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Interactive Video: A Gamechanger for the Medium or Just Another Gimmick?

The way people experience moving images hasn’t changed much since the film industry’s flickering dawn. It’s a one-way street: There you sit, often in a dark room, passively gazing at a screen. Sleepy yet?

Now a cluster of startups is breathing new life into an idea that’s been around for decades — making video interactive, so that viewers pay closer attention, and become more emotionally invested in what they’re watching. Turning audiences into active participants, the theory goes, translates into digital dollars. Advertisers can let consumers click to buy a featured product or tap to find related info. For creative types, the technology opens up a panoply of possibilities, letting users dictate the action in a movie, TV show or musicvideo with multifaceted, immersive content that rewards repeat visits.

Some tout interactivity as the next major evolution in video, akin to the advent of HD, and predict that it’s destined to play a major role in the future of entertainment and advertising. “It’s not going to be very long before the expectation will be that the video you are watching on your smartphone, the Web or smart TV should be interactive,” says Erika Trautman, founder and CEO of startup Rapt Media. “We are fundamentally rethinking how video is presented.”

But will interactive video really be huge? While the technology will prove useful in some cases, especially for advertisers, it’s not clear Hollywood will rush to embrace it, says Jon Liebman, CEO of talent management/production company Brillstein Entertainment Partners.

“The jury is still out on that,” Liebman says of TV showrunners or moviemakers using interactivity as a storytelling device. In any case, he notes, flawless execution is critical: “Things have to be super-easy for a generation that is intuitively digital. It has to be like turning on the light.” (Liebman is an investor in interactive-video startup Fuisz Media.)

Startups proselytizing the message of ubiquitously interactive video, in addition to Rapt, include Cinematique, Fuisz Media, HapYak, Interlude, Wirewax, TouchCast, Adways Studios, Videopath and Zentrick.

The concepts have attracted interest from filmmakers, TV networks, music labels and marketers that have dabbled in the milieu. As the glut of video produced and distributed on the Web continues to soar, interactive hooks can make a project stand out.

“It’s a way to cut through the clutter,” says Julie Greenwald, chairman and COO of Atlantic Records Group, whose artists have used Interlude’s system to produce interactive vids. “Anyone with an iPhone can make a musicvideo. This presents a new creative tool.” Atlantic talent including CeeLo Green, Wiz Khalifa, Coldplay and Trey Songz have launched clickable musicvideos.

A breakthrough demonstrating the technology’s potential was Bob Dylan’s 2013 interactive video for “Like a Rolling Stone.” In the vid, created by Israeli director Vania Heymann, viewers can flip through a generic cable TV lineup — with newscasters, home-shopping hosts and movie actors eerily lip-syncing to the iconic tune as the user channel-surfs.

True believers say the trend is only poised to grow bigger. One such prognosticator: Nancy Tellem, a longtime TV bigwig who earlier this year joined Interlude as executive chairman. Millennials, who grew up glued for hours to game consoles, are especially “rabid and engaged” with interactive vid, she says.

“I’m not saying linear experiences are over,” says Tellem, who previously held top jobs at CBS, Warner Bros. and Microsoft’s Xbox Entertainment Studios. “But this is a technology that lets people relate very differently to video.”

To be sure, forms of interactive video have existed for years. More than a decade ago, DVRs let TV viewers easily record, play back, rewind and fast-forward programs. (Remember how astounding it was to be able to pause live TV?) Videogames evolved into sophisticated, interactive narratives with stunningly realistic graphics and live-action sequences, and virtual reality moves the ball forward into a 3D realm. In traditional video formats, YouTube’s “annotations” feature lets creators overlay clickable banners at specific points in their videos.

What’s different with the latest wave of interactive-vid approaches is that they minimize or entirely eliminate the visual cues prompting user interaction. The goal is to provide interactivity that is seamlessly integrated with the content. “There’s nothing worse than getting pop-ups over video,” says Cinematique CEO Randy Ross, formerly a designer at ad agency MacLaren McCann. “It disrupts the experience.”

Also fueling the rise of interactive video is the explosion of mobile devices with touchscreens — where a user response is a fingertip away — along with the general boom in Internet-media usage. In addition, whereas past approaches to interactive video have used proprietary video-playback mechanisms, startups are trying to develop Web-based standards that will allow interactive vids to achieve wide scale across multiple platforms.

“The technology has finally caught up to the reality,” says Adam Shlachter, chief investment officer at ad agency Digitas-LBi, who has seen growing interest in interactive video from clients.

The emerging sector is gaining fans in the investment community, too. In July 2-year-old startup Fuisz Media announced $10 million in Series A financing, led by Evolution Media Partners, the joint venture of CAA-backed Evolution Media Capital, TPG Growth and Participant Media. Other Fuisz backers include ICM Partners president Chris Silbermann and Ross Levinsohn, former CEO of Yahoo and Guggenheim Digital Media.

