In the early 1990s, before the Internet explosion, pundits heralded interactive television, or ITV, as the new media gateway to the Great Unwashed. Greater household penetration and more universal appeal seemed to give television distinct advantages over personal computers in becoming the medium of the future.

However, the technology at the time couldn’t support the vision. Set-top boxes were bulky, expensive, slow, and often interfered with traditional TV viewing rather than enhancing it. Media conglomerates including Time Warner and telecommunications outfits such as Pacific Bell never rolled out promised services beyond local-market trials, and soon shelved their projects to catch the booming Internet express.

Now, evolving technology and changing perceptions among consumers and advertisers are breathing new life into interactive television. While the user base still encompasses just a few million U.S. households, the consensus is that the industry is on the brink of a boon.

“Interactive television is a solution that works today,” says David Katz, vp-strategic planning and Internet ventures at broadcast giant CBS in Los Angeles, which has partnered with WebTV, the interactive venture of Microsoft Corp. “We’re not waiting for thousands of boxes to be deployed. We already have a built-in — albeit small — audience. Our goal over the next year is to include an interactive component with almost all types of programming, from dramas to comedies to sports.”

Vendors, naturally, agree. “It’s real now,” says Richard Fisher, president of RespondTV, San Francisco, an agency that provides an infrastructure to tweak ITV content. “We’re involved in 50 campaigns with brands such as Coca-Cola. This isn’t something that may happen, it is happening.”

While early ITV initiatives emphasized Internet accessibility, online connections are no longer a necessity. “Broadcasters are embracing what ITV can be to them,” says Colleen Bertiglia, vp-marketing at WebTV. “At first, it was all about the Internet, and while that’s still a big part, it’s more about expanding the viewing experience [in any way].”

INSTANT WINS

Interactive promotions can be delivered directly through traditional TV without additional effort from broadcasters or consumers. To back the launch of a new Internet-ready phone packaged with AT&T’s Digital PocketNet service last October, Miami-based Ericsson Mobile Phones tapped Veil Interactive Technologies, St. Louis, whose service delivers digital information through ordinary TV images. Working with promo agency Impiric, New York City, Veil produced electronic game devices that hooked to the phones for use in a contest tie-in with ABC series Who Wants To Be a Millionaire? dangling more than $1 million in cash prizes and rebates.

AT&T encoded TV spots with information that let consumers download entries using the devices, about 100,000 of which were mailed to homes. “This technology was such a wild card we didn’t know what to expect for results,” says Karen Morris, Ericsson’s director of marketing to consumers for North America. “But 50 percent of consumers who received the mailing remembered it. We definitely want to do this again.”

“The commercial became an event, rather than an excuse for the viewer to go to the fridge,” says Ted Koplar, Veil’s ceo. “AT&T and Ericsson benefited because viewers were seeking out their ad specifically. ABC benefited because it cost them nothing, yet thousands of people made sure to tune into the show.”

Last November, Coca-Cola, Atlanta, joined with RespondTV to add an interactive component to one of its most enduring ad campaigns, the holiday Polar Bear spots. Most viewers with set-top boxes could watch the 30-second spot, then respond to an offer for a free plush bear. Based on early returns, Coke expected to receive upwards of 1,000 responses. That’s significant at this early stage in the medium’s development — especially since the still-cumbersome process required viewers to stop watching TV and use the keypad on their set-top box to respond. (Since then, RespondTV has partnered with AT&T to build an infrastructure that lets viewers respond to offers via TV remotes.)

PLAY ALONG AT HOME

Sony Pictures Entertainment-owned TV game shows Jeopardy and Wheel of Fortune have offered interactive components to their broadcasts for almost two years through WebTV. Today, WebTV viewers play along with the on-air contestants and compete for prizes. Last December, Sony ran a four-week promotion called Happy Holidays that gave away a digital recorder and a trip to Hollywood for show tapings to at-home contestants with the highest scores. Beginning this quarter, Sony awards weekly prizes to WebTV viewers.

