Updated: Is This the Year for Interactive TV?

This article was written by Ben Homer, a NewTeeVee contributor who runs the site Online Video Watch.

Updated: More than 55 million homes will could be interactive TV-enabled by the end of 2009. according to research firm SNL Kagan, a number expected to reach 75 million by the end of 2010. Currently there are 30 million homes capable of receiving interactive programming as a result of the Enhanced TV Binary Interchange Format standard employed NDS and OpenTV standards employed by DirecTV and DISH Network, respectively. Research firm SNL Kagan expects the Enhanced TV Binary Interchange Format (EBIF) standard will be rolled out to an additional 25 million-plus digital cable and Verizon FiOS subscribers this year. In the meantime, ESPN recently became the first U.S. network to announce they will soon go fully interactive 24/7. In other words, this year should be a tipping point for interactive TV.

Interactive TV, which connects digital broadcast television to the Internet to enable a two-way viewing experience, has existed in Europe for years, but here in the U.S. it’s been handicapped by strict government regulations and cable operators resistant to change after years as operating monopolies.

Now that widespread consumption of online video is beginning put pressure on cable operators, we may finally be at a tipping point. Cable operator joint ventures in the form of Project Canoe and Tru2way, as well as the already widespread OpenTV platform, are finally making interactive television possible in the U.S. on a large scale.

“This is the year for interactive television,” Dalen Harrison, CEO of Ensequence, one of the companies leading the creation of interactive television experiences in the U.S., told us this week at the OnMedia conference in New York. “We’re seeing broad deployments with television networks going interactive.” The Portland-based company provides a single authoring tool to deliver interactive content across all platforms for cable companies, networks and advertisers. It first came onto our radar in 2007 when it announced $40 million in Series C funding; it has since signed up an impressive client list.

Ensequence powered NBC Universal’s interactive Summer Olympics broadcast for DISH Networks, which was utilized by 41 percent of subscribers. It’s powered QVC UK’s interactive service, allowing viewers to purchase items using only their remote control, since October of 2008.

“Anything that keeps [viewers] on television is a far better proposition than sending them the Internet,” Harrison said. And the results speak for themselves. He says that, on average, when interactive elements are present, 20 percent of viewers spend 5 minutes interacting. During SpikeTV’s interactive broadcast of the Video Game Awards in 2007, 25 percent of the audience spent a half hour interacting on a two-hour show.

Above: SpikeTV Interactive Features During the 2007 VGAs

According to Harrison, the selling point of interactive TV for programmers, advertisers and MSOs is clear. “It combines the reach of television with the measurement accountability of the Internet,” he said. “You can use your current remote control, current set-top box, no change in hardware. You have a call to action on your television set and it just works.”

ESPN clearly agrees. Starting in June, it will begin rolling out three new interactive features on its networks: A polling application tentatively called ESPN My Vote; ESPN In Game Extra, which will enable viewers to get additional stats and information during live events; and My Bottom Line, which will be available to Tru2way viewers anywhere ESPN displays a bottom line.

That said, it’s still early days. There are a number of hurdles for companies seeking to provide more innovative interactive experiences in the U.S to overcome, and a lot of work to be done in order to standardize interactive ad formats and bring interactive TV to the mainstream. And even if it is possible to reach 100 million households with interactive experiences, that doesn’t mean networks will be able to monetize it or that advertisers will flock to change their existing methods. But for viewers new interactive features can’t hurt, and we can look forward to seeing more of these in the coming months