Interactive TV is dead. Long live ‘interactive’ TV.

Michael NutleyThe following is an interview I did with Michael Nutley, the editor in chief of New Media Age, in 2007.

To get a good look at what can go wrong in interactivity, and how it can revive, you only need to glance at the red button. In 2001 it was the panacea, promising to bring truly interactive, commercial applications into the front room. Since the 1950s the television industry has sought ever-more sophisticated ways of harnessing their audience’s opinions in the editorial of the show. Experiments with teletext in the 70s and phone-ins in the 60s gradually enticed the audience into getting more and more involved.

Only recently has the emphasis been on making money rather than augmenting the editorial. By the 90s the advertisers were getting on-board, BT was setting up a content-driven interactive TV network (sound familiar?), and by the close of the millennium Sky Digital viewers could watch football highlights that were not on the original broadcast. Red button had everything going for it. Except that no one wanted to use it.

Red button technology was amazingly expensive to make, which meant few people got to innovate. Add to that the monopoly that Sky had on approving new programming and you get a bottleneck that rapidly killed innovation.

“The barriers to entry were ridiculously high. Someone put this theory to me the other day: red button looked good in a narrowband world. If you were used to dial-up, the level of dicking about you had to go through to get anything decent out of your modem meant red button looked pretty good. The minute you move into a broadband world red button gets really lumpy.”

By contrast, the web was moving fast. Easy access to development tools and (literally) millions of authors meant solutions to common problems arrived thick and fast.

“Web Technology moved on dramatically which made everyone question red button. The time it took to get through to the red button application was terrible. Templating, which seemed like a great idea, was only a necessary evil and started to look very dated very quickly. And the middleware providers and cable companies completely failed to provide any kind of alternative to Sky.”

So when broadband arrived, red button was quickly knocked into a cocked hat. The magic trick was over, and the only people keeping the business alive was the BBC.

“You ended up in this bizarre world where web people are slagging the BBC off for distorting the market, and [in the interactive TV world] everyone’s saying the BBC is brilliant because they’re the only ones explaining what it’s all about. The only people doing any kind of education were the BBC. Sky must have been on their knees every day thanking the BBC for digging them out of this red button hole they’d got into.”

And then there was IPTV. If broadband web showed the world that red button was tired and over-priced, IPTV promises to give the web a truly mass-market application. Delivering television images via a web interface propels teletext interactivity into the 21st century. And don’t forget that no matter how everyday the web has become, most people still like to sit back and simply be entertained.

“I have a theory. Each medium, as it develops, mimics other media as it starts to figure out what it’s actually for. A web page looks like a print page so we’ll put print on it. And so on. I think IPTV comes from a different place. It suddenly says ‘Wow! We can do video. What have we got that does that?’ and the web world starts looking around for quality. And that comes from the TV world. I think that makes IPTV more TV than interactive TV.”

All of which consigns red button to the history books. Like talking kitchens, it promised too much too early, and even then no one was really certain they wanted it.

“I simply don’t think there’s a place in the future for red button. Red button will become an artefact of history.”

Making money

So how does anyone make any money out of it? One thing that characterises the digital media age is the sheer volume of different business models.

“It’s one of things I love about new media. I used to work [as a trade journalist] in construction and leisure. Most of those people are using well known business models. It’s kind of dull but it works.”

Once you could build whole businesses on trends. Now we have to build concepts that can flexibly adapt to the prevailing circumstances.

“Like Jung said: Time speeds up as we approach the end of history. In new media you have to be thinking broader. Going back to Sky, there was no competition in the red button world. It was just Sky. I remember Nigel Whalley [founder and CEO of digital strategy consultancy Decipher] saying to me that we did red button the wrong way round. Sky installed it then tried to make money from it without ever trying to get people to use it.

Like mobile?

“Interesting question. Like the mobile world Sky made a massive investment in set top boxes. They had to make that money back. So it was all Woolworths selling records on interactive TV.”

Could this desire to find the model before you find the audience kill the mobile industry?

“Someone said to me mobile is where web was in 2001. Its not. It’s where red button was in 2001. The barriers to entry are extremely high. There are a very defined set of gatekeepers who are protecting their revenue ferociously. And it’s almost impossible for other people to get in there and make money in the current structure.”

And the mobile industry is on the verge of adding yet another control to their content.

O2 has just announced that all off-portal transactions must go through its third-party PayForIt ecommerce application. The company says this is to simplify the whole experience of buying and paying for goods on the mobile. Critics believe it merely creates a new hoop that companies have to jump through to make a living out of digital media.

The need to control the business medium hasn’t worked well for traditional companies in a digital media world. The mobile network operators struggle to cope with carriage cost and recouping their spectrum license, while all the time keeping their suppliers innovative. Yet a public Wi-Fi network could undercut their business in a single swipe.