“Interactive TV offers much more sticky, submersive content,” says Nicholas Wodtke, Sony’s senior vp-interactive TV. “After watching Frasier, if I quizzed someone an hour later to name five commercials they remembered, I doubt he could do it. But when the viewer is playing a game or asking for a coupon, it sinks in.”

At this stage, most ITV providers are still working out technological kinks, and therefore have yet to launch full-scale assaults on the advertising community. AOLTV, the venture from AOL Time Warner, is still more concerned with building market share and making sure its technology works than with recruiting advertisers. Other companies are experimenting with their own content to get a sense of what they can offer advertisers. CBS incorporated what it calls “passive interactivity” into the broadcasts of six college football games last year, including the Dec. 28 Sun Bowl. Viewers could use WebTV to access ancillary information like player biographies or track an individual player’s statistics during the game. The network also ran polls on topics such as which team viewers thought would win, with results posted on-screen in real time. “We’re testing the tolerance of the viewer for interactivity,” says Katz. “We’re trying to involve people at home as much as they want to be involved.”

Part of wooing viewers is giving them an interactive option that doesn’t disrupt the broadcast format they’re used to. “Most interactive television shrinks the screen or uses overlays that cover the programming,” says Katz. “We are trying to control the look and feel of the broadcast so the viewer can enjoy it as usual.”

Comedy Central, New York City, recently hired RespondTV as an experiment. “We wanted to learn what the issues were,” says Ken Locker, the cable network’s senior vp-enterprises and new media. For its top-rated Battle Bots series (which features homemade robots engaged in mortal combat), the cable network developed a six-hour marathon in which WebTV viewers could learn about contestants and participate in polls. The network also encouraged viewers to submit e-mails for more information. About 800 viewers utilized the interactive options and 37 sent e-mails, impressive considering Comedy Central didn’t put any marketing effort into it.

REMOTE POSSIBILITIES

If interactive TV has traditional advertisers salivating, the rise of personal recording systems has them choking on breakfast. Technology from the likes of TiVo, San Jose, CA, and ReplayTV, Mountain View, CA, lets users record in real time and control what they see. Speaking at last fall’s Association of National Advertisers conference, Procter & Gamble ceo A.G. Lafley noted that early tests found TiVo users fast-forwarding through 50 percent of ads. “Still, they are watching the other half,” he noted. “We need to find out why.”

“TiVo and ReplayTV have put the fear of God into the advertising community,” says Sony’s Wodtke. “It’s not changing the way we do things yet, but it’s something we’ve got our eye on.”

Personal recorders can gain critical mass quickly because they can be packaged with TV sets or satellite dishes. Sony and Phillips will offer DirectTV satellite receivers with built-in TiVo recorders, and Panasonic is said to be building a 27-inch TV with built-in ReplayTV.

Advertisers are already finding ways in. Coca-Cola and Universal Pictures have struck deals to run banners on-screen when ReplayTV users hit the pause mode. TiVo is also developing a special ad program.

Despite the potential, ITV still faces an uphill battle, particularly now that Wall Street is once bitten, twice shy about embracing new technologies too fast. “Interactive television may face the same fallout as the dot-coms are enduring,” says Rich Yelen, chief marketing officer at ACTV, New York City, which offers interactive advertising and content programs. “People are promising wonderful things that, at this time, many can’t provide. We’re asking consumers to change in many ways, and they just don’t change that fast.”

ITV also faces challenges from within, as providers square off against each other in court. In its fight against the Time Warner-AOL merger, Walt Disney Co. claimed that AOLTV discriminates against its content. Meanwhile, ACTV is suing Disney and its ABC Sports/ESPN subsidiary over the enhanced television offerings of Monday Night Football, Sunday Night Football, and the aforementioned Who Wants To Be a Millionaire?, claiming they infringe on ACTV’s proprietary technology.

At some point soon, consumers will ultimately give the thumbs up or down.

And they’ll do it right from the couch.

