Interactivity Now!

May 2001

NDS has been working with several TV channels to ensure their content works in the interactive environment - including Sky Sports Active, Discovery, Channel4, Flextech and QVC plue Mini channels. These companies have sought to develop their interactivity to launch on Sky digital. Richard Cross, VP interactive Television, NDS, describes to advanced-television.com how this is done.

ATV: Can you provide an example of the sort of service you provide, and what that adds to the existing programming?

Cross: "We've already worked with Music Choice, which runs 44 music channels in a variety of genres, to develop a music portal. New tracks play every three minutes. We selected Music Choice to work with as it is able to create branded applications - enabling users to find additional information related to the music they are listening to, plus allowing banner advertising to that audience. Users can browse around to see what is playing on the other channels and what is coming up. It's not initially a purchasing system, but that functionality will become operational later."

"We are great believers in interactivity to enhance the TV experience, enriching the content to make it more interesting and entertaining. We've been saying for a long time that interactivity sells. We do not take users to a Web site, but focus on making the most of the format users are used to, synchronising with video. It's a robust solution with a seamless transaction layer - unlike say having to switch to Open.


ATV: How does the relationship work between Sky owning its customers, and the channels developing a direct relationship with their customers?

Cross: "These key issues are covered by a series of guidelines and agreements, providing the framework for what needs to be agreed by a channel to launch an interactive service on its platform. The channel explains what the look and feel of the channel will be, down to the music choice. They also sign a commercial agreement relating to revenues from eCommerce and advertising."

ATV: How does that work in terms of revenues? What are the revenue sources and in relation to the channel and the operator, who gets paid by whom?

Cross: "Making money from interactivity has proved difficult, but there are many ways of getting a return, including just making TV more entertaining, which has a value. Music Choice is using interactivity to relaunch its brand.

"Some channels might be able to negotiate a better carriage deal while companies like QVC can increase sales and reduce telephone call centre costs using interactivity."

"Sky has put together a clear model for t-commerce. It charges a percentage of anything sold on the channel, with a fee for its security system and a fee for each transaction.

"Who gets the interactivity revenue, the channel or the platform? That depends on who is in control of the relationship - which will decide who has got the better carriage deal. These relationships and agreements need to evolve, we need to create a commercial framework. Sky is currently subsidising set tops and interactivity, and therefore needs to recover that cost. The market is still immature and models are being developed.

"QVC pays for banks of phone lines and wants to minimise use of operators through the use of remote ordering - thereby cutting costs. Others want to charge a fee for services and make money that way - therefore we have to be flexible to deal with different business models."

ATV: How open is your software and how does it fit in with other existing proprietary middleware platforms? What exactly do you provide to the operator?

Cross: "We develop the software for the set top box and the end-to-end modules for interactivity, created in XML, synchronising the interactive packages with the video. Music Choice has installed our software in its playout centre.

"We are system integrators with complete testing capability n addition to providing set top software and re-purposing of content.

"Music Choice wants to deploy across a number of platforms (currently 16) so the system used depends upon whatever the operator uses. The system is designed to be as open as possible. This makes repurposing for different architectures as easy as possible.

"Our software can sit on Open TV and still achieve a consistent application. Abstraction layers sit on any other middleware used - which is a key factor in the selection of this system.

"Discovery now want to launch across Europe - first on Sky to win more eyeballs. Discovery viewers were shown to want more information, and they can get that with interactivity which also helps create a community of interest - without changing the programming format.

"For Discovery we developed the applications, provided training and development tools. The kit providing the interactive environment is XML, which is straightforward to use - and others can develop their own functionality using our tool kit, which creates sub-sets of XML.

"The final decision on deployment is not ours. For example, we installed the system for Music Choice and Sky and they will decide when it is rolled out - which we would expect to be a matter of weeks."

ATV: You mentioned QVC using the system to increase sales and reduce costs. How is that working?

Cross: "QVC has been able to add a directory which invites buyers to browse and see what else is available and order for delivery. Consequently viewers can buy from 200 to 300 additional products, and not just what's showing on air.

