I Want My iTV
(FORTUNE Magazine) – It's a damp February morning, and Debbie Drake is feeling under the weather. The 33-year-old account manager for a graphic design firm has spent the past few days on her couch, nursing a cold and clocking a lot of time in front of the tube. But unlike many viewers, she didn't suffer through countless hours of mind-numbing programming. Instead, Drake used her remote control to scan headlines, check the weather, plan her schedule for the following week, e-mail her colleagues at work, pay a few bills, remind herself to record her favorite shows, buy CDs, and order pizza--all on her television set. "It would be great if more people had this," she says.
Drake is the kind of customer who makes Manhattan media moguls and Silicon Valley entrepreneurs drool. But they can't have her. You see, Drake lives on the other side of the Atlantic, in a suburb of London.
Welcome to the world of interactive television, also known as iTV. For the past decade, television and technology executives in the U.S. have been promising that viewers would use their remote controls for something other than channel surfing. Well, we've seen how that's turned out. Ventures like Microsoft's WebTV flopped, and time-shifting video recorders like TiVo have been slow to catch on. In Britain, however, that dream has become a reality. Thirty-one percent of Britain's 26 million households have interactive TV, compared with only 8% in the U.S.
How did Britain, a country not known for its high-tech prowess, achieve such dominance in interactive television? Because cable was a novelty in England until recently, the country was able to skip a generation of technology and go straight to digital TV, while U.S. cable companies are still upgrading their networks. Consumer behavior differs too. Fewer Brits own PCs, and those who have Internet access spend less time online than Americans, making them more willing to utilize Web-like functions on their TV sets.
But the main reason iTV has jumped ahead in Britain is British Sky Broadcasting. The company is 36% owned by News Corp., whose chairman and CEO, Rupert Murdoch (also the chairman of Sky), is a firm believer in the marriage of content and distribution. Sky is a perfect illustration of how he thinks. In 1998 it aggressively began courting cable customers and converting existing analog satellite customers to digital. By offering more channels and a better-quality picture, Sky quickly became the largest television provider in Britain. It currently has 5.7 million customers, all with digital TV--a prerequisite for most iTV features.
Since Sky is vertically integrated, it could create iTV content as well as distribute it to its customers. And since its most loyal customers were soccer fans--Sky has the exclusive rights to televise games of the FA Premier League, which boasts the top teams in Britain--it was natural for the company to turn to sports for its first interactive TV application in 1999. Today viewers can choose from multiple camera angles, highlights, and statistics, and can even listen to biased hometown announcers.
Competing cable companies NTL and Telewest are also providing interactive features as they convert their systems to digital. But Sky has the most diverse selection, including enhanced news, games, and personal-finance management. "It's brilliant," says Drake. "I couldn't live without it."
--Christine Y. Chen