Interactive TV: The Future That’s Never Quite Here

By: Shira Ovide

The Wall Street Journal - The dream has been just around the corner for a decade or more: A home TV that let’s you flip seamlessly from a live Cubs game, to a “Gangnam Style” music video on YouTube, to a Judd Apatow flick new on Netflix. But this dream has long been elusive for some of the brightest minds in technology, including Steve Jobs.

A range of companies including Google Inc GOOG -0.52%Apple Inc. AAPL +0.39%, Microsoft Corp Intel Corp. INTC -0.75% Samsung Electronics Co. 005930.SE -1.32%, Roku Inc. and Comcast Corp. CMCSA +0.53% each have sought to define the future of home entertainment, often by creating TVs or TV hubs to stitch together programming across live TV with entertainment or other offerings available online. Microsoft, Apple Sony 6758.TO -1.78% and Intel also are among companies that have tried and so far failed to convince TV programmers — many of whom rely on fees from cable-and-satellite companies — to let them offer a cable-like bundle of TV programming over the Web.

Because of those failed efforts and others, many in the tech industry have grown disillusioned at how little the TV industry has changed despite a revolution in consumer-entertainment habits.

“The TV ecosystem hasn’t been disrupted even though half of U.S. households have DVR whose explicit feature is to skip ads, [and] at the same time Web and mobile usage during prime time is through the roof,” said Bijan Sabet, a general partner at Spark Capital and an investor in Boxee Inc., a startup that makes a TV-connected gadget to stream Web video or record TV programs.

At the 2010 All Things D conference, Jobs said breaking into the TV business was daunting, in part because of a lack of consistent technology across the cable-and-satellite TV business, and because consumers are used to relying on their pay-TV company for their set-top boxes. “The TV is going to lose until there is a viable go-to-market strategy; otherwise you’re just making another TiVo,” Jobs said.

More recently, Jobs told his biographer Walter Isaacson that he had “finally cracked” an easy-to-use TV technology, according to Isaacson’s 2011 book. Apple has been testing high-definition TV sets and talking with pay-TV companies about potential partnerships in set-top boxes.

With the Xbox, Microsoft so far has come perhaps closer than any other company to grabbing a significant share of the interactive TV market, though it remains unclear whether it can maintain its position against a growing number of contenders.

Some entertainment programmers are enthused about the future of interactive TV to give them more outlets to distribute their programming, and to find new ways to make it come alive.

“This completely changes what we can do, especially as creators and owners of our original programming. We are just getting started realizing what is now possible.” said Otto Berkes, HBO’s senior vice president of digital products, and its soon-to-be chief technology officer.

Still, traditional TV remains the king of home entertainment. On average, U.S. consumers spend nearly 147 hours a month watching TV in the home, compared with four-and-half hours a month watching video on the Internet, according to a Nielsen report published last February.

For Xbox, the data is mixed on how important the videogame system is for entertainment, compared with other ways to watch video or other entertainment. According to the Nielsen report, 6% of online consumers watched video daily on a videogame system, compared with the 20% of people who watch video on a mobile phone daily.

For its part, HBO said people using computers and mobile devices are the biggest users by number of the company’s HBO Go streaming-video app, but by hours viewed, Xbox is the top source of usage. Netflix recently said Sony’s PlayStation 3 is the most important device to watch Netflix movies and TV shows from a TV.

Video-advertising firm FreeWheel early last year said Xbox was the most common way, besides computers, to watch online video, with more than 28% of non-computer usage on Xbox. At least one senior Xbox executive has publicly pointed to the figures. However, more recent FreeWheel data show Xbox was responsible for less than 10% of total online video views in the third quarter, compared with 50% for iPhones and iPads. (The FreeWheel data exclude some important sources of online video, such as Netflix and user-generated videos on YouTube.)

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