink and ACTV," says Kishore.
"Even more importantly, the entry of News Corp. into the U.S. market via DirecTV is very significant combined with its focus on developing a common global technology platform, which will enable it to more rapidly launch new ITV products," Kishore adds. "News Corp. is confident that its investment in ITV over satellite will pay off. The successful roll- out of ITV by BSkyB is a case in point. More than $300 million in ITV revenue was generated last year by the Sky Active ITV service, for example."
Sky Brasil will soon launch an interactive TV shopping channel in Brazil with Shoptime using NDS iVideoguard for content and transaction security, and NDS Core middleware. NDS XTV is part of the mix as well. Besides home shopping, sports programming with multiple camera angle option for the viewer has taken off like a rocket.
"When the multiple camera angle enhanced viewing option was introduced by BSkyB in the United Kingdom as part of the Sky Sports Active offering, it doubled the subscriber take up rate throughout the first eight months of this year," says Dov Rubin, vice president and general manager of CA-based NDS Americas.
Rubin expects the United States to soon see the kind of ITV activation process that BSkyB uses today where the appearance of a red dot on the TV screen alerts the viewer to initiate an instant downloading of an ITV application, if the viewer wants to engage in a specific ITV experience.
Some executives in the industry, however, say that significant ITV applications will enter the U.S. marketplace when open standards are adopted. "Right now, primarily what has been deployed worldwide for ITV applications are proprietary middleware platforms. Thales is very much behind open standards. There are open protocols currently being written for interactive TV applications," says Howard Barouxis, director of sales for Thales Broadcast and Multimedia. "Open standards we feel are better for the industry. In the end, the consumer will see more interactive TV applications. Interactive TV will truly take off in the United States once open standards are adopted within the next few years."
Currently, Thales offers a turnkey solution to broadcasters that allows them to launch interactive TV portals containing anything from news to general program information. The sub-system includes Thales’ Coral MHP broadcasting server that supports simultaneously MHP, OCAP, OpenTV or MediaHighway interactive formats, to broadcast in real-time interactive applications; its Amber DVB digital TV processor, to manage digital streams; its Amethyst advanced switcher to manage the redundancy of the complete system; its Synapse is a manager of multiple Coral’s; and a QPSK modulator.
"Interactive gaming, gambling and e-commerce that have all succeeded abroad as ITV platforms can soon experience the same success within the United States. Any application that can generate revenue or will increase viewer loyalty and decrease churn among subscribers will benefit the broadcasters most," Barouxis adds.
"Higher order ITV applications, such as banking and home shopping will warrant having a conditional access solution tied to them. This does not impact the cost of the STB [set top box] because the application is downloaded in real-time when selected by the viewer," says Rubin.
BSkyB is opening up both its business model and its platform via its Sky Active program, which steps away from the prior exclusive approaches and allows third parties to define content. The adoption by Sky of Wireless Access Protocol-based WTVML–Wireless Access Protocol TV Markup Language–in the process allows for the rapid creation of templates, among other things.
The so-called WTVML micro-browser is downloaded directly into the STB, and it enables thin client or smaller processor equipped STBs in particular to handle ITV content. Sky customers can take advantage of a multichannel ITV authoring platform from U.K.-based Volantis Systems known as Multi-Channel Server (MCS), which is applicable to all Markup and XML-based content aimed at both satellite STBs and mobile portals simultaneously for browsing content, and transacting via dial-up modems, if available. MCS generates WTVML for the Sky Active platform, and different markup languages for other platforms and devices.
"WTVML and the Sky WTVML micro-browser have lowered the entry or authoring cost for ITV content providers, and the way that both the browser and content are delivered via the broadcast path has enabled content providers to put their ITV content on the platform more easily," says Martin Jones, head of device research and product management at Volantis Systems.
With Sky Plus now being deployed based on Digital Video Recorder (DVR)-equipped STBs using the NDS XTV technology, among other things, ITV is being propelled ahead more aggressively by Sky at the same time. "The ITV community has not really taken full advantage of the hard drive, not yet anyway. It is just a question of how quickly DVR STBs can reach that critical mass in the subscriber base so it becomes worth developing next-generation ITV applications," says Jones.
In the United Kingdom, as elsewhere, the enormous amount of installed bases of older first and second generation STBs is hindering the ability of satellite service and content providers to jump start a cluster of new satellite-based ITV services using MHP with either MPEG-4/part 10 aka H.264 or Windows Media 9 encoding and front ends.
"We are caught between a rock and a hard place," says Mark Cronin, technical director at U.K.-based Kingston inmedia. "We can see the potential of MHP being restrained by all the legacy systems now in place."
