Interactive TV to Outpace Overall Online Growth in the U.S.

by Mar 26, 2001, 12:00 AM

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Interactive television will grow 83% per year through 2005 in the U.S., reaching almost 46 million homes, according to Jupiter Media Metrix. Interactive television (iTV) will be an accelerated growth market, compared to online households which Jupiter projects will grow 9% during the same period. Jupiter analysts warn, however, that iTV penetration will occur on a regional rather than a national basis, because the infrastructure and technology will not be initially available in every market. The key for programmers and advertisers is to focus on delivering targeted interactive applications and on realizing the value in regional audiences.

"Even though iTV will be a viable platform for developers, content programmers and advertisers alike, the market needs to understand that this audience will be fragmented - by geography and by technology," said Lydia Loizides, Jupiter analyst. "Programmers and advertisers looking to target the iTV audience must understand what can be delivered by cable or satellite and plan their initiatives accordingly. Interactive TV programming and services should take shape today for deployment tomorrow."

While Jupiter predicts that the US will outpace Europe as a whole in iTV penetration in 2005, the lead is lessened when the US is compared on a country-by-country basis. The United Kingdom, Germany and Sweden will keep pace with US iTV penetration levels reaching 37%, 38% and 40% respectively. According to Jupiter analysts, content programmers and advertisers with a global presence should use iTV global penetration to target different audiences. For example, a global television network (i.e. CNN, Discovery, MTV Networks) could use the same interactive programming elements for the U.S. as well as their overseas affiliates.

Despite the recent iTV hype, Jupiter analysts believe that no clear middleware technology platform (i.e., MicrosoftTV, Liberate, OpenTV, PowerTV) will emerge as the leader within the next 24 months. Platform developers in the iTV market will share leadership, not own it.

ITV cable and satellite households lead through 2005, in approximately 26 million and 15 million households by this time (up from four million and two million, on average, in 2001). By 2005, however, cable will surpass satellite in terms of iTV household penetration. Jupiter analysts assert that programmers and advertisers need to think how to best deliver interactivity - not only across satellite but also via cable since it will reach a larger audience.

According to Jupiter analysts, iTV programmers should continue to invest heavily over the next 12 to 18 months in programs that lend themselves to interactive functionality such as sports, game shows and news. Other types of programming, like drama and comedy, will be more difficult to bring in interactive functionality, but provide an opportunity for dual-screen programming.

"Despite the hurdles that programmers will face in developing for iTV as an interactive platform, long

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