Interactive TV: Clearing the static

Which technology has been deployed in more homes in the United States: satellite TV or interactive TV?

The answer is...interactive TV!

Surprised? I'll bet you're shocked. If you listen to the critics, you probably think that interactive TV is a big flop.

"Even proponents by now must acknowledge that this 'nascent market' (interactive TV) ranks as one of the biggest financial sinkholes since Boston's Big Dig," Charles Cooper wrote in a recent CNET News.com commentary.

Mr. Cooper, no offense, but the only sinkhole is your depth of knowledge about interactive TV. Like many new technologies, interactive TV is slowly but surely finding its way into the nation's living rooms. And yes, it has passed satellite TV in total homes deployed. And no one is saying that satellite TV is a failing technology.

Still skeptical? Let's look at the numbers:

• Wink Communications, the TV commerce service that enables viewers to order goods with the click of the remote, is now installed in 5 million homes (including 4 million DirecTV homes).

• OpenTV, which offers a variety of interactive TV services, including games and shopping, is now in 4 million homes via EchoStar Communications.

Mr. Cooper, no offense, but the only sinkhole is your depth of knowledge about interactive TV.

• MSN TV, Microsoft's Internet TV set-top, formerly known as WebTV, is in 1 million homes.

• Charter Communications, the cable system owned by Microsoft co-founder Paul Allen, has launched on-demand interactive services to more than 550,000 viewers. It's difficult to pin down the exact number of homes with interactive TV in other cable systems, but cable TV operator Insight Communications reports approximately 130,000 subscribers in Kentucky and Illinois, while Cablevision's "Interactive Optimum" service is deployed in approximately 800,000 homes in New York and New Jersey.

To be conservative, let's say there are 1.5 million interactive cable homes in addition to Charter's total. (And we're not even counting the DSL services, Qwest Communications International and SBC Communications, which provide interactive TV to a handful of states in the West and Midwest.)

• The personal video recorder, from companies such as TiVo, is in approximately 1 million homes, with reports that the number is growing rapidly. TiVo alone added 100,000 subscribers in the fourth quarter of 2001.

• Finally, video on demand, the interactive movie service, is in approximately 6 million to 8 million homes, including 3 million Comcast cable homes. And that number is growing rapidly.

So, got your calculator handy? Total the numbers, and you'll see that some kind of interactive TV feature is now available in approximately 19 million to 21 million homes. If you account for the likely duplication of some services--the TiVo owner who also has video on demand, for instance--you can reduce that number to 16 million to 18 million. But that still compares favorably with satellite TV's DirecTV and EchoStar, which have a combined 17 million to 18 million homes in the United States (not factoring in the possible duplication of DirecTV/EchoStar homes).

Frankly, the interactive TV industry has performed miserably in promoting the technology's advances and benefits to the media.

Of course, there is a significant difference between a subscriber and a deployed home. Satellite TV has 17 million to 18 million confirmed subscribers, while the number of people actually using interactive features is less certain. But the fact that cable and satellite TV companies have launched interactive TV to so many homes suggests that the technology may be nearing mass acceptance. The TV operators wouldn't waste their time and bandwidth on services that weren't bringing in the bucks.

So why is there a consensus that interactive TV has failed?

Frankly, the interactive TV industry has performed miserably in promoting the technology's advances and benefits to the media. Wink, for instance, issued a press release this week at the National Cable Television Association conference to announce that several networks, including CNN, will add interactive features to their advertising campaigns. That's nice, but nowhere in the release does it state that Wink is now in 5 million homes. My guess is that few journalists are aware of that fact, particularly reporters at major metropolitan newspapers.

And I don't mean to pick on Wink. Overall, the company has done an admirable job of spreading the word about interactive TV. But in general the industry needs to better communicate the technology's attributes to the media and consumers.

When done right, interactive TV adds convenience and entertainment to our lives. But until consumers understand that, there's one point on which I agree with Mr. Cooper: It will be difficult to convert a home deployed into a home subscribed.