Cronin points out that there is a growing demand for thin client multi-use appliances that can accommodate multiple applications downloaded on demand to the STB. Even with the sudden appearance of DVRs, with their larger hard drives in the home; however, neither the satellite nor terrestrial ITV markets are maturing as quickly as many expected. "There is a general reluctance by the service providers to engage in any dual illumination so that service can be provided to legacy STBs as well as the new advanced STBs at the same time," says Cronin.
With an ITV menu consisting of 14 channels, Dish Network, which is part of CO-based Echostar Communications Corp. is offering satellite-based ITV services in North America. The ITV selections include kids, sports, lifestyle, games, weather, customer service and entertainment ITV channels.
"As we embrace two-way ITV applications, which are dependent upon dial-up modems, we are creating personalized STBs," says Scott Higgins, director of interactive programming at Echostar. "The DVR is the cornerstone of our ITV strategy. It enables a lot of new ITV applications, and a richer experience. ITV gives us a competitive advantage, and it is good for customer retention."
All of the applications in question at Echostar are based on OpenTV middleware, and derived from the OpenTV software development kit. While Echostar is monitoring the progress of MHP-based ITV platforms in the marketplace, Higgins says Echostar is not implementing MHP middleware today.
"We have a solution that could be adapted for satellite, and we are quite agnostic in terms of the underlying transport," says Ed Graczyk, director of marketing for the Microsoft TV Division. The company started to pursue a satellite-based ITV strategy years ago, first with Echostar via the Echostar Plus box, which was the first DVR-equipped STB using the WebTV platform, and later with DirecTV via the UltimateTV service, which is built on the Microsoft TV Advanced solution. "We learned early on that there are limitations to any business model revolving around a subsidized STB where the subsidy is shared between more than one partner." Graczyk adds that lots of potential for IPTV rests in Asia and elsewhere, and there is no reason why ITV content, even ITV content originated in the Windows Media 9 format, could not be distributed by satellite.
"As we look forward to the future of in-home entertainment and information delivery, ITV is only one element. The future of ITV, HDTV and consumer broadband may be linked. As we drive down the cost of consumer broadband delivery, a dedicated ITV physical delivery mechanism may not be warranted," says Peter Garland, vice president of hub and network products at Montreal-based EMS Satellite Networks.
Momentum is Building
ITV over satellite is evolving quickly. DirecTV, for one, recently upgraded its NFL Sunday Ticket service with more of an ITV edge.
And what about a possible ITV role for the substantial amount of Ka-band capacity that Echostar and others either already have or soon will be acquiring throughout the coming months? To date, Echostar has only announced that it is beginning to explore its use for Internet access, for example.
"Lots of Ka-band capacity will be coming online rapidly in the next two or three years, especially in North America." says Garland.
As for MHP and other advancements at the STB, well again, momentum appears to be building. "While we have not seen much take-up of the new DVB standard known as MHP in the United Kingdom thus far, it is looking like the way forward for ITV in other parts of Europe such as Spain, Germany and Scandinavia. MHP is using XHTML, the language of the Web, which will also reduce authoring costs going forward," says Jones.
Still, MHP is just one of several options, and the market will no doubt generate more choices for content providers and service providers alike in the coming years. "Memory space in the STB is an issue, and at the same time, the viewer has to retain full control of the device in the home as well," Rubin says. "Service providers can go with the MHP middleware, which is a feature-rich higher-end solution, or NDS Core, which is a lower-end middleware solution that is less expensive to implement and takes up a fraction of the memory space required by MHP. Or they can go with both, depending upon their customers’ needs."
How interactive will ITV over satellite really become is anyone’s guess. The Ka-band return path door, however, is opening thanks to the continuing refinement of DVB-RCS and the efforts of EMS and others, and yet, nobody is rolling out this type of ITV over satellite platform today.
"The back channel problem looms large in this instance. Return path management remains a tricky issue for the DTH/DBS industry. Even in places like Asia where we may see very different multichannel video strategies emerging where a leapfrogging of generations of technology is possible due to a complete lack of legacy infrastructure, the return path issues will not be easily overcome," says Kishore.
"MHP holds out the promise of unlocking the value of multipurposed content, but again, you cannot get around this lack of advanced STBs," says Cronin. "And in the huge unserved or undeveloped markets of Asia, Eastern Europe and the Middle East, where a pure satellite-based MHP play makes sense from a technical standpoint, for example, you come up against the issue of what the consumer can afford."
As satellite broadcasters enhance their pay-TV menus with ITV services, they are able to take advantage of a shared industrywide view that adhering to a standards-based approach is the only way to go. At the same time, equipment manufacturers are answering the call with more capable platforms that allow the service providers greater flexibility along with the right tool-sets. Launching ITV services has become easier. So too has the process of ensuring the quality of the viewer experience, and the performance of the ITV- based revenue stream from end-to-end. Add it all up and it appears that ITV is a win-win for everyone involved.
Peter J. Brown is Via Satellite’s Senior Multimedia & Homeland Security Editor. He lives on Mount Desert Island, ME.