"Currently the ordering is still via phone in, but were are in the final stages of testing interactive ordering using the remote. Users have a membership number which they use when they purchase. TV shopping is already a very profitable business - and all the research shows interactivity increases buy rates. QVC is opening a new half a million sq ft call centre, and we have developed an interactive system to integrate with the call centre, which will broadcast availability of stock when people request information (EG Blue size 16 out of stock).

"It's a simple iteration using the existing remote - and again its independent of (Sky's proprietary) Open interactive environment. Users are not paying extra for the service at the moment.

"On Sports interactive we find that 50 per cent of orders are via touch tone, not a speaking operator, and this is just another step in that direction."

ATV: NDS comes primarily from the satellite world, so I presume you would favour enhanced set tops rather than increased network functionality?

Cross: "We'd like to put more functionality in the hard drive inside the set top. In reality (in the future) it will be a large box with a hard drive and this will be a significant step forward for satellite.

"We use the strength of the platform, hence we are scalable to handle satellite's five million Sky viewers. On cable - we are driven by the customer - so in Israel where cable dominates we are working on cable. In the US we are trialing the Kodak Photonet service for photos on cable TV allowing viewers to order reprints and send to friends - and we expect to do more work on cable in the future.

ATV: Gambling has made a significant contribution to Sky's interactive revenues. What are your own plans in this area?

Cross: "I've always believed it (betting and gaming) is the big area for interactive TV. And we are able to offer a complete solution.

"In December we acquired Orbis - a leader in interactive betting and gaming with customers like Ladbrokes, the 'Tote' and Sky. We have subsequently deployed betting and gaming for the following customers in the UK: NTL, Telewest, OnDigital and Sky.

"Both the betting, and also, games themselves generate revenue - though many games are free to play. We don't develop the games ourselves - but we do have relationships with Game-Play, TwoWay TV and other interactive games developers, and we deploy and make them work. For the future we expect to see growth in games for multiple users, and multi-platform games.

"Other areas of growth will include impulse ppv where we have experience which we can bring to pay per play.

"Regulators' views on betting vary according to the country, with the UK more relaxed. The ITC advertising restrictions do not allow presenting opportunities to gamble without prior permission - otherwise, plus only to viewers over 18, and not outside the UK, and there are more restrictive rules specifically related to sports."

ATV: Advertising is the other big area for interactivity. What is your involvement here?

Cross: "Our head of interactive advertising, Rahul Chakkra, came from Proctor & Gamble. His experience has been invaluable, emphasising that we must be able to provide service delivery along with the complexity of the service. Advertisers want to deploy across platforms, provide content as required by agencies and want maximum coverage by different platforms. This is what we strive to deliver.

"We did think advertising would be the driver of interactivity; that hasn't happened - but it will come. First it requires more standardisation - then agencies will be able to take advantage of the kind of capabilities we are developing - such as targeting for groups, beaming direct marketing, and organising advertisement deployment for ad agencies.

ATV: So what standards do you believe will win out?

Cross: "XML seems to be emerging as a standard from a technical point of view. There are subsets, but in general, there is a move to XML. We agree with being pragmatic about what to use. We will design for OpenTV middleware though it is not naturally HTML compliant.

"I expect we'll see more Java virtual machine environments. I believe these standards will emerge, but the market and I don't want to wait for them. We want something that works today to deliver to five million digital set top boxes. We need to get on with it and deal with the complexity that exists.

"MHP standards do not have widespread support yet, but when that materialises, we will support it. Standards will emerge which will be of benefit, but there's still work to be done in the meantime.

"An example of where interactive programming is headed is E4 - a positive new idea. It's a spoof of game shows with betting for bizarre things such as 'Guess who's wearing a wig?' Viewers place bets and choose. It was conceived with interactivity in mind - not added in later. The application pops up and is easy to use - intuitive. Itùs a new form of content and I believe been fairly successful with the late night back from pub audience."