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FTIT September 5 2001 - Interactive TV
Case study - sport on iTV
by Andrew Gellatly
Published: September 3 2001 13:43GMT | Last Updated: September 5 2001 09:15GMT
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Interactive sports television has been around so long that veterans describe it as a permanently premature technology, but the technology has already turned in some spectacular results this year.

When BBC digital offered multi-court coverage of Wimbledon on Sky this summer some 900,000 viewers used the service each day to switch between five court. BARB statistics counted 4.2m viewers over the course of the two week tournament.

Meanwhile Quiero, a digital terrestrial channel in Spain, has fired up the slow-moving digital TV market there, attracting over 230,000 subscribers in its first six months of operation with a strong package of primera liga football and e-mail on TV.

But in interactivity terms there is a world of difference between multicourt coverage and e-mail, essentially broadcast enhancements, and the more complex add-ons that many sports channels are pushing to their subscribers.

BSkyB claims that 40 per cent of its digital subscribers have used the interactive services on Sky Sports, including the player cam and fan commentary. However, that figure includes all those who have used the service once and then never again. Most estimates see the true regular user numbers to be much lower.

Via Digitale in Spain charges PTA1800 for each pay-per-view football game with an optional extra payment of PTA500 for interactive services giving information about players, multi-cam, fantasy games and prizes. However, the take up rates for the interactive services are low.

"Sports are great for developing stickiness, particularly in the UK market," says Thomas Behe of Copenhagen-based interactive TV consultancy Agency.com. "But services like player cams and camera angles are only good for the top 2 or 3 per cent of viewers who are the high brand affinity customers, extremely loyal to their teams."

In other European countries, now experiencing the roll-out of interactive TV, it is becoming clear that customers are more likely to use a service because their friends have tried it and liked it.

One of the secrets of Quiero's success has been to operate a 56kbps return path telephone connection inclusive of the basic subscription package. This allows unlimited internet access as well as an unmetered Quiero private portal. The service is marketed as "TV with the internet".

According to Chen Assayag, General Manager of Open TV in Europe who supply software technology to Quiero: "Its really the e-mail which gives people a compelling reason to hook up their box to the phone line."

Quiero expects to reach a break-even point in 2003 with 1m subscribers, but the company is growing quickly by supplying sports content as a loss leader, with an offer of all the primera liga football you can watch (excluding Madrid and Barcelona) for E1. When this offer expires Quiero's churn rate may shoot up.

The usual trajectory for a sports broadcaster is to start with basic applications such as information channels and then move on when they have the ability to link interactivity with sporting events, whether that is contests, quizzes or betting. However, there are significant holes in the patchwork of iTV development across Europe.

As Mr Assayag notes: "Italy is lagging badly in providing services, but we expect things to change very quickly in Germany because of Kirch [the German media group] and its Formula One and World Cup Rights."

It may be that the World Cup 2002 broadcasts will be a qualitative watershed in the delivery of interactive sports coverage, particularly for Scandinavian countries.

But while sport is certainly driving interactive TV adoption across Europe it is sports betting that is delivering the revenues.

Television par Satellite (TPS) in France has experienced high levels of usage for its interactive services - 91 per cent of subscribers use at least one interactive service, whether the Meteo weather channel or the other information channels - but close to half the platform's revenues now come from their relationship with Equidia, a dedicated horseracing channel.

Equidia, a venture of the French PMU, the national horse racing authority, is available on TPS and Canal Satellite and at the end of its first year of operation the system had 47,000 accounts and had generated £32m in pari-mutuel betting turnover.

Clearly though, not all channel operators stand to benefit equally from the opportunities of interactive TV sports betting. Thomas Behe argues that betting companies are wasting their time in most European markets until interactive TV moves to a properly transactional stage.

"In Scandinavia, the betting companies are nationalised and they tend to plod along at their own pace, so if a fan wants to bet on a horse race they will most likely have to pay a lot more to have that service delivered. Just because the law allows it doesn't mean it's possible."

Broadcasters mulling over their sports offers on interactive TV platforms around Europe also have to consider significant cultural differences. In France horse racing betting rules, in Spain and Scandinavia it is lottery and bingo games.

But as Ed Shedd, partner at Andersen consulting in London notes, interactive sports betting is not all gravy to the operators: "When you add extra interactive services it brings incremental revenues but also substantial incremental costs," he says.

The experience of BskyB in the UK goes some way to proving this. BskyB's year end results to June 2001 showed interactive sports betting turnover of £78m. At the same time it incurred fixed costs of £48m to provide the interactive services.

As interactivity develops and return path speeds improve, betting companies expect to be able to offer running bets through the course of the game, on the outcome of a penalty or next player to score. However, frequently those bets are less profitable than ones made before the kick-off and require a team of odds setters to work throughout the game.

Much of the hype about sport on interactive television - that viewers will be able to monitor tennis players' heart rates at match point, for example - is ominously familiar, and has come from internet production companies which have gone bust because they were too far ahead of fans' real interests. But while iTV production companies are thinking up ever more compelling enhancements, most sports fans' needs are a lot simpler.

Anthony Lilley, managing director of London-based interactive TV production house Magic Lantern, gives the example of a fan being able to send an SMS message via his remote control to a friend who is in the crowd of a football match on TV, "Interactivity really works best at moments when you would otherwise be shouting at the screen," he says.