In the early 1990s, before the Internet explosion, pundits heralded interactive television, or ITV, as the new media gateway to the Great Unwashed. Greater household penetration and more universal appeal seemed to give television distinct advantages over personal computers in becoming the medium of the future.

However, the technology at the time couldn’t support the vision. Set-top boxes were bulky, expensive, slow, and often interfered with traditional TV viewing rather than enhancing it. Media conglomerates including Time Warner and telecommunications outfits such as Pacific Bell never rolled out promised services beyond local-market trials, and soon shelved their projects to catch the booming Internet express.

Now, evolving technology and changing perceptions among consumers and advertisers are breathing new life into interactive television. While the user base still encompasses just a few million U.S. households, the consensus is that the industry is on the brink of a boon.

“Interactive television is a solution that works today,” says David Katz, vp-strategic planning and Internet ventures at broadcast giant CBS in Los Angeles, which has partnered with WebTV, the interactive venture of Microsoft Corp. “We’re not waiting for thousands of boxes to be deployed. We already have a built-in — albeit small — audience. Our goal over the next year is to include an interactive component with almost all types of programming, from dramas to comedies to sports.”

Vendors, naturally, agree. “It’s real now,” says Richard Fisher, president of RespondTV, San Francisco, an agency that provides an infrastructure to tweak ITV content. “We’re involved in 50 campaigns with brands such as Coca-Cola. This isn’t something that may happen, it is happening.”

While early ITV initiatives emphasized Internet accessibility, online connections are no longer a necessity. “Broadcasters are embracing what ITV can be to them,” says Colleen Bertiglia, vp-marketing at WebTV. “At first, it was all about the Internet, and while that’s still a big part, it’s more about expanding the viewing experience [in any way].”

INSTANT WINS

Interactive promotions can be delivered directly through traditional TV without additional effort from broadcasters or consumers. To back the launch of a new Internet-ready phone packaged with AT&T’s Digital PocketNet service last October, Miami-based Ericsson Mobile Phones tapped Veil Interactive Technologies, St. Louis, whose service delivers digital information through ordinary TV images. Working with promo agency Impiric, New York City, Veil produced electronic game devices that hooked to the phones for use in a contest tie-in with ABC series Who Wants To Be a Millionaire? dangling more than $1 million in cash prizes and rebates.

AT&T encoded TV spots with information that let consumers download entries using the devices, about 100,000 of which were mailed to homes. “This technology was such a wild card we didn’t know what to expect for results,” says Karen Morris, Ericsson’s director of marketing to consumers for North America. “But 50 percent of consumers who received the mailing remembered it. We definitely want to do this again.”

“The commercial became an event, rather than an excuse for the viewer to go to the fridge,” says Ted Koplar, Veil’s ceo. “AT&T and Ericsson benefited because viewers were seeking out their ad specifically. ABC benefited because it cost them nothing, yet thousands of people made sure to tune into the show.”

Last November, Coca-Cola, Atlanta, joined with RespondTV to add an interactive component to one of its most enduring ad campaigns, the holiday Polar Bear spots. Most viewers with set-top boxes could watch the 30-second spot, then respond to an offer for a free plush bear. Based on early returns, Coke expected to receive upwards of 1,000 responses. That’s significant at this early stage in the medium’s development — especially since the still-cumbersome process required viewers to stop watching TV and use the keypad on their set-top box to respond. (Since then, RespondTV has partnered with AT&T to build an infrastructure that lets viewers respond to offers via TV remotes.)

PLAY ALONG AT HOME

Sony Pictures Entertainment-owned TV game shows Jeopardy and Wheel of Fortune have offered interactive components to their broadcasts for almost two years through WebTV. Today, WebTV viewers play along with the on-air contestants and compete for prizes. Last December, Sony ran a four-week promotion called Happy Holidays that gave away a digital recorder and a trip to Hollywood for show tapings to at-home contestants with the highest scores. Beginning this quarter, Sony awards weekly prizes to WebTV viewers.

