No more crying wolf. Cable in 2009 finally has a concrete business reason — advertising — to make interactive TV work on a wide scale.
This year, the largest cable operators in the U.S. plan to have upgraded at least 20 million digital set-tops with code to run standardized interactive-TV applications. That will make it possible for viewers to click a button on their remote to, say, ask an advertiser to e-mail them more information, or cast a live vote for the MVP of the basketball game they're watching.
“The prediction that interactive TV will be here 'tomorrow' has been made any number of times,” said Paul Woidke, senior vice president of advanced advertising for software provider OpenTV. “Today, though, I think we're at a real turning point for delivering on that.”
The opportunity is enormous. National cable networks generated $21.4 billion in advertising sales in 2008, according to SNL Kagan, and industry leaders believe they can take share from the total TV pie even faster by offering premium-priced advertising services that are actionable and engaging.
“Clearly, there is a huge, huge business out there if you can get the interactivity that you currently get when you advertise on the Internet married with television spots,” Comcast chief operating officer Steve Burke said on the operator's earnings call last month.
Precisely how huge can't be predicted with any accuracy. Burke conceded that Canoe won't be a “needle-moving business” this year. But conservatively, if even 5% of the total inventory were sold for a 10% ITV-enablement premium, that would be an incremental $100 million annually (split among MSOs and programmers).
Interactive TV, of course, has been around for years. But these deployments and trials frequently have been one-time experiments meant to impress shareholders. More often than not, they were locked into vendor-proprietary technologies, and typically in scattered markets. Without standards and reach, it's been tough for the industry to kindle major interest in exploiting ITV.
What's different at this juncture is that the technical elements have now aligned with business imperatives.
“We're beyond the silos that have kept interactive TV in isolated pockets,” Woidke said.
The industry over the last two years has coalesced around a common technical standard, maintained by CableLabs, referred to as Enhanced Binary Interchange Format, or EBIF (pronounced “EE-biff”).
“Getting out of the proprietary world is essential,” said HSN vice president of advanced services John McDevitt. “Instead of totally different approaches and languages for all the operators, all the major operators are playing by one set of rules and that will drive adoption from the programmers.”
And unlike the industry's Tru2way platform, which requires set-top boxes with substantially greater horsepower, EBIF is intended to run on the slowest and most memory-starved digital cable boxes still humming away out there.
As a result, EBIF has clicked into place as the foundation for cable's interactive dreams. Software developers have created tools and components to build applications based on the spec. Led by Comcast and Time Warner Cable, operators are moving to support EBIF broadly and, by historical measures, quickly.
“The EBIF stuff is happening now; very, very quickly,” said Showtime Networks vice president of interactive TV David Preisman. “The deployments are happening. It's not ideas or concepts.”
And, critically, the business case for putting the technology into action has crystallized, in the form of Canoe Ventures. The advanced-advertising joint venture of the six largest U.S. cable operators, formed last summer, is aiming to transform cable TV by layering in interactive features and targeting capabilities on a massive scale.
Canoe hopes to launch the initial ITV product, based on the EBIF spec, before the end of 2009.
“We want to start proving out EBIF applications,” said Canoe chief technology officer Arthur Orduna.
In the next few months, Canoe will provide TV programmers with detailed specs and tools, based on EBIF, for building two classes of interactive applications: one for voting and polling, and one for “request for information” applications.
In a Canoe-led technical trial late last year, a national cable network inserted a viewer-voting EBIF application into its programming stream. The app was successfully distributed to several hundred set-top boxes, across several MSOs, in the homes of “friendlies,” or employees and others who are aware of the test. “We proved out this new set of specifications for Canoe,” said Orduna, who declined to identify the network that participated in the test citing a confidentiality agreement.
Canoe also is defining the business model for national interactive-TV advertising campaigns. Orduna declined to discuss pricing plans at this point, but said the goal is to preserve the way TV advertising is bought and sold today “with the incremental value of interactivity tied to it.”
For many programmers, the MSOs' push to get EBIF activated on millions of set-tops — sparked by Canoe — will provide the enabling foundation for their own interactive apps and agendas. They're looking to ride Canoe's coattails.
Showtime has created an EBIF version of an interactive marketing app, developed by interactive-services firm Itaas, which the programmer plans to demo at the Cable Show in April.
The application will let cable customers sample free episodes — for example, of Showtime's original series The Tudors — and get more information on shows. If a viewer has been persuaded, he or she can instantly order the premium channel with a few clicks of the remote.
Because of the historically balkanized nature of interactive TV, Showtime has done only limited rollouts with cable operators of an interactive marketing app designed to push subscriptions, including Time Warner Cable's Oceanic division in Hawaii, and also has run a version with Dish Network.
EBIF should dramatically change that. Showtime already plans to roll out the EBIF application across the entire footprint of one major operator in the third quarter of 2009. “Until now, there hasn't been a mass deployment of ITV technology in cable,” Preisman said.
ESPN also has jumped on the EBIF train. The sports programmer is pitching cable affiliates on two EBIF-based applications — “My Vote,” which provides real-time voting, and “In-Game Extra,” to provide additional player and team stats and information during live events.
