1.3 Present
| Today, digital TV provides both interactivity and high definition. Whereas HDTV is the major adoption driver in the U.S., interactive TV is already a reality in Europe, where major terrestrial broadcasters, as well as cable and satellite operators, already claim millions of digital subscribers, accounting for roughly half of the worldwide audience. According to Strategy Analytics, in 2000, Western Europe accounted for 62% of the audience, North America 18%, Asia-Pacific 10%, Latin America 1%, and some predict a potential worldwide market of over 70 million [DEVICETOP]. Because these set-top boxes are likely to interface with a wide range of smart accessories, the overall number of devices expected to process interactive TV content is expected to be much larger. As an example, the BBC views iTV as a major strategic long- term investment. Its Natural History unit is tasked with producing a wealth of new programming with associated interactive and online areas, covering new programming as well as established series, such as the long-running Wildlife on One . The series Great Britons already allows viewers to vote via iTV, and the Omar Shariff-narrated Pyramid was accompanied by the world's first iTV adventure game, as well as widely accessible competitions. Two very successful series were Walking with Beasts and The Blue Planet , both of which experienced massive levels of interest. Western Europe, where mass-market deployment of iTV can be traced back to 1995, is the leading region in the world for iTV services, which include gaming, shopping, and banking through the television. About 14 million households, or about 40%, have interactive digital television. All the UK's major satellite, cable, and terrestrial digital platforms offer a wide range of interactive services such as interactive sports coverage, TV-commerce, games , email, and walled garden Internet. Other leading European markets with more than 20% household penetration include Denmark, Spain, and Sweden. The success of advanced digital television services is leading to the emergence of a fast-growing new industry of iTV application and software developers eager to build on the potential of the new platforms. iTV has caught on so strong in Europe that some believe it may replace the personal computer as the primary avenue for European e-commerce before 2010. The 2002 Eurovision song contest, one of the most popular in the continent , paralleling Europe's beauty pageant , was enhanced by interactive content. The latest ventures by leading children's channels CBBC, Cartoon Network, and Nickelodeon in the interactive field have all been a resounding success. Currently the European iDTV services are offered on private networks operated by satellite TV broadcasters CanalSatellite and BSkyB's SkyDigital TV. According to SkyDigital TV, the company drew millions of viewers to its Open interactive TV service during 2000, about 7% of its subscribers made TV-commerce purchases, and more than 500,000 have signed up for its free email. At some point in time, the company signed up new subscribers at a rate of 100,000 per month. A number of heavyweights in Europe are already lining up to build iTV interfaces to their banks, shops , and media content. About 45% of respondents from a survey conducted by iTV Marketer's Yankee Group Europe Consumer 2000 Survey said they would be interested in iTV [iTVMARKET]. As part of its bid to reach beyond the lagging PC market, Microsoft is also banking on its iTV software with TV Cabo of Portugal (see Figure 1.1). Speaking during kick-off events in Lisbon, Microsoft CEO Steve Ballmer called the launch critical to the company's overall strategy. In Europe today, interactive applications have become a core component of digital television services. European service providers are required to offer interactivity to maintain leadership in innovation. Table 1.1 illustrates how iTV changes the basic underlying assumption of the industry and Figure 1.4 illustrates the types of content delivered (see Chapter 2 on enhanced programming). Table 1.2 provides a list of some iTV programs. Initial levels of investment in building networks and raising consumer awareness have already been undertaken in key markets. Interactive applications have demonstrated the ability to generate additional revenues for service providers. Costs for service providers are declining, and technology providers are focusing on leveraging existing applications and offering low cost solutions. Figure 1.4. Present iTV applications. Thanks to a combination of an explosion in DVDs and lower prices on HDTV, despite the downturn in the economy, 2002 sales of digital sets were up sharply; clearly, the transition has begun. Although still expensive, with average TV set prices just above $2000, they offer much improved cinema-like picture quality. Lower cost HD-ready TV sets are available as well, which become HDTV sets with the addition of a $500 receiver. Table 1.1. How iTV Changes the Underlying Assumptions.
iTV products are primarily set-top boxes (STBs), namely TV add-ons, which can be organized into families. As an example, Microsoft sometimes classifies them into groups of basic STBs, advanced STBs and media centers. In the basic category are STBs priced in the range of $150 to $200. These STBs provide the added value of reduced digital chum, better ad targeting, VOD, games, walled-garden Web-page access, and EPG. In the advanced category are STB priced in the range of $300 to $400. They provide the added value of Web-Services, Email and Chat, Enhanced TV, IP telephony, as well as better ad-targeting, VOD, games, and EPG. In the media-center category are STBs priced in the range of $450 to $600. Beyond the advanced STBs, they provide full HD DVD support, Digital Video Recording (DVR), and improved interfaces to a wide range of home entertainment devices. Table 1.2. A List of Some iTV Programs (see [iTVT]).
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