They like their TV, they trust their TV, Faull sez

LONDON — Forget the hype, the best new media is coming from an old medium — television.

The humble box is proving the gateway to the future at a time when broadband is stalled, a wireless entertainment industry is years away, and the tally of dot-gones is climbing.

Interactive TV — from home shopping to online gambling to enhanced channels — was a $1.5 billion business in the U.K. last year.

British satcaster BSkyB and France’s Canal Plus are the acknowledged world leaders, and where Europe’s two biggest pay TV platforms have led, others are following — at home and abroad.

The potential is enormous. Merrill Lynch estimates that the U.S. interactive TV market could be worth $25 billion in 2005.

In July, BSkyB demonstrated its commitment to the sector when it upped its stake in Open, an e-commerce platform available through SkyDigital, to 80% in a deal worth $575 million.

Recently, BSkyB posted interim interactive revenues of $54 million, of which $48 million was derived from betting, also a key driver for Canal Plus

Ricardo Tejada, director of corporate communications for Open, says it is just the beginning. “The real development will be what you can do in conjunction to the broadcasting stream.

At present, BSkyB subscribers — two-thirds of SkyDigital’s 5 million subs have tried Open — have to exit the TV show they are watching to bet, shop, bank or whatever. Integrating e-commerce options into the broadcast screen will make for a more compelling proposition.

BSkyB offers add-on applications to its Sky Sports and Sky News channels featuring alternate camera angles, extra info and more, but that’s separate from Open. Extracting extra value is now in the cards.

A similar application for Sky Movies, due in summer, will integrate such things as cinema ticket sales and movie merchandising. There are also plans to add a number of revenue streams to Sky One, BSkyB’s flagship channel, by the end of the year: buy a Bart T-shirt while watching “The Simpsons,” for example.

But why does the iTV business model seem to work when consumers are wary of making purchases on the Internet?

“They like their TV, they trust their TV,” says Ashley Faull, joint managing director of iTV company Sit-up. “If it’s on the TV it should be kosher. The power of video can be overlooked — it’s massive.

“And convenience is key,” Faull adds. “A lot of people are time poor and cash rich.”

Startup Sit-up recently defied the odds of the market downturn when it struck a $22 million asset swap and funding deal with Telewest, the U.K.’s No. 2 cable operator.

The agreement combines Sit-up’s Bid-up.tv auction channel — cranking $3 million per month in sales after only six months — with Telewest’s home shopping service, Screenshop.

The idea is that the expanded Sit-up will evolve into the cabler’s broader iTV proposition. Gaming channels are in the pipeline, and in the long term, even virtual attendance to events such as soccer matches, car races and concerts.

U.K. outfit Done and Dusted already specializes in multicasting music across platforms, TV to Webcast to anything in between. The company recently produced the Brit Awards — the British equivalent of the Grammys –and handled Madonna’s one-off concert from London’s Brixton Academy last year.

But while garnering millions of Internet hits can be impressive, Done and Dusted is firmly rooted in straight-up TV. The Webcams behind the scenes at the Brits were fun, but it was the network broadcast that paid the bills.

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