OpenTV: TiVo, We're Not in Kansas Anymore

The lobby of Open TV's corporate headquarters in San Francisco, California.

by Davis Freeberg, Staff Writer

Recently Tom and I interviewed Marc McCarthy, Vice President of Corporate Communications and Wesley Hoffman the General Manger of the North American Cable Division at OpenTV about their middleware services and the features that they are providing to some of their international customers. As the PVR industry continues to mature, it is becoming increasingly important for television providers to offer new services and features to their customers. This process has been painfully slow in the North American markets, but providers in Europe and Austrialia have been remarkably progressive with their offerings.

While many people may not have heard of OpenTV, over the last ten years they have created an impressive niche behind the scenes in the set top marketplace. They currently offer service to Foxtel in Australia, British Sky Broadcasting in England & the Dish Network in the U.S. Earlier this year OpenTV announced plans to develop an interactive solution in the Netherlands and Europe for UnitedGlobalCom. In total their middleware solutions exist in one form or another in 96 different countries globally.

While OpenTV provides different levels of functionally to each operator, I was most impressed by OpenTV's 2.0 PVR that is currently available to Foxtel subscribers in Australia. Those lucky Aussies who happen to live in the land of Oz are able to experience interactivity in a way that Tivo and Media Center users can only dream about today. Their 2.0 PVR allows viewers to not only choose amoung 4 -8 camera angles on select programming, but even more exciting they are able to choose from 4 - 6 audio streams as well. Recently during a Rugby match they not only miked the tradional commentators, but also hooked up some die hard beer drinking hooligans to their audio streams as well. While FCC regulations might restrict what fans say or do on air in the U.S., because of Austrialia's progressive censorship policies, fans were able to enjoy true color commentary from like minded fans.

The 2.0 PVR supports HDTV, live stats, interactive weather reports, karaoke & even interactive gaming for their customers. They have also begun to pursue partnerships to provide VOD directly to their customers and recently signed Playboy as a content provider. While Playboy has choosen not to broadcast their programming in HDTV, Marc did say that they had the ability to begin offering HDTV on demand if content providers will allow them.

In addition to their middleware and PVR software OpenTV also currently hold 417 patents worldwide. Unfortunately Marc and Wes were not geeky enough to give us the specific details on their patents, however it's been clear for some time that a strong patent portfolio will be important to any television operator going forward.

While some in the blogosphere have been concerned about TiVo's privicy policies, Foxtel's policies are much more controversial by comparision. When users sign up for service and as they interact with their device Foxtel and OpenTV are able to track this information and digitally insert 30 second ads over the traditional ads that one would see through normal programming. By knowing a little bit about your viewing habits combined with your demographics it may mean the difference between a sports car or a mini van commercial. This can be great or it can be really scary.

By allowing advertisers to more effectively address their target audience, advertisers are able to bring more compelling ads to their viewers. Currently, I would estimate that about 10% of the ads I see on TV are relevent to my interests. Because I could care less about learning how to stop that not so fresh feeling, I will typically fast forward any advertisment that I see, regardless of how compelling a product might be. If on the other hand, advertisers knew about my weakness for game shows, I'm sure that they could lure me into a commercial by offering me the ability to play a round of poker against the pros or to participate in various contests that I can't seem to resist.

On the other hand... I'm not sure that I want advertisers to know about my weakness for the show Cheaters or Blind Date out of fear that I might start recieving all kinds of solicitations to join various matchmaking services.

It's a tough situation for consumers, but the opportunities for couch commerce will undoubtably cause many middleware and PVR providers to think more seriously about the benefits and drawbacks of collecting this information. While TiVo's stand alone business has prevented them from taking more radical measures when it comes to advertising, OpenTV's relationship with the cable and satellite industry has allowed them to pursue a more controversial strategy because of their focus on the content providers. As CEO James Chiddex (formally of Mystro TV) put it in their most recent conference call, "our real customers, in most cases are network operators, in the context of deals between network operators and programmers or advertisers we can certainly provide services, but we're clear who the primary customer is." Whether this focus on operators and advertisers vs. the end user of their products pays off is yet to be seen -- but this focus is clearly a distrubing development in the PVR industry and one that is unlikely to change as advertising revenues become a more important part in the PVR industry.

While Marc and Wes were reluctant to reveal the number of subscribers who have access to the 2.0 PVR, they did tell us that they currently have 55 million middleware enabled set top boxes globally and that since the March 2005 launch of Foxtel's PVR 1.0 & 2.0, they have now sold over 1 million PVR units to customers in Australia. Pretty impressive given that it took TiVo almost 5 years to hit 3 million subscribers and given Microsoft's disappointing numbers so far

The future of interactive television is sure to be a hard fought battle and as each software provider tries to differentate themselves from brand X, it will become increasingly important for cable and satellite providers in the U.S. to provide a truly personalized and compelling television solution. While TiVo and Microsoft have done a great job at reacting quickly to this rapidly changing market, there will undoubtably be many competitors that will try to seize a piece of this ever-growing pie. While I'm frustrated at the lack of interactivity and progress in the North American markets so far, this is clearly an important decision for operators to make. Whether consumers like it or not, the choice of a PVR provider by the cable and satellite companies will be one of the most important decisions that these companies will make in the near future. I just hope that when it's all said and done that they will be willing to let Davis Freeberg call a Laker game or two. While the PVR wars still have not been decided, in the immortal words of Chick Hearn "this game's in the refrigerator: the door is closed, the lights are out, the eggs are cooling, the butter's getting hard and the Jello's jiggling."

As we begin to see increasing interactivity in television I hope that the television providers can come to a decision quickly and give consumers the functionality that we so desperatly crave.

Update: We were contacted by OpenTV today with one clarification with regards to the above article:

"...and that since the March 2005 launch of Foxtel's PVR 1.0 & 2.0, they have now sold over 1 million PVR units to customers in Australia."

Actually, we announced the launch of our PVR 1.0 solution with FOXTEL (FOXTEL iQ) on March 1 with no 2005 plans to update them to PVR 2.0. The approx. 1 million subscribers is for the full FOXTEL digital service. That number represents subscribers they've signed on since the service launched in early 2004. Foxtel has not shared with us any recent PVR distribution numbers. Also, as of the 2Q call we're now over 57 million set-top boxes deployed with OpenTV-enabled middleware.