Tech battle to hinder interactive TV deployment in US

NEW YORK: About 17 per cent of US households will have interactive television

by 2002, but a battle over which technology to use for new services will create

a fragmented market and hinder widespread deployment, Jupiter Media Metrix said

in a report on Monday.

While the fragmented market will hinder widespread development of the

interactive medium, the Internet research firm said market players such as

content programmers like AOL's CNN and Viacom's MTV Networks, as well as

advertisers, should not wait to make their investments in the nascent sector

that will let TV viewers engage in Internet activities such as e-mail,

e-commerce and Web information searches via their televisions.

Jupiter does not expect a clear middleware software platform, such as

technologies Microsoft Corp., Liberate Technologies Inc. and OpenTV Corp. are

pushing, to emerge as the leader in the US within the next two years. Although

Europe has the head-start on interactive TV adoption and services at the moment,

Jupiter expects the US to hit critical mass - the point at which the medium has

gained mass market acceptance - a year before Europe in 2002.

Interactive TV penetration will reach 42 per cent of US households and 26 per

cent of overall European households in 2005, but some countries like the United

Kingdom, Germany and Sweden will keep pace with US levels. Unlike in the US,

these countries will provide interactive services based on one delivery platform

such as satellite.

Providing the news services will also occur on a regional scale in the US,

not a national one, creating a climate where companies will execute different

software strategies and use different delivery methods such as satellite and

cable.

Therefore, it will be difficult for programmers and advertisers to create

initiatives that can work for different technology platforms and they will be

forced to implement interactive initiatives on a project-by-project basis. The

key for programmers and advertisers is to focus on delivering targeted

interactive applications and on realizing the value in regional audiences,

Jupiter said.

"Despite the hurdles that programmers will face in developing for iTV as

an interactive platform, long-term opportunities should justify near-term

investments," said Jupiter analyst Lydia Loizides. "Once this market

reaches maturity and stabilizes, overall higher entrance costs will penalize

late entrants. Value does exist in moderate experimentation and early entry into

the iTV market."

Jupiter's consumer survey indicated that consumers were currently most

interested in services that let them pause or rewind live programming - or

digital video recording features. The firm believes this type of functionality,

which Microsoft has incorporated into its newly launched UltimateTV service,

will become the norm.

(C) Reuters Limited 2001.