TV Goes InteractiveTV Goes Interactive

The big players in media are choosing sides this summer, laying the groundwork for the day when it will be possible to buy not just pay-per-view movies, but all kinds of goods and services through interface capabilities in your living-room TV.

New interactive capabilities for TV sets already are on the fall lineup at Cablevision Systems Corp. In September, the Bethpage, N.Y., cable company will offer video-on-demand and other services to its 3 million customers. The details haven't been set, but couch potatoes likely will be able to control the angle of the camera as they watch sports events, order movies and special programming from Cablevision's video library, and access special programming from Madison Square Garden, Radio City Music Hall, the N.Y. Knicks, and the N.Y. Rangers--all of which Cablevision owns.

Cablevision signed contracts with Sony Corp. to deliver set-top boxes and with Harmonic Inc. for its high-bandwidth server gateway, Narrowcast Services Gateway 8100. Customers can use the keypads on their remotes or set-top boxes to send orders via the same cable lines that deliver their TV programming.

Sony late last month signed a broad alliance with Yahoo Inc., under which the two will develop a co-branded site and cross-market each other's content, products, and services. The deal will help Yahoo distribute its services over Sony platforms, including set-top boxes, says Yankee Group analyst Rob Lancaster.

Microsoft also entered the market with a July swap of its 70% stake in Web-based travel distributor Expedia Inc. for about 5% of USA Networks Inc. USA says it will use Expedia as the travel-booking engine for a new Travel Channel, letting consumers order vacation packages and cruises via the Web, phone, and ultimately TV. Also linked to that deal is Vivendi Universal, which in late July acquired the option to raise its stake in USA Networks from 43% to 50.1%. Vivendi also recently bought a 75% stake in Divento, a European portal that offers online ticketing, and signed a marketing deal with AOL Time Warner. Vivendi says it's working new ways to deliver content on demand.

Moving to retail through TV involves not just new technology but a new spin on retail marketing, says Richard Anderson, general manager of IBM's Media & Entertainment Industry practice. "Every new front end has to hook into your commerce system and interact with multiple retail and content providers, and with other systems like CRM," he says. "But there's also a whole new learning curve related to doing commerce through the television vs. the Web site. The Internet is an interactive model; the television is a 'lean-back' model, where people are just being entertained. You have to entice them out of that mode."

How? Perhaps with a message on the TV screen that says, "to order this product or access more information, hit the button on your remote," Anderson says.

Retail-based interactive TV may be a few years away, but some analysts predict U.S. sales through that medium will eclipse those via the Internet by 2004.