ERIC...By the start of 2003, Quantum New Media Services predicts that 8.8m UK homes, from 6m today, will access the internet through a home computer while 11.7m homes will be using interactive television to access the net. ONdigital recently launched its full internet service, ONnet, and the other broadcasting platforms are set to follow suit.
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Switch On To The Future Of TV-- Investors Chronicle - U K; Dec 15 - iatv_longter 12/15/00 4:58:49 PM
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Subject: Switch On To The Future Of TV-- Investors Chronicle - U K; Dec 15
From: iatv_longter
Date: Friday, December 15, 2000 (EST) at 4:58:49 PM
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Digital Revolution: Switch On To The Future Of TV - Digital Television Is
Investors Chronicle - United Kingdom; Dec 15, 2000
BY DAVID ROTHWELL
Television has changed very little since the BBC first began broadcasting from Alexandra Palace back in 1936. Viewers have sat passively watching the box for 60 years, benefiting only from the addition of colour in the 1960s, the arrival of the remote control in the 1970s and the introduction of satellite and cable broadcasting in the 1980s. By 2003, however, most homes in the UK will be hooked up to digital and television will play an increasingly important role in everyday life.
For the same amount of bandwidth much more information can be stuffed into a digital signal than in an analogue one. That not only means improved sound and picture quality but also means more channels, some dedicated only to interactive services. While digital cable viewers are already connected to a two-way pipe to be able to shop, download games and access video-on-demand, satellite and terrestrial viewers need only a phone line to connect to these services.
British Sky Broadcasting was the first to broadcast its satellite service in digital two years ago and was swiftly followed by digital terrestrial broadcaster ONdigital, a joint venture between ITV giants Granada Media and Carlton Communications. In that short time the demand for digital television has surpassed even the most optimistic predictions. BSkyB has already converted most of its 4.7m subscribers to digital and will stop broadcasting in analogue altogether early in 2001 while ONdigital, which is a brand new service, is on track to achieve 1m new subscribers by the end of the year. That's already a quarter of the 23m homes in the UK and at the current rate of take-up more than half the country could be watching in digital by 2003.
The enormous potential of the internet has attracted most media attention in recent years but despite all the fuss the internet has yet to reach the mass market. Many people are reluctant to buy a home computer because of the expense and fear of operating systems they can't understand. Internet access via a TV is more convenient and easier to use than a computer and is expected to prove more popular. By the start of 2003, Quantum New Media Services predicts that 8.8m UK homes, from 6m today, will access the internet through a home computer while 11.7m homes will be using interactive television to access the net. ONdigital recently launched its full internet service, ONnet, and the other broadcasting platforms are set to follow suit.
Research in Germany by Mercer Management Consulting found that people who owned digital television and were able to access the internet through it stopped using their PCs. It also discovered that people without a PC wouldn't bother to buy one once they had access to the internet through their TVs. That suggests television will become the main access point to the internet in the future and slow the growing demand for home computers. This is likely to hit internet service providers, such as Freeserve and America Online which depend on the PC for their customers.
Accessing the internet through a TV set will not only reduce viewing figures for scheduled programmes but will also give viewers access to new programmes. Internet TV sites such as I-chooseTV are now producing shows exclusively for the internet. A number of companies are also using the internet to revive the short film. Atom Films, for example, gives new film makers an outlet for their work and allows internet users to download films that would never have made it to the screen otherwise.
Although the internet is unlikely to become the main platform for most people to watch their favourite programmes it will provide an alternative source of viewing entertainment and further fragment audiences.
As well as access to the internet, digital television offers a ''walled garden'' of services similar to those offered on the net. Banking is widely predicted to be the most popular of these services and most banking is likely to be done online in the near future. All the major high street banks have been quick to set up internet facilities and interactive offerings through digital television. Abbey National reckons that by 2003 26m adults will be able to bank via their television sets. Checking balances, paying bills and arranging overdrafts will all be done through the television.
