Interactive TV is success story for the UK

Nearly four million households will have interactive TV by the end of the year according to research firm IDC confirming that the UK is leading the world in this area.

While interactive TV has floundered in other countries, it is flourishing in the UK, according to IDC. Some experts regard interactive TV as a crucial asset in the battle against creating a digital divide in the UK, with TV opening the Internet up to an audience who do not own a PC.

Interactive services are offered by cable companies ntl and Telewest (quote: TWT) but Sky -- via its flagship Open TV service -- remains by far the biggest player in the UK, with rival ONdigital still some way behind.

Content is key to ensuring interactive TV reaches a mass market, according to IDC analyst Jason Armitage. "Content has to be sufficiently attractive to justify charging a monthly fee that will cover the cost of providing subsidised hardware," he says. Sky's decision to bundle interactive services with its TV content is a model being "picked up all over the world", says Armitage.

While content is important, new technologies are coming along which could revolutionise interactive services, IDC believes. Digital Video Recording (DVR) launched in the UK at the beginning of October via US company TiVo. It allows users to record and manage TV programming, achievable because of the installation of hard disks into set-top boxes. Armitage believes DVR could be the next big thing in interactive TV although he thinks TiVo may have its work cut out to convert the British public.

"The initial challenge for TiVo in the UK will be educated consumers on DVR and the benefits of personal TV," he says. "The business model of purchasing a set-top box with a service, although not completely unfamiliar to the UK market, will have to overcome resistance from a consumer base that is accustomed to free hardware bundled in with attractive content," he says.

While the public may need convincing about the benefits of DVR, advertisers and other service providers are already angered by the technology. Armitage believes it should be viewed as an opportunity rather than a threat. "Much has been made of the ability to fast forward through advertising. However, the storage of personal information on the hard disk also creates the potential opportunity for targeted advertising," he says.

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