Interactive TV Gets Off to a Flying Start
By Andrew Tilin

(Business 2.0) – Before the horses take off running at this month's Belmont Stakes, EchoStar Communications hopes its new onscreen betting system will have viewers champing at the bit. For the first time, Dish Network subscribers will be able to wager on horse races from their couches using only their remote controls. "It's the most TiVo-proof content on television," says Ryan O'Hara, president of TVG, the horse-racing network that broadcasts events and handles viewers' bets.

Though the wager-by-remote feature serves a narrow niche--it's permitted in just 12 states--the technology marks one of the first U.S. applications of interactive television, which is already a huge business in Europe. On Rupert Murdoch's BSkyB satellite service in the United Kingdom, viewers can use their remotes to make home-shopping purchases, play roulette, and even change camera angles during soccer matches. While those applications may be a few years off in the United States, the same technology is being used by Murdoch-owned TVG to let viewers navigate onscreen menus with a standard remote control and software embedded in set-top boxes.

The key for satellite and cable providers is engaging viewer emotions. "Interactive television works only if it enhances the experience of just watching," says Phillip Swann, author of TV Dot Com. "Appealing to a base desire like lust or winning money can help do that." Indeed, Comcast rolled out a trial service in Philadelphia last year called Dating on Demand, which let digital-cable subscribers view video profiles of eligible singles; the feature was such a hit that it's now expanding into other cities. With the number of digital-cable households expected to swell 48 percent to 42 million by 2008, according to Kagan Research, the interactive-TV market will bring a boom of opportunities for companies creating interactive TV shows, improved user interfaces, and viewer-polling software. Play the odds wisely and you won't need a racing form to make a killing. -- ANDREW TILIN