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Me TV: What's holding back interactive TV?

A former AOL chief offers his take on why the industry landscape is littered with fruitless attempts at the convergence.

5 min read

What's holding back interactive TV?

By Barry Schuler
Special to CNET News.com

Technologists began talking about the delivery of entertainment and information services to the living room more than 20 years ago. But we're still waiting for the catch-all vision that falls under the title of convergence to become a reality.

No doubt, this is not a venture for the feint of heart. The graveyard of technofailures is littered with fruitless attempts at interactive TV. And while some of the ideas might ultimately prove to have been ahead of their time, most have never connected with consumers.

What's more, the medium hasn't changed dramatically since the days of Ed Sullivan, and most of the technology advances since then have turned what was a very passive activity into an even more passive one.

TiVo furnishes a great example. You regularly hear about TiVo customers who say the device has changed their lives. Yet the company continues to struggle with only 3 million subscribers--a veritable rounding error in the world of TV viewership. The failure of TiVo to catch fire speaks volumes about consumer passivity. The appliance might be

much better than a VCR, but it remains too complicated for most consumers to install and interact with.

Perhaps the technology industry's biggest mistake was to overestimate the desire to engage with new technology and underestimate how difficult it is to change consumer habits. So it is that some pundits believe that interactive TV will fail because consumers don't want to do

anything but zone out front of the tube. That may be true for the Baby Boomer generation. But new forces in motion may finally transform TV forever.

Convergence refers to the notion that once there are ubiquitous high-speed, broadband connections into households, several technologies

that have heretofore been delivered via discrete technologies and networks will all converge on the digital data technology that has powered the Internet: TCP/IP. When that happens, every appliance in your home will ultimately be transformed.

Before the Internet bubble popped, the concept of convergence became so overplayed that it seemingly joined George Carlin's famous list of unmentionable words. If uttered at all in media and Wall Street circles, it was referred to as "the C word." Convergence was so highly misunderstood that it was written off as a Silicon Valley pipe dream. Yet here we are in 2005, and it is playing out right before our very eyes.

Today, your telephone calls are delivered via a decades-old circuit-switched network. Your cable TV is delivered via a completely separate network, or perhaps your TV comes via good old-fashioned broadcast signals or maybe satellite. If you live in one of the 50 percent of households in the United States that have high-speed Internet, via either cable modem or DSL, that's yet another network.

What's holding back interactive TV?

By Barry Schuler
Special to CNET News.com

Technologists began talking about the delivery of entertainment and information services to the living room more than 20 years ago. But we're still waiting for the catch-all vision that falls under the title of convergence to become a reality.

No doubt, this is not a venture for the feint of heart. The graveyard of technofailures is littered with fruitless attempts at interactive TV. And while some of the ideas might ultimately prove to have been ahead of their time, most have never connected with consumers.

What's more, the medium hasn't changed dramatically since the days of Ed Sullivan, and most of the technology advances since then have turned what was a very passive activity into an even more passive one.

TiVo furnishes a great example. You regularly hear about TiVo customers who say the device has changed their lives. Yet the company continues to struggle with only 3 million subscribers--a veritable rounding error in the world of TV viewership. The failure of TiVo to catch fire speaks volumes about consumer passivity. The appliance might be

much better than a VCR, but it remains too complicated for most consumers to install and interact with.

Perhaps the technology industry's biggest mistake was to overestimate the desire to engage with new technology and underestimate how difficult it is to change consumer habits. So it is that some pundits believe that interactive TV will fail because consumers don't want to do

anything but zone out front of the tube. That may be true for the Baby Boomer generation. But new forces in motion may finally transform TV forever.

Convergence refers to the notion that once there are ubiquitous high-speed, broadband connections into households, several technologies

that have heretofore been delivered via discrete technologies and networks will all converge on the digital data technology that has powered the Internet: TCP/IP. When that happens, every appliance in your home will ultimately be transformed.

