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AOL TV no threat to digital players - Analysts

AOL's decision to expand its empire to interactive TV will be no threat to digital services such as Sky or ONdigital, according to analysts.
Written by Jane Wakefield, Contributor on

AOL -- which recently acquired Netscape -- is working on a new television service called AOL TV. No timetable or details for the American service are yet available, but AOL envisages the service integrating online and television content.

Analysts agree AOL is using TV as another service platform rather than migrating to a new industry. Yankee group analyst Andy Greenman believes the online mammoth is reinforcing its "AOL everywhere" message. "It is a chance to gain more eyeballs," he said. AOL is more likely to be seen going head to head with Microsoft and its interest in Web TV rather than competing with Sky Digital, according to Greenman.

Datamonitor analyst Chris Buerger agrees. "Digital TV is driven by the broadcasting aspect rather than interactivity," he said, adding that Sky will eventually offer interactive services like shopping and banking but any Internet access will be with a "walled garden" approach rather than public access to the whole Internet." According to Buerger, AOL has been investigating the possibility of Internet access via cable TV for several years in Europe and has made an agreement for a trial with Channel Plus in France.

Sky has been offering customers digital TV since October of this year but has no plans for full blown Internet TV. A spokesman for the company believes there are two reasons for this. "Firstly it looks awful. The Internet was designed for PC monitors, not TV screens," he said. Furthermore it is not what customers want. "People use TV in a different way to the computer. Sitting in front of the TV is much more passive than sitting in front of the PC and people don't want to press a lot of buttons," the spokesman said.

Sky does plan to launch a teletext style service in the middle of next year. "Customers will have programme clips on a loop so they can get the news headlines or watch goals from a football game," the spokesman explained. AOL has more grandiose plans -- people watching a football match will be able to chat to friends online simultaneously.

Interactive TV is set to explode over the next 5 years according to Jupiter analyst Phil Dwyer. Recent Jupiter research predicts over nineteen percent of UK households will have some form of interactive TV by 2002. Dwyer believes digital TV and the kind of Internet TV AOL will offer can exist side by side. "Many people will have AOL TV as well as digital TV," he said.

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