Interactive TV-- Will it ever arrive?

At the Western Cable Show, cable moguls, programming gurus and advertising experts differed in opinion as to how quickly TV watchers will want to interact with their televisions -- be it by calling up information, shopping or otherwise being distracted from the show they are watching.

The gathering may be convinced that interactive TV is inevitable, but by no means do they think it will come soon.

"TV is a really passive experience to begin with. It's called the stupid box for a reason," said Kirsten Jansen, director of new media research for content maker Lunatic Fringe.

Market researcher Jupiter Communications, however, believes that more than 30 million interactive TV set-top boxes will serve as conduits for producing some $10 billion in sales in 2004.

But cable companies and content makers are not so sure interactive TV sales will come that quickly.

A creator of video content for music videos and commercials, Lunatic Fringe is now wondering whether it should advise its clients to add interactivity to their programs. "We don't want to invest all this time and money if it flops," Jansen said.

Jansen cannot be blamed for being skeptical. Enhancing TV with digital smarts has been a promise long unfulfilled.

"Interactive TV has been a tremendous flop over the past 20 years," said Phil Goldman, general manager of TV platforms for Microsoft Corp. (Nasdaq: MSFT), during a panel discussion. "One of the things that we have learned is that content is hard to make."

Not only that, but the infrastructure that cable companies need to install to make interactivity work is daunting, said Richard Fisher, executive vice president of interactive e-commerce content maker RespondTV Inc.

"America Online deals with 1.2 million or so subscribers online at peak usage. Imagine that 'ER' is on and 5 million people click on an interactive element," he said. The result: a storm of requests for data with which even the most robust network will have trouble dealing.

RespondTV's solution is a better infrastructure so that advertisers can offer products that people can buy interactively using only their remote control.

In the eye of the viewer
Another problem for the industry is that no one can agree on just what interactivity is.

Ted Turner, vice chairman of Time Warner Inc. (NYSE: TWX), spoofed what some interactivity proponents have been advocating.

"Being able to make a sports game turn out the way you want it to will be a feature that people want," he said. "If you want to press a button to make your team win when watching a game, no matter what happens in reality, we'll have to deliver that to you. You won't even have to ever deal with reality."

Others argued people don't want to change the story; they just want to enjoy it.

"People will always want to sit down and passively access a story," stressed Barry Diller, chairman and CEO of USA Networks Inc. (NYSE: USAI). "It started with campfires, and it will continue."

Michael Bloomberg, president and CEO of Bloomberg L.P., agreed. "I don't think people are going to customize a show," he said. "People will instead say, 'I have two hours and I want to spend them the best way possible.' Another is that they want to watch the shows they like, when they want."

That's a problem that a new device, known as the personal video recorder, has been designed to solve. TiVo Inc., ReplayTV Networks Inc. and Microsoft have rolled out products that allow users to program what they want to watch and when. Letting consumers customize TV viewing could help solve traffic spike problems to interactive sites described by RespondTV's Fisher.

So-called smart TV technology isn't so appealing to advertisers, however, who fear users will fast forward past their messages.

It's an old problem with a new twist, Bloomberg said. "We want to use technology to get more ads to the consumer, and the consumer want to use the technology to have less ads. That's a normal battle."

One solution might be product promotions built right into the programming, like Jeff Goldblum's use of an Apple Macintosh portable in "Independence Day." With the ability to add touch-of-a-button interactivity, consumers might be tempted to seek more information or even purchase an item featured during a program.

It is not surprising, however, that cable companies want to be convinced that interactivity can deliver e-commerce to the TV.

RespondTV, along with rivals Wink and ETV, has been pushing hard to prove the worth of interactive television. In a pilot with Domino's Pizza, RespondTV offered free pizzas to about 1,000 WebTV subscribers who filled in an interactive commercial on the TV.

"To the advertising sales forces of the world -- your life is about to change," said RespondTV's Fisher. "The implication for the advertising agency is tremendous. Don't resist it. Embrace it. Or you will get run over."

One example: RespondTV is enhancing the Bloomberg network with interactive quotes that carry interactive ads.

Yet advertisers are still not convinced. The Game Show Network, with five interactive shows -- including "Jeopardy" -- in its line-up, is having a hard time convincing advertisers to pay for interactive content.

"Advertisers are struggling to come to grips with this new technology and how they can benefit from it," said Jak Tauber, executive vice president of the network, which has 25 million subscribers.

Just doing the interactivity for "Jeopardy" is fairly time-intensive, said Sam Barone, chief technology officer of Mixed Signals, the development firm that adds the interactive signals to most of The Game Show Network's interactive programming. "However, the effort doesn't even register compared to the amount of effort to produce the actual TV show," he said. "The additional work is not that much of a trade-off."

The fact that a new standard for interactive TV has been agreed upon is also helpful.

The Advanced Television Video Enhancement Forum defined a set of interactive features that can be added into TV signals. Already, about 300 to 400 hours of television programming every week are made interactive using ATVEF. "Having formal standards with a minimum level of functionality is really helpful," said Barone.

Turf tussle over TV
The final hurdle for interactivity may be industry politics.

Most of the data used to deliver interactive content is delivered in the "vertical blanking interval" -- a small amount of blank space typically sent along with every frame of video. The problem: Everyone is trying to lay claim to that valuable piece of electronic real estate.

Advertisers and content makers believe that they should be able to use the additional space in the channel being delivered to the viewers. The cable provider thinks it should own those additional bits. The debate gets hotter when someone's content -- say, a Ford commercial that pulls viewers away to a Ford Web site -- steals a viewer away from the channel's other ads and content.

"If you can just add a link in the stream that takes people away from other's content, that's a big problem," said RespondTV's Fisher. "Number one, I've lost my viewer. Number two, I may not have gotten paid for that delivery of a potential customer."

In the end, interactivity may be able to deliver a lot, but if it doesn't deliver more dollars, cable companies may just pass.