OpenTV - Interactive digital TV (OPTV)

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Interactive Television:
The Gold Rush is On

From the web site again...

http://www.opentv.com/company/news/newsletter/2003_q2/goldrush.html

There was a time when broadcasters viewed interactivity services as a nice-to-have feature, but not crucial to their bottom line. But times are changing.

In the U.K. a gold rush is on among a whole swathe of channels that survive solely on iTV revenues.

Channels like "Chat Box" and "Txt Me" carry scrolling text messages from television viewers that allow them to chat and flirt with one another. To send a message costs between
80 cents and $1.70. And there is no shortage of viewers wanting to express their opinions - both channels are available 24 hours a day. The new interactive services, built using OpenTV technology, are springing up on the U.K.'s biggest digital network, Sky Digital.

Already more than 25% of viewers in satellite broadcaster Sky Digital's 6.3 million homes regularly push the "red" interactive button on their remote control to vote in news polls or for their favorite contestant on a reality show, order pizzas or product brochures or place a bet. In 2002, the satellite broadcaster earned $298 million in interactive revenues.

But when it comes to making real money for new channel operators, the focus is on betting and gambling.

By 2005, European interactive gaming revenues are expected to reach $15.4 billion. According to research agency Schema, Britain will account for more than half of that total. The company predicts that iTV gambling will earn U.K. companies $1.7 billion by 2005 (against $6.4 billion for Internet gambling in the U.S.).

Avago is one of the new "red button" channels powered by OpenTV technology. Launched by Digital Interactive Television Group in July 2002, this is a mass-market entertainment service that claims to bring the thrills of a Las Vegas gaming hall to armchair punters through their set-top boxes.

The channel made record operating profits after only two months on air and is expected to bring in $19 million in revenues in its first year of business. It's enough to make their traditional TV rivals green with envy.

Avago's 70,000 registered users pay 40 cents to download a virtual bingo card which allows them to bet on an array of bingo-related fixed odds games that run live for 12 hours a day.

Viewers are ratcheting up more than $640,000 per month in winnings and each can win as much as $480 per week. And what's in it for Avago? A share of the betting income as well as a cut of the phone revenue generated while people play on-screen.

Avago's success is inspiring others to launch betting channels on Sky Digital. Leisure and entertainment group Rank has created a bingo-style channel, " Fancy A Flutter". For a minimum stake of 35 cents, players can win up to $830,000 payouts, with winnings credited to registered debit or credit cards. The target audience is mainly female customers who attend Rank's Mecca bingo halls.

Chief Executive Mike Smith says the iTV venture will "further strengthen the Rank brand as a leader in gaming, generating new revenue and customers".

Meanwhile another network is using interactivity to redefine home shopping. "BidupTV" is a fast-paced auction channel where viewers bid for everything from Chrysler cars to Cotes du Rhone wine.

To bid on an item, viewers phone a premium rate number, entering the amount they're prepared to pay using the keypad. If theirs is the winning bid, the network calls back for address and credit card details.

Ashley Faull, one of BidupTV's founders, says he is now evaluating the possibility of automating the process through set-top boxes, so viewers can bid using their remote controls.

Interestingly, whereas QVC's demographic is predominantly women aged 30 to 50 with a couple of kids, 53% of
BidupTV's audience is male, young and mid-market with a higher-than-average disposable income. "It must be something to do with bringing out the hunter gatherer instinct in males," says Faull.

But can such channels survive the increasing fragmentation of television audiences? According to Andrew Curry, a director at The Henley Centre, the research arm of global advertising giant, WPP, digital TV's ability to service these niches actually means services like BidupTV and Avago will be among the most resilient as traditional TV usage becomes increasingly ambient. Clearly the interactive marketplace - and the number of viewers ready to bid, buy, gamble and bet, is only going one way. Up.