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Cable ITV: Is It a Real Business Yet?

NEW ORLEANS -- CTAM Summit 2010 -- US media buyers may soon be able to reach 25 million cable subscribers with interactive ads, but the cable industry still must figure out how programmers, operators, and technology vendors will split the loot, industry executives said here Monday.

"There is a dance going on. That dance will go on until this issue gets worked out," Ensequence Inc. president Peter Low said on a panel focused on interactive TV.

Low noted that Canoe Ventures LLC , the cross-MSO advanced advertising venture, has made progress in trying to build a business model for interactive TV advertising, but that there are some uncertainties, including how operators will share data about how subscribers interact with ads. "There isn’t a uniform application of how this gets paid for, what metrics matter, what metrics are available," he said.

Despite some challenges, Low and executives from Cox Communications Inc. , Time Warner Cable Inc. (NYSE: TWC), Canoe, and The Weather Channel emphasized that the interactive TV advertising business is gaining momentum, and that the sector can drive increased revenue for the cable industry.

"Why is it [ITV] real? Because we’re going to make money with it," said Cox vice president of video product development Steve Necessary. "Interactive TV, particularly with advanced advertising applications, is going to make money. Canoe is positioned well to enable that."

Cox was one of the first MSOs to sell advertisers targeted and addressable advertising, using software from Navic Networks, which is now owned by Microsoft Corp. (Nasdaq: MSFT). Necessary said Cox is transitioning from using proprietary interactive TV software to applications that support the Enhanced TV Binary Interchange Format (EBIF) interoperability spec. (See Cox Reports Heavy Interactive TV Usage .)

"Clearly we are committed to the EBIF environment. It is a great enabler. It is a far better enabling technology and standard than what we have had in the past," Necessary said.

But Necessary said Cox and other MSOs must also make decisions on how much of a priority to place on deploying technology to support interactive advertising compared to investing in technology such as switched digital video, expanding video-on-demand (VoD) content, or improving the user interface for subscribers. (See Cable SDV Makes Bid for a Tech Renaissance .)

"Just because technology enables something doesn’t mean it's worth doing," Necessary said. "What we’ve got to continue to vet and push and poke on is whether or not new interactive ad capabilities really matter to the consumer. Do they really move the needle? Do they cause further engagement with the programming, or is it just something cool, but consumers could take it or leave it?”

Canoe executives have said that there would be 25 million cable homes capable of receiving interactive ads based on EBIF by the end of 2011. But Canoe COO Kathy Timko said Monday that the interactive ad JV may not be ready to deliver interactive ads to those homes by the end of the year. (See Cable ITV Braces for 'Template Tension' and Comcast Clicking With EBIF.)

"We are going to lag those numbers by a little bit," Timko said, noting that Canoe and its MSO partners are still working on "pipe cleaning," or ensuring that EBIF signals inserted at the operations centers of broadcasters can reach cable headends and set-tops. “We’re working with six programmers now -- more are coming,” she added. (See Cable Breaks Out the ITV Drano .)

Canoe has been focused on rolling out interactive ads that allow subscribers to request more information about a product. It also plans to launch voting and polling applications.

When it comes to interactive programming, most networks have added interactive components to existing content. Low said the industry could see big changes when content creators begin to produce shows that incorporate interactivity form their inception.

"At some point really soon the creators are going to get a hold of this," Low said. "There are things that we can’t begin to contemplate that are going to be really awesome. In my mind, no one can do this better than the creators. When that happens, I think things are going to start to be very, very different."

— Steve Donohue, Special to Light Reading Cable

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