Study predicts majority of US households to have interactive TV by 2005

Another bullish report on interactive TV in the US estimates that the majority of TV households will be capable of receiving interactive TV (iTV) and that active usage will reach over 41 million by 2005.

Washington DC-based media researcher Strategis Group says increasing bandwidth capacities are driving the future demand for such services. "As operators continue to upgrade their networks to digital and interactive capability, and content providers prepare for widespread deployment of interactive products and services, the pieces are being put in place to take iTV mainstream in the coming years," says Keith Kennebeck, analyst with Strategis. "iTV has the potential to revolutionize the way we use our televisions – we'll be able to order products, access information, get movies and chat with friends with the click of a remote."

iTV growth is expected to be fueled by consumer demand for interactive services, such as Video on Demand (VOD) and television-based commerce (T-commerce), and by cable, digital broadcast satellite (DBS) and digital broadcast operators' desire to tap new revenue sources, according to Strategis.

Strategis conducted a consumer survey recently, which found that 24 percent of consumers are very or extremely interested in VOD, while 12 percent are very or extremely interested in T-commerce. "This survey data reveals that not all consumers are currently ready to embrace interactive services because iTV has not yet demonstrated its value," says Ty Cottrill of the Strategis Group. "This will change quickly if consumer experience shows interactive television to be an entertaining and useful service."

Recent announcements of new interactive services from DirecTV and cable operators' investments in Microsoft, Liberate and OpenTV demonstrate increasing interest from operators in providing interactive services over broadband networks and digital set-top boxes. Terrestrial broadcasters are also expected to enter the iTV fray as digital broadcasting proliferates in the coming years. Cable and DBS operators are counting on revenues from interactive services to augment their traditional video service revenues. VOD alone is expected to generate $2.6 billion in incremental revenue for cable operators by 2005, according to Strategis.

Edited by Tom Butts