RespondTV Inc. may have struck the mother lode for enhanced-television players, reaching an affiliate deal with AT & T Broadband last week.
The agreement is San Francisco-based Respond-TV's first deal with a cable operator. It's also the first deal AT & T Broadband has reached with any enhanced-television player to support its rollout of high-end Motorola Broadband Communications Sector "DCT-5000" set-tops. The MSO plans to begin deploying those boxes by the end of the year.
"It should make the process a little bit more understandable going forward, given the amount of due diligence and consideration that AT & T put into this," RespondTV president Richard Fisher said, noting that he hopes the agreement will help him to close more cable deals.
RespondTV provides the back-end infrastructure that allows cable networks and advertisers to deliver enhanced programming and ads. The company relies on triggers delivered through the vertical-blanking interval to deliver the enhancements.
The company charges advertisers and programmers fees for delivering enhanced programming and ads, and it offers to share that revenue with cable operators.
Before last week, most of RespondTV's agreements were with advertisers and programmers, including Scripps Networks, Bloomberg Television, Domino's Pizza LLC and Ralston Purina Co., which will use the company's infrastructure to deliver enhanced ads and programming.
Under terms of the AT & T Broadband deal, the MSO agreed to pass through the triggers RespondTV needs to deliver its enhanced ads and programming. AT & T Broadband will also integrate RespondTV into the user interface it is creating for its advanced digital rollout.
RespondTV will share a percentage of the revenue it generates from serving up enhancements for advertisers and programmers, with AT & T Broadband Fisher said.
RespondTV's service is based on open Internet standards, and it will work on any set-top that runs on middleware from Liberate Technologies, Microsoft Corp., PowerTV Inc. or Spyglass Inc., whose merger with OpenTV Inc. is expected to close soon.
RespondTV competitor Wink Communications Inc. recently cut a deal with EchoStar Communications Corp. that will see Wink share revenue with both EchoStar and OpenTV, which is providing the proprietary middleware for set-tops that will support Wink.
Unlike that deal, RespondTV won't share revenue with any middleware vendor because it is only focused on nonproprietary platforms. But Fisher wouldn't rule out such a model.
"As of today, we have no formal agreement with anybody that would share the revenue outside of our relationship with the distributor itself," he added. "That said, if a Microsoft or Liberate or any middleware vendor said, 'Here's something we can do that adds value beyond the way it's being done now,' we, of course, would be open to it."
AT & T Broadband was attracted to RespondTV's focus on open protocols, including HTML (HyperText Markup Language) and ATVEF (Advanced Television Enhancement Forum), senior vice president and program director for interactive television Rich Fickle said.
The MSO also liked Respond-TV's focus on launching on advanced digital set-tops and ability to deliver targeted ads, he added.
"Under the current Wink model, everybody gets the same thing. Right now, it's a fundamental part of the way they market their system. Respond has a slightly different approach that lends itself better to some of the targeting and personalization. How much is that worth, and is that going to be really important to customers and advertisers? We think so, but we don't know exactly what that incremental value is," Fickle said.
The deal with RespondTV is not exclusive, and Fickle said AT & T Broadband would still be open to striking similar deals with Wink or other enhanced-television vendors. The MSO will probably choose two or three enhanced-television players to include in its user interface, he added.
AT & T Broadband would also be open to striking deals directly with cable networks if they choose to invest in their own infrastructure to deliver enhanced programming and advertising, Fickle said. "[Networks] could do this. We could do it ourselves, too," he added.
The MSO currently has no plans to offer enhanced programming and advertising through the lower-end digital set-tops it has deployed, such as the Motorola Broadband "DCT-2000," but it is exploring how to do so, Fickle said, adding, "The primary focus is the DCT-5000."
RespondTV is in "multiple conversations" with other MSOs, and it hopes to announce another cable deal by the end of the summer, Fisher said.
One obvious possibility would be Comcast Corp., as its Comcast Interactive Capital Group venture unit is an investor in RespondTV.
Other companies that own equity stakes in the company include AT & T Corp., GE Capital Corp., Integrity Partners, Sequoia Partners, Showtime Networks Inc., Tribune Media Ventures and United Television Inc.