“Interactive TV offers much more sticky, submersive content,” says Nicholas Wodtke, Sony’s senior vp-interactive TV. “After watching Frasier, if I quizzed someone an hour later to name five commercials they remembered, I doubt he could do it. But when the viewer is playing a game or asking for a coupon, it sinks in.”

At this stage, most ITV providers are still working out technological kinks, and therefore have yet to launch full-scale assaults on the advertising community. AOLTV, the venture from AOL Time Warner, is still more concerned with building market share and making sure its technology works than with recruiting advertisers. Other companies are experimenting with their own content to get a sense of what they can offer advertisers. CBS incorporated what it calls “passive interactivity” into the broadcasts of six college football games last year, including the Dec. 28 Sun Bowl. Viewers could use WebTV to access ancillary information like player biographies or track an individual player’s statistics during the game. The network also ran polls on topics such as which team viewers thought would win, with results posted on-screen in real time. “We’re testing the tolerance of the viewer for interactivity,” says Katz. “We’re trying to involve people at home as much as they want to be involved.”

Part of wooing viewers is giving them an interactive option that doesn’t disrupt the broadcast format they’re used to. “Most interactive television shrinks the screen or uses overlays that cover the programming,” says Katz. “We are trying to control the look and feel of the broadcast so the viewer can enjoy it as usual.”

Comedy Central, New York City, recently hired RespondTV as an experiment. “We wanted to learn what the issues were,” says Ken Locker, the cable network’s senior vp-enterprises and new media. For its top-rated Battle Bots series (which features homemade robots engaged in mortal combat), the cable network developed a six-hour marathon in which WebTV viewers could learn about contestants and participate in polls. The network also encouraged viewers to submit e-mails for more information. About 800 viewers utilized the interactive options and 37 sent e-mails, impressive considering Comedy Central didn’t put any marketing effort into it.

REMOTE POSSIBILITIES

If interactive TV has traditional advertisers salivating, the rise of personal recording systems has them choking on breakfast. Technology from the likes of TiVo, San Jose, CA, and ReplayTV, Mountain View, CA, lets users record in real time and control what they see. Speaking at last fall’s Association of National Advertisers conference, Procter & Gamble ceo A.G. Lafley noted that early tests found TiVo users fast-forwarding through 50 percent of ads. “Still, they are watching the other half,” he noted. “We need to find out why.”

“TiVo and ReplayTV have put the fear of God into the advertising community,” says Sony’s Wodtke. “It’s not changing the way we do things yet, but it’s something we’ve got our eye on.”

Personal recorders can gain critical mass quickly because they can be packaged with TV sets or satellite dishes. Sony and Phillips will offer DirectTV satellite receivers with built-in TiVo recorders, and Panasonic is said to be building a 27-inch TV with built-in ReplayTV.

Advertisers are already finding ways in. Coca-Cola and Universal Pictures have struck deals to run banners on-screen when ReplayTV users hit the pause mode. TiVo is also developing a special ad program.

Despite the potential, ITV still faces an uphill battle, particularly now that Wall Street is once bitten, twice shy about embracing new technologies too fast. “Interactive television may face the same fallout as the dot-coms are enduring,” says Rich Yelen, chief marketing officer at ACTV, New York City, which offers interactive advertising and content programs. “People are promising wonderful things that, at this time, many can’t provide. We’re asking consumers to change in many ways, and they just don’t change that fast.”

ITV also faces challenges from within, as providers square off against each other in court. In its fight against the Time Warner-AOL merger, Walt Disney Co. claimed that AOLTV discriminates against its content. Meanwhile, ACTV is suing Disney and its ABC Sports/ESPN subsidiary over the enhanced television offerings of Monday Night Football, Sunday Night Football, and the aforementioned Who Wants To Be a Millionaire?, claiming they infringe on ACTV’s proprietary technology.

At some point soon, consumers will ultimately give the thumbs up or down.

And they’ll do it right from the couch.