Interactive TV: The $20 billion revolution: Part 2: An advertising and e-commerce bonanza
February 20, 2000 12:27 PM PT Previous page
By 2004, interactive TV will be worth $20 billion in advertising, commerce and subscription revenue, according to Forrester Research.
Two companies eager to get a piece of that are Wink Communications (Nasdaq: WINK) of Alameda, Calif., and RespondTV of San Francisco. Both have designed technology that lets you use your remote control to pull up additional information about what's appearing on television. More importantly, the companies' technologies let viewers make purchases via their television. In RespondTV's case, those transactions can take place in real time, meaning you could click your TV to order a pizza and have it show up at your door 30 minutes later. Both companies expect to be in up to 3 million homes by the end of this year. (See: Startups target couch potatoes.)
For advertisers, "It's like they died and went to heaven," said Wink CEO Maggie Wilderotter. "It's finally an opportunity for them to measure the effectiveness and pay for performance and have direct connectivity to customers."
For companies, the potential is enormous. Not only does ITV-powered e-commerce enable impulse buying, it lets interactive advertisers instantly track the effectiveness of their commercials and engage in pinpoint direct marketing. Also, by combining Net use with the average seven hours per day people spend watching TV, advertisers should be able capture more eyeballs longer.
Telewebbers on the rise
Consumers are already creating their own do-it-yourself ITV by combining their use of the Internet with their TV habits.
A study just released by Dataquest, a division of GartnerGroup, shows the number of people watching TV while simultaneously surfing the Web has risen from 8 million adults in 1998 to 27 million in 1999. According to analyst Sujata Ramnarayan, who authored the report, the majority of these "telewebbers" (82 percent) have the TV on as background noise while they surf. Other telewebbers say they use the Net to look up more information about a news story or to chat with other viewers and vote in online polls while they're watching a show.
The possibility that television use could shift to the PC has some broadcasters running scared. iCraveTV, a Canadian company that streamed TV programs and sports events until it was blocked by a preliminary injunction, was sued by everyone from Time Warner (NYSE: TWX) to the National Football League for violating U.S. copyright and trademark laws. The iCraveTV lawsuit inspired the U.S. House of Representatives' Commerce subcommittee on communications to hold a hearing Wednesday on television programming and licensing issues over the Internet.
At issue is whether Internet companies should be given a compulsory license to retransmit broadcast TV channels like the license given to cable and satellite operators. Broadcasters are worried the Internet makes it too easy to violate copyright protections -- cheating them out of lucrative royalty payments. Henry Petri, an intellectual-property lawyer for Washington, D.C.-based firm Howrey, Simon, Arnold & White, said the broadcasters are probably fighting a losing battle.
"This wave of support for the Internet and e-commerce is so strong right now Congress is not going to stand in the way of that," Petri said. "They will reach some type of solution where this type of broadcasting is permitted."
Ramnarayan agreed and compared the current hesitation to the concerns radio broadcasters faced with the mass arrival of television back in the 1950s.
"I really think the two are complementary," she said. "Right now they feel threatened, but there's no reason for that. They should take advantage of it. It's a matter of finding technology solutions.
One company already "taking advantage" is Zatso, a San Francisco-based company that, with permission, repurposes and enhances television news content. While watching a TV news broadcast, viewers are directed to a Web site featuring streamed video of the story along with content created by Zatso.
Zatso CEO Roger Keating said the company won't limit itself to PC-only content, however. It's already looking into bringing their services to ITV. He calls it "the next logical step."
Despite plans to make your television a phone system, home entertainment provider, shopping guide and communication tool, most experts agree neither the PC nor the TV are likely to replace each other; you just might not be able to tell them apart. Wink's Wilderotter compared the situation to the various kinds of ovens that can be found in a kitchen. Toasters, convection ovens and microwaves all perform basically the same function, but each has its own specialty.
"It's all about simplicity," she said.
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