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Promoters of Video-on-Demand Ally to Urge Quicker Adoption

Promoters of Video-on-Demand Ally to Urge Quicker Adoption

Technology

by Christopher Keough

A new trade organization has formed in Santa Monica to jumpstart the stalled interactive television industry.

The Interactive Television Alliance will focus on business development, marketing and lobbying through infomercials, print supplements, e-mail marketing and public demonstrations of interactive television technology.

It is backed by television networks, ad agencies, production companies, hardware manufacturers, cable and satellite TV operators and software and application companies.

“Interactive TV is in an inactive state right now,” said Ben Mendelson, the association’s president and former vice president of Internet development at the Electronic Retailing Association. “Everyone’s waiting for events to push it forward.”

Interactive television, or “the remote control on steroids” as Mendelson calls it, allows viewers to use links to click through programming much the same way they would surf the Web. Uses range from gathering additional information during an educational program to playing along with a game show or shopping for products discussed during a show.

In all, Mendelson said, 130 companies have pledged membership in the organization, which is awaiting non-profit designation. Founding members include Liberate Technologies, NBC, OpenTV, Canal Plus, ACTV Inc. and WorldGate Service Inc. (Last week, cable giant Liberty Media Corp. announced it would acquire OpenTV and the 84 percent of ACTV it did not already own.)

The alliance’s projected annual budget of $300,000 will be funded through memberships of $500 for individuals and $2,500 corporate memberships. Governing memberships will cost $5,000.

Cynthia Brumfield, president of research and analysis company Broadband Intelligence Inc., said the alliance is necessary if the industry is to move beyond interactive program guides. She believes interactive television will progress to the point where people will shop through their televisions, and sees the alliance as a first step.

Gary Arlen, president of Arlen Communications, a Bethesda, Md., research firm specializing in interactive media, isn’t as sanguine.

“There is considerable skepticism about the value of an interactive television association right now,” he said. “The industry is puttering along at such a level that an association has very little to fight for or against.”

VOD Taking Hold?

The spate of deals announced by some L.A.-area video-on-demand companies could portend increased interest in the movie distribution model. It could also just be feeding a pipe dream.

CinemaNow Inc. of Marina del Rey, Intertainer Inc. of Culver City and TVN Entertainment Corp. of Burbank recently announced deals expanding their reach, even as the viability of the market is questioned.

“The news is great,” said Sean Badding, a senior analyst at media research firm The Carmel Group. “But there’s nothing going on.”

Badding contends that VOD works, but can grow only in metropolitan markets with digital cable infrastructure. Once the service starts drifting outside the city limits, demand drops off considerably, he said.

By the end of 2002, 20.8 million of the nation’s 65.3 million cable subscribers will have digital service, according to Badding’s projections. “It’s a third of the market, but that doesn’t mean a third are taking video-on-demand,” he said.

Dom Stasi, chief technology officer at TVN, said a number of factors will prove Badding wrong. Resolution of signal security issues, the plummeting cost of digital storage and other advances make VOD more affordable and easier to deliver, he said.

Staff reporter Christopher Keough can be reached at (323) 549-5225 ext. 235, or at

ckeough@labusinessjournal.com.

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