Interactive TV today “smells to me like HD smelled about six years ago,” said Bryan Burns, ESPN's vice president strategic business planning and development. Before high-definition TV was mainstream, “everyone said, 'No one is ready for this, there's no market for this.' ”
ESPN plans to incorporate the interactive features into more than 3,000 events and shows per year as early as 2010.
ESPN can potentially sell sponsorships on interactive elements. But primarily, the impetus for ITV boils down to the same reason the network adopted HD, according to Burns: “We think viewers will spend more time watching the programming.”
How big a footprint of EBIF-enabled set-tops will be ready this year?
Comcast, for one, claimed it had deployed EBIF user agents on more than 10 million Motorola set-top boxes by the start of 2009. The operator hopes to complete the rollout to its entire Motorola footprint, about 20 million boxes, by midyear. That would represent about 75% of the operator's deployed set-tops, and Comcast is currently working on a user agent for its Cisco/Scientific Atlanta systems.
Other operators, while less specific, are rallying around the spec.
Time Warner Cable has a market test for EBIF planned for the first half of 2009 and a phased deployment plan starting in the second half of the year. Cox Communications said it's “supportive of the EBIF standard and the Canoe initiative,” and Charter Communications plans to launch EBIF in several markets which have yet to be determined.
Longer-term, Canoe hopes to build a big enough tent to bring in satellite and telco TV providers — and really cover the waterfront — although the venture's executives acknowledge their first priority is with cable.
At one point, the industry's presumed path to interactivity was CableLabs' OpenCable Applications Platform, also called “Tru2way.”
But OCAP, an interactive-services specification whose origins date back a decade, turned out to be just too much to bite off at once. So the industry worked up EBIF as a way to target existing set-tops.
Tru2way “was almost too big of a step for people to take,” HSN's McDevitt said. “EBIF makes it easier for people to make an investment in ITV. It creates a business model for people instead of forcing them to make a huge gambling leap.”
The difference between EBIF and OCAP is “like the difference between a Web browser and a full-desktop development environment,” Itaas chief technical officer Jatin Desai said.
Indeed, ESPN found it needed to turn to Tru2way for its snazziest forthcoming ITV app: My Bottom Line, a customizable version of the on-screen score ticker that displays real-time updates of your favorite teams and players.
According to ESPN vice president of emerging technologies Anthony Bailey, Tru2way was a better match for what his group wanted to do with My Bottom Line because the spec is able to support a 16:9 screen display (EBIF is limited to 4:3). Tru2way also is able to update scores in virtually real time, whereas an EBIF app would need to be batch-updated at, say, 10-minute intervals.
“We could have done it in EBIF, but with Tru2way it will be more robust, and nicer graphically,” he said.
BIAP chief technical officer Aaron Ye said by and large EBIF is unfairly perceived to be far less capable than OCAP. He said many presumed limitations of the lighter-weight spec's are actually limitations of the underlying set-top hardware; for example, EBIF apps are able to display up to 16 million colors, if set-tops have that capability.
OCAP, a full applications programming environment based on Java, can handle an interactive program guide. But its relative complexity means that applications written in that format are likely to be less stable than EBIF.
Time Warner Cable has been leading its peers on Tru2way-based deployments, with more than 1.4 million boxes in service running its OCAP Digital Navigator (ODN) guide. In getting there, though, TWC has run into software glitches, including set-top slowdowns and crashes in markets where it upgraded to ODN.
“It's really not possible to crash the box with an EBIF application,” said Aslam Khader, chief technology and product officer of interactive-TV firm Ensequence. OCAP operates in “a much larger sandbox — so there's the typical paranoia by the operators, well-founded, that you might introduce issues.” Khader added: “Even with EBIF, they're taking an extremely cautious approach.”
Furthermore, OCAP/Tru2way requires considerably more processing power and memory in a set-top, TV or other device than EBIF does. A rule of thumb for Tru2way-based set-tops is to have at least 256 Megabytes of memory — more than 35 times the memory available in early versions of Motorola's DCT-2000, first introduced in 1999 and considered the lowest common denominator of digital set-top boxes in use today.
Because it would be too costly to replace millions of existing set-tops with ones able to support the Tru2way spec, its viability as a ubiquitous ITV platform is years away.
For now, Tru2way is serving the cable industry's goal of opening up interactive services, like the IPG and video-on-demand, directly to consumer-electronics devices. The six biggest U.S. MSOs last year signed pacts with major CE companies, including Sony Electronics, pledging to support Tru2way-compatible retail devices across their footprints by July 1 and that 20% of all new cable set-tops they deployed would be based on Tru2way to ensure common reliance on the spec.
But interactive-TV developers previously focused on OCAP have shifted gears to devote their energy to EBIF instead.
BIAP's Ye said that two years ago, the company had ported all its ITV applications to OCAP. Then EBIF started to pick up momentum, though, and now the company is developing all of its new applications in that format.
The main OCAP-related work it has done recently was to create an EBIF user agent to run on an OCAP box.
“It's a business decision: What's going to see the most distribution in the near future?” he said.
Industry executives said interactive TV applications that gain traction will be the ones that have well-defined business purposes — to generate ad revenue, drive subscriptions and upgrades, or enhance programming. The technology is no longer about the theoretical, untested, pizza-pie-in-the-sky ideas of yesteryear.
“For the first time, the drive behind interactive TV isn't simply based on the desire to have the shiniest, coolest toy of anybody in the media business,” Woidke said.
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