Explaining why he invested, Levinsohn says the Fuisz platform delivers “innovative ways to interact with content across social media, e-commerce, entertainment and more.”

Why the hype? What’s so appealing about interactivity is that it demonstrably makes people watch video three times or more longer than a non-interactive version, and produces much higher engagement, according to companies that have experimented with the approach. Execs cite user click rates on ads and highlighted products of 80% or more, making preroll video ads — with response rates that hover around 1% — look ridiculously ineffective by comparison.

MTV used Interlude to produce “Choose Your Own Murder,” an interactive video promoting the recently premiered “Scream” horror series, based on the spoofy movie franchise. The cabler found viewers spent an average of 7 minutes 23 seconds interacting with it, more than three times the length of the total video content in the segment.

“If you make something interactive, people will watch it longer — and they’ll rewatch it,” says Matt McDonough, MTV’s director of digital marketing. The promo topped his expectations, with hundreds of thousands of views, and a high rate of users sharing “Choose Your Own Murder” on social media directly from the video.

Today, interactive video is gaining the most traction as an instrument of commerce. For example, Fuisz Media’s interactive-vid platform has been used mainly by marketers like Procter & Gamble, Ford and Victoria’s Secret. They’re interested in linking videos directly to e-commerce portals.

But beyond that, founder and CEO Justin Fuisz is looking to drive business with media and entertainment companies. “With our Hollywood partners,” he says, “we have an opportunity to go after longform brand integration.”

Down the road, some envision even bigger things for interactive video. It might become de rigueur, say, for sitcoms to use interactive elements to give fans a different spin on gags. Dramas might unfold differently based on how viewers want to see their favorite characters’ fates decided — imagine being able to determine whether Tony Soprano lives or dies. Or, perhaps one day, theater audiences will vote on which plot twist an action movie should take.

“Sitting in a cutting room, an editor can decide, ‘This is the best joke.’ But there’s a whole other laugh if you cut the movie or show a different way,” says Tribeca Film Festival co-founder and producer Jane Rosenthal.

To Rosenthal, who has brought experimental interactive film and video projects to Tribeca over the past two years, interactivity affords creators an opportunity to try new things. And it behooves artists to do so, she adds: “The way a whole new generation is engaging in storytelling is changing.”

That said, challenges remain for the category. While indie filmmakers like Chris Milk (“The Wilderness Downtown”) and Doug Aitken (“Station to Station”) have created interactive video projects, studios have not jumped on the bandwagon. Some in the business derogatorily refer to the use of interactive tropes as a “choose your own adventure” gimmick, and resist the notion of putting the audience in the driver’s seat.

And historically, creating interactive video has been relatively expensive and time-intensive, says Dan Garraway, co-founder of Wirewax, which has worked with clients including NBCUniversal, BBC and Time Inc. What’s required for wider adoption is automating the process so that interactive videos “are made in minutes by computers, not armies of people in an agency,” he says.

Meanwhile, most people are accustomed to the old way of consuming video entertainment: sitting back and enjoying the ride. It’s entirely plausible that consumers will simply tune out the marketing calls to action of interactive ad formats once the novelty wears off.

Then there are technical hurdles. Chief among them: TV is still the biggest and most popular screen in the house for watching video, but a fragmented hodgepodge of interactive TV devices, services and platforms make it a logistical nightmare to run large-scale campaigns. For a sense of how hard this problem is to resolve, consider that the TV industry’s yet-to-be-realized dream of becoming a major direct-commerce platform that enables viewers to buy products by using their remote control dates back to the example of selling Jennifer Aniston’s sweater on NBC’s “Friends” 20 years ago. Even the likes of QVC and HSN have been stymied in trying to turn TV screens into virtual checkout lanes.

Add to all of that the fact that not everyone is skilled at producing a smart, highly engaging interactive video or ad. Just as the craze for 3D has yielded movies that have failed to effectively employ the technology — or bungled the stereoscopic effect altogether — there’s a danger of using interactivity carelessly.

“Is there a clear story to be told, or is the use clear from the marketer’s side?” DigitasLBi’s Shlachter says. “Creatively, there are so many possibilities that if you don’t have that defined well from A to Z, it’s easy to do this in a subpar manner.”

Even the technology’s advocates concede that point. “Interactive video is a complex visualization process for people,” says HapYak founder and president Kyle Morton. “That’s why it hasn’t taken off like wildfire.”

But of course, Morton also argues that interactivity eventually will become a standard part of video production as people figure out the rules, and the technology is enabled across more devices. When the Web was new, people had a hard time understanding linking to other pages, but it soon became second nature. “No one says ‘hyperlinks’ anymore,” he says.

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