Interactive TV takes giant step forward

A consortium of heavy hitters in the entertainment and technology industries--including Intel, Microsoft, Sony, and Disney--announced today they are licensing royalty-free technology for creating enhanced TV content.

The agreement is a crucial component in the development of TV shows that will allow viewers to receive detailed sports statistics, for example, during a baseball game.

Broadcasters also are expected to use the capability to allow viewers to do more than simply channel surf. For example, consumers will be able to use their remote controls to purchase items while watching commercials.

The standard for distributing enhanced content is just one element in the drive to bring such services to couch potatoes, who have been reluctant to embrace current interactive offerings. On the hardware side, manufacturers are developing Internet set-top boxes, as well as new cable and satellite set-top receivers, digital televisions, PCs, and other devices that will be able to display content based on the just-announced software standard.

Coalition members have contributed technology and expertise to the development of the standard. They have also agreed to forgo charging royalty fees in a deliberate attempt to have hardware makers incorporate the technology into their devices.

Currently, television networks and others that produce interactive content must substantially reconfigured the data before it can be used on the growing array of television set-top receivers, PCs, and handheld devices.

The Advanced Television Enhancement Forum (ATVEF) standard that was announced today aims to solve that costly and burdensome task.

As a result of the agreement--and the expected increase in content-- consumers may finally be persuaded to buy hardware that enables interactive services. And that is good news for companies such as WebTV, Liberate Technologies, Wink Communications, and others.

Analysts say the development is significant because the deployment of new digital set-top boxes that will process the interactive data is picking up steam. By 2004, according to research from Allied Business Intelligence, there will be 252 million digital set-tops in homes worldwide, with the vast majority of those capable of offering interactive services.

"There are a lot of people looking at next-generation TV services, such as combining Internet features?but there are a lot of different approaches and technology," said Navin Sabharwal, an analyst for Allied. ATVEF's standard and similar efforts should result in more consumers demanding interactive services through their TVs, and that should further spur the industry to provide additional hardware and services.

Growing support for standards
"People are interested in doing commerce with remote off of a TV," said David Kaiser, chief executive of B3TV, a company that provides the software and hardware needed for TV-based e-commerce. However, networks have a hard time meeting that interest because they are creating shows for a nationwide network; they have been reluctant to create different versions of their interactive content for each segment in a patchwork quilt of cable systems an set-top receivers.

"At this point, the most important effort [to solve this problem] is ATVEF," Kaiser said. B3TV recently ran what is thought to be the first ATVEF-compliant commercial during a broadcast in the San Francisco area. During a commercial for Domino's Pizza, a small banner on the bottom of the screen was displayed for viewers using a WebTV device to order a pizza while continuing to watch the show.

Already, ATVEF has a number of powerful supporters in an array of industries that are attracted to the opportunities afforded by e-commerce via television, and the list continues to grow. Among the 21 new companies adopting the technology since May are companies such as Deutsche Telecom, Nokia, e-commerce consultancy firm iXL, and Pace Micro, one of Europe's largest markers of set-top boxes.

Another battle looming?
Despite its considerable support, ATVEF isn't the only standard being considered. Worldwide, a wide array of sanctioned standards bodies such as the U.S.-based Advanced Television Systems Committee and Digital Video Broadcasting in Europe are looking into the issue of how to advance TV through the use of Sun Microsystem's Java language, among other technologies.

OpenTV is among those who haven't signed on to ATVEF. The company is part-owned by Sun, meaning that Microsoft, one of the founders of the ATVEF effort, will indirectly be squaring off against its long-time rival.

OpenTV's stance is worth noting because it currently enjoys the largest number of deployments of interactive services worldwide at 3.5 million users, according to data from IDC Research. OpenTV estimates that number will grow to 5.5 million by year end, and by early next year most of satellite provider Echostar's 2.6 million users will have access to enhanced content that isn't ATVEF compliant. That compares to 800,000 subscribers for Microsoft's WebTV service.

ATVEF's early support has come mostly because of Intel and Microsoft's presence and reputation. That's because many in the broadcast industry are uncertain as to what direction the market is going, say OpenTV executives.

Mitchell Berman, senior vice president for OpenTV, said the company is watching developments with ATVEF, but believes the technology is lacking in some respects. Not surprisingly, OpenTV is emphasizing the use of Java in television systems to address the issue of making enhanced TV services available across multiple devices.

ATVEF is focused on allowing content to be displayed on multiple platforms, while JavaTV, as the software is being called, is focusing on hardware compatibility. Allied's Sabharwal said there are questions about the feasibility of the content-based approach.

There is an advantage to the ATVEF approach, said Marlin Davis, president of Screamingly Different Entertainment, a production company involved in the development of the standard.

"With a content-based standard, you have more eyeballs. That's the only thing that matters in Hollywood," he said. More viewers means that interactive services will penetrate the market more quickly, he claimed.

In any case, the use of ATVEF doesn't preclude the use of Java, and there is talk of making JavaTV compliant with the new specification, he added.