MONTEREY, Calif. -- A new study from Kagan Research projects that 69 mil. digital subscribers will be equipped with interactive platforms by 2009, accounting for more than half the TV households in the U.S.

Growing competition for video customers has focused cable operators, satellite operators and telco carriers on developing interactive services capable of generating revenue, reducing churn and providing differentiation in the marketplace.

"The debate over the future of interactive TV has shifted from if there is a marketplace to what applications should be introduced first and how quickly," reports Kagan Senior Analyst Ian Olgeirson.

STATE OF INTERACTIVE TV 2005 provides a comprehensive view of the ITV sector and offers exclusive five-year revenue projections for three categories Kagan forecasts will contribute most significantly to the sector's outlook: TV-based gaming, television commerce and interactive or direct response advertising. While the revenue outlook for these types of interactivity is limited when compared to VOD and DVR technologies, the three categories outlined in the report will help drive subscribers to the platform and are expected to generate significant incremental revenue.

Kagan estimates total revenue for electronic transactions conducted via games, television or t-commerce and interactive advertising will reach $2.4 bil. by the year 2009. The interactive services segment will also contribute to the bottom line for cable, DBS and telcos. Kagan estimates interactive services will generate $780 mil. in operator revenue by 2009. STATE OF INTERACTIVE TV 2005 outlines the enabled universe on three levels, starting with projecting growth of digital subscribers; then delineating the outlook for the installed base of digital set-top boxes; and finally forecasting the potential for interactive software-enabled set-top boxes. The three layers form a complete five-year profile for interactive capability in the U.S. market and define the footprint upon which services can be launched.

The study also includes operator profiles for the major U.S. providers of multichannel video packages and how they intend to deliver ITV services. Profiled companies include Cablevision, Charter, Comcast, Cox, Insight, Time Warner, DirectTV and EchoStar.

Kagan Research LLC