Will Convergence Make Consumers Click on Cable TV?

by Dave Zornow
CSP Magazine, June 2002

Ever since the late 80's when the seeds of interactive TV were first planted, marketers and researchers have wondered if people really wanted to interact with their televisions. There were more than a few reasonable doubts about whether consumers would adopt this technology. After all, this is the consumer group which researchers derisively named "coach potatoes," a target market that freely admits they can't program their VCRs. Interactive TV providers have been wondering if We Build It, Will They Come? Or to be more exact, Will They Click?

WorldGate Communications, a vendor that partners with MSOs to supply hardware and content to support Internet connectivity over cable, says they now have research that validates the interactive TV concept. These findings are based on a four month test of the WorldGate system in Massillon, Ohio last fall involving 1,000 subscribers and original interactive content provided by seven broadcast networks, 75 cable networks and 51 local and national advertisers. The WorldGate system features Channel HyperLinking, a proprietary system which lets consumers seamlessly link from a TV program or commercial to additional content on the World Wide Web through a button on a wireless keyboard. According to a Nielsen telephone study commissioned by WorldGate, eight out of ten subscribers felt that Channel HyperLinking was a valuable service, and two-thirds of these subs say they use the feature 1-4 times a week.

How It Works
WorldGate uses an icon in the lower right corner of the picture to tell viewers when additional content is available for an advertisement. During the test period about 70 percent of Massillon's WorldGate subscribers said they tried Channel HyperLinking. "One of the major questions about interactivity has been whether consumers view it as an intrusion or as a valuable addition to the television experience," said Gerard Kunkel, senior vice president, WorldGate. Kunkel says that the Massillon test proves that consumers want additional information on the ads and programs they watch. Almost seven out of ten subscribers who used this interactive TV feature said they were satisfied or very satisfied with it.

Massillon subscribers averaged 1-3 minutes online for each Channel HyperLinking session according to WorldGate internal logfile data. The average length of an advertising interactive session was one minute and 17 seconds. The average length of a programming interactive session was twice as long at 2:55. Daytime (10a-4:30p) accounted for about a third of all interactive TV behavior, followed by prime (8p-11p) and Early Fringe (4:30p-7:30p) both of which delivered 20% of all Channel HyperLinking sessions. Nick/Nick At Nite (8% of all Channel HyperLinking), ESPN (4%) MTV & Cartoon (3%) and USA & TNT (3%) were the top cable networks; NBC & ABC (6%), FOX (4%) and CBS (3%) were the leading broadcast networks for Channel HyperLinking.

Although interactive TV provides more benefits for consumers, programmers and advertisers, the study showed that a successful implementation requires regular content updates. WorldGate logfiles show interactive usage increases when content is updated and when mail and email promotions are executed. "Consumers' need new content," says WorldGate's Vice President Advertising Bud Breheney. "We know as viewers increasingly use interactivity to enhance their television viewing experience the need for new content also increases." Breheney believes advertisers and programmers can creatively respond to this need by offering daily updates, like cooking recipes or targeted programming on a daily basis. Although this means extra work, WorldGate says that their HTML-created content is easy to update because it uses the same technology as the World Wide Web.

From Cable Net to Internet
WorldGate's Internet over cable service also proved to be popular with subscribers. Using analog converters, the service operates at double the standard 56K dialup speed; digital converters allow users to run 3.5 times faster than a typical cable modem. Nielsen found that six months after subscribing, more than nine out of ten Massillon subs said they used WorldGate for Internet access at least once a week with almost 60% using email daily.

Subscribers rated email (82%), web surfing (77%) and access to on-screen TV guides (54%) as the most important features of interactive TV. These results are consistent with CTAM's findings from their January/February survey on set top boxes that found cable customers cited the "ability to access the Internet through your TV including email" as one of the most valuable features of digital set top boxes.

Worldgate plans a follow-up test using 15,000 subscribers in multiple markets beginning in the third quarter of 2000.

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