TV Goes Digital

Friday, Sep. 14, 2001
Between 2006 and 2010, Western European governments want their countries' TV signals fully digitalized. Whether that target will be met remains to be seen. But clearly, the number of European households with digital television will grow rapidly. Durlacher, a British investment house, estimates digital TV penetration in Europe will rise from just under 12% last year to 85% in 2010. Digitization then opens the door to interactive TV (iTV), using a modem connection to merge TV and PC functions. That's good news for French company NPTV (www.nptv.fr), whose software enables TV producers, channels and advertisers to add interactivity synchronized to programs or ads on air.

Here's how it works. In France, Fort Boyard is a popular game show. Set in a castle, two teams face challenges and collect clues in order to guess a password at the game's end. NPTV's main product Bando, a suite of software tools, lets viewers use their remote controls to also gather clues, play along and win prizes. On a Big Brother-type show, you can use the remote to vote on which participants should be booted from the program. And the technology also exists to let you change the plot of a drama and choose a different ending. That said, NPTV CEO Etienne Grange, notes that most broadcasters would find the cost of airing interactive dramas too prohibitive.

Certainly iTV has great appeal to advertisers, as well. Let's say you're watching an ad for a product that interests you. With a few clicks of your remote you can order a brochure. Better yet, you can go to a website — complete with visuals and sound — for more information. And when personal video recorder technology is more widespread, you'll be able to click and request that an information video be downloaded to your set. Alas, for the moment, the iTV ad market in Europe is moribund. According to Grange, the lack of an agreement over pricing means that network operators aren't selling airtime for interactive ads to media buyers. "Right now, there is no agreed business model," he explains.

Enlisting the support of network operators — who control Internet access within their systems — has also proved difficult for NPTV. So far, it has licensing agreements with Canalsatellite, the biggest digital operator in France and Spain. And Grange is confident of reaching agreements with operators in Italy, Poland and the Scandinavian countries later this year. But the biggest potential market, Germany, is fragmented and no operator there is yet offering digital TV. In the U.K., BritishSkyBroadcasting is the largest digital operator, and so far it's not interested in using software it hasn't developed itself. NPTV hopes that its powerful clients, channels like Disney and Bloomberg — which buy its software services in Europe — will help pressure BSkyB to relent.

NPTV clearly faces some formidable hurdles. But if it can break into new markets, and if disputes over interactive advertising are soon settled, it may be just a few clicks away from successfully manipulating Europe's expected digital TV boom.