Gaming industry
By 2003 the gaming industry will also be transformed as punters will be given the opportunity to gamble on sporting events while watching them on television. Gambling group Blue Square, which already operates through BSkyB's Open service, is proposing an arrangement that will split a television screen into two parts, one section acting as the normal TV showing the game or event while the other will link viewers to the gambling site. This will make it possible to bet at any time during an event. If your horse falls on the first leg of a race you'll be able to put a bet on another horse in the middle of the race, or if a football tournament has to be decided by penalties the site can give viewers up-to-date odds on which players are likely to score.
Video-on-demand has already arrived in the UK and is expected to mark the death knell for pay-per-view services and video rental. Viewers simply choose the film or programme they want to watch and can start and stop it whenever they choose. Video Networks launched its service HomeChoice earlier this year and is currently embarking on an aggressive advertising campaign. It is currently available to 2.5m households in London and plans to extend this to 70 per cent of the UK population by the end of the year. Another provider, Yes Television, which tried and failed to float on the stock market twice this year, has joined with BT and is trialling services in west London. These services need broadband ADSL phone lines in order to provide the service.
Interactive television is not a new idea - it has been around for many years. In the 1980s TCI and Time Warner introduced a number of interactive services to a small group of viewers in the US with some encouraging results. The trial group were given the opportunity to shop, play games and call up particular programmes on demand. Unfortunately, neither company could make any of the services cost-effective enough to be commercially viable. But with digital television, interactivity is already embedded into the broadcast signal so the cost of sending interactive data is negligible.
Interactive TV service, Open, which offers viewers the opportunity to shop, bank and play games, began operating in the UK a year ago and is already proving popular. UK retailer Woolworth recorded 5,000 orders a week on Open in the run up to Christmas last year and is expecting significant growth in orders this year.
Along with WH Smith, Woolworth is about to launch an advertising campaign that will add an interactive icon to television ads. Viewers will be able to watch an ad and be taken directly to the relevant shopping pages on Open by pressing a button on their remote control. Similar campaigns are planned for ONdigital and the digital services of cable operators Telewest and NTL. This will not only give viewers the opportunity to buy directly from an advert but will also give advertisers a better idea of which campaigns appeal most to their customers. The interactivity, which is fragmenting audiences, will also allow advertisers to learn about individual customers and send them customised messages instead of one-size-fits-all advertisements.
Interactive TV will allow advertisers to gain more information about viewers but it also has a worrying side effect. Viewers will be able to easily skip commercial breaks. Where interactive TV has already taken off in the US this has become one of the most popular features. If commercial breaks become less effective, advertisers will look to other mediums to get their message across which could mark the end of this type of free-to-air TV.
Advanced set-top boxes can act as video recorders but their potential to change viewing habits is far greater. Recordings are stored on special chips inside the set-top box so there is no need for videotape. Recording to a chip means that it will be possible to begin watching a programme that is still being recorded, and will make it easy to fast forward through all the advertising breaks. Interactive digital video recorders from companies such as TiVo and ReplayTV also allow viewers to skip past commercials when playing recorded material.
Advertising
Television advertising has hardly changed since the first ad for Gibbs SR toothpaste was aired in 1955. But advertisers are well aware of the changes taking place in the television industry and are looking at different ways of getting their message across. Just as the remote control, multi-channel television and the video recorder were expected to mark the end of TV advertising, digital broadcasting is unlikely to break the strong bond between advertisers and TV that has existed for 50 years.
By 2003, however, adverts are likely to be very different from those aired today. One way to advertise on TV without breaking up a programme is to become part of the programme itself. Sponsoring programmes is already common but rather than just featuring alongside a popular show, brands are making shows of their own.
Celebrity magazine OK! was the first to do this when it commissioned a series of OK!-branded programmes on the lives of famous people. This idea has now been taken a step further with a recent programme on the Knightsbridge department store Harrods using the technology of Open to allow digital subscribers to BSkyB the opportunity to buy goods as they are featured on the programme. As well as promoting the store the programme also gives shoppers the opportunity to make purchases without ever having to visit. |