Before the Internet bubble popped, the concept of convergence became so overplayed that it seemingly joined George Carlin's famous list of unmentionable words. If uttered at all in media and Wall Street circles, it was referred to as "the C word." Convergence was so highly misunderstood that it was written off as a Silicon Valley pipe dream. Yet here we are in 2005, and it is playing out right before our very eyes.

Today, your telephone calls are delivered via a decades-old circuit-switched network. Your cable TV is delivered via a completely separate network, or perhaps your TV comes via good old-fashioned broadcast signals or maybe satellite. If you live in one of the 50 percent of households in the United States that have high-speed Internet, via either cable modem or DSL, that's yet another network.

A "C" change on the horizon?

In the next decade, we will see new versions of all of those familiar services delivered over broadband. We are already seeing voice over Internet Protocol, or VoIP, starting to get traction. Radio over the Internet is routine, and now that iPods have replaced Walkman-type devices and portable radios, consumer electronics companies are racing to deliver that music to home stereos.

Guess how it will get there? TCP/IP over your wireless or wired home network.

Flat-screen TVs connected to Internet-capable boxes like TiVo or a host of new emerging appliances will deliver movies, TV and even your home

videos right to your television, and that will set the stage for the biggest changes we have seen in TV yet.

With video, telephone, music and data all flowing into your home over a single network in digital form, we will

see an explosion of new applications. Planning a vacation? Not only can you see pictures of your desired destination, you can read reviews written by previous visitors,

then book your reservations and airline tickets.

Now think about a TV version of the Internet. Just as anyone can have their own Web site or blog, you will be able to have your own "channel." Today, you can go to iTunes and instantly buy songs; soon, you will be able to buy movies and TV shows on demand. And yes, when the phone rings, you could have a video phone session either on your TV or VoIP video phone--or right on your laptop computer.

The biggest problems will center on navigation and interface issues. If indeed there are hundreds of millions of choices of video content, how will you decide what to watch? Google TV? Perhaps Steve Jobs' next bombshell is "iTV."

Gatekeepers and service deliverers

One of the great battles looming in the next couple of years is the fight for ownership over the ways consumers navigate through TV content. This is currently the domain of the mighty cable companies, which have zealously guarded their control of channel line-ups for more than three decades. Along with satellite TV providers, these are television's gatekeepers. Interestingly, they also supply the very technology--broadband Internet--that could destroy their position as gatekeepers.

They now deliver digital TV and high-speed data over the same pipe. But television is delivered in a closed, proprietary format that they completely control. So it is that these folks are very happy to deliver Internet service over that same pipe while billing you an extra $40 a month. They are gleefully launching a weapon of mass destruction aimed at the phone companies in the form of VoIP, a lower-price phone service they will roll out for another $20 a month. Ka-ching!

But what happens when the very same movies they offer on pay-per-view become available over the

Internet, not just to your computer but to your TV? Will they join the convergence party and help shape the coming revolution, or will they start pricing your broadband connection based on "bit consumption" to ensure that it does not compete with their core video business?

And what about the phone companies? Don't expect them to sit idly while the cable companies steal their voice customers with VoIP. A digital subscriber line connection to a set-top box like TiVo would be a very capable way of delivering video services into the home, enabling them to strike back at the cable companies' core business.

So it's not just a war over who the gatekeeper will be, but also one over who will deliver these new converged services. We are on the precipice of a nuclear battle for the hearts and minds of the very couch potatoes who, up until now, have not been very interested in anything that complicates their TV "zone out" time. That will change, once Generation X starts paying the broadband bills.

Bio: Barry Schuler in 1989 co-founded design company Medior, which America Online acquired in 1995. He was named president of AOL's Interactive Services group in 1998, and served as the online giant's chairman and chief executive until after the company merged with Time Warner in 2000. He now serves as chairman of The Meteor Group, which invests in and assists the development of new technologies.