“The thing I’m intrigued by is the notion that wireless operators are going to be super-seded by WiMAX. You build out a cellular network that is the combination of this café and that library and so on. A single city-wide network.”

“I was in San Francisco a little while ago and Google were proposing to give them a Wi-Fi network. Add Skype on top of that and who needs a mobile?”

In a similar way, the TV industry struggles to maintain traditional business models while fending off piracy. Although it hasn’t hit the commissioning budgets (yet), trouble is on the horizon and heading this way fast.

“The most pirated content online is individual TV shows. That proves there’s a desire to watch either as a catch-up of stuff they’ve missed, or as a way of seeing heroes before anyone else.”

“To me the irony of the great Sky-Virgin row is that all those people complaining that they can’t see Simpsons or Lost… most of those people are getting their broadband from Virgin as well … they can get it online. Not legally, but potentially.”

“And there’s an interesting distinction between people who pirate films and people who pirate TV shows. People who pirate film know they’re doing wrong. People who pirate TV either don’t know they’re doing something wrong, or think they’ve in some way already paid for it.”

TV feels free. We’ve had it free for too long to get used to paying for it.

“TV is free. I’ve paid my license fee. I’ve paid my Sky subscription. Why can’t I download Lost? That’s the thinking that the TV industry is up against.”

Like the music industry before it, the TV business faces a wholesale reversal of fortunes. And yet the irony is that the multifaceted TV industry with its myriad production companies and territorial broadcasters is more like the web; the five-strong music labels closer resemble red button TV and its stranglehold on the business.

“The music business resisted until it all fell down. When it comes down to it I don’t think the music industry had much to do with it. Steve Jobs and Coca Cola made it easy for people to download. They created the route and the retail. But why did the music industry allow two companies who have no interest in selling music to set their prices? Steve Jobs set the tariff for the whole music industry and he set it on the basis that it would sell more iPods! He didn’t care that you can’t make money selling music at that price. And he can do it because he doesn’t care how much music he sells. How did the music industry not see that coming? It can only have been that they were in such an utter, utter panic that it looked like Steve Jobs was saving them.”

Innovation – the way through

Innovation is the keyword these days. “We got some really interesting results from O2 a year ago. Consumer desire is predicated on innovation. As soon as you see something new and cool and funky you switch. The only way you can keep your customers is by innovating. You don’t keep your customers simply because they’ve been with you for ages. The notion of brand loyalty, particularly among younger people, just doesn’t exist.”

And this kind of thinking is changing the way digital media companies are operating.

“There’s an interesting example of how companies cope with this new environment. Compare Microsoft and ebay. How do you encourage people to find features in your products? If you’ve got a product – and it doesn’t really matter what that product is – how do you encourage people to learn about it? Most companies live or die by the amount of people they can churn into the next version, so how do you tell them that what they’ve got in there is so good?”

“Microsoft know the problem. They have so much functionality and they know how little of it people use. It’s a huge problem for them to get people using it all. Because nobody reads the manual, right? So they are looking to make it part of the design of the software to get people exploring.”

“Now, what eBay do is they have created a completely new design environment. They’re just further down the road. They have a philosophy where they can put something live that is on brand and in tune with the company’s values but they’re not so wedded to it that they can’t take it down very quickly. Their design philosophy has to be that they don’t own ebay. The people who own ebay are the ebay users. They are the people who judge whether ebay works or not. Very smart.”

These two schools of thought are all about control. Microsoft comes from a world where most people didn’t know what they wanted so Microsoft had to make their decisions for them. In the 80s and 90s it worked incredibly well, and teamed with a good understanding of market behaviour it provided adequately for the middle ground.

EBay’s world is newer, looser. It wants everyone to get the most out of it and believes in the wisdom of crowds.

Nutley does appreciate one Microsoft trend though: corporate blogs. Robert Scoble was hired into Microsoft marketing team in 2003. Entirely separately from his employment (it is said) he wrote a blog, in which he revealed all sorts of unofficial intimate details about working at the company. According to The Economist: “He has made Microsoft, with its history of monopolistic bullying, appear marginally but noticeably less evil to the outside world.”

“I’m really interested in how mediated the online experience is, and how mediated people think the online experience is. Robert Scoble is a perfect example of how to blog from a company. It’s held up as the perfect example of what to do to improve a company’s image. Everyone says it’s so good.”

“But why should I believe that what he writes is any less mediated by Microsoft than any other piece of marketing that comes out of the company? More to the point, why are you suspending your suspicions because this bloke happens to be writing in the form of the blog?”

“If I was Microsoft and I saw what was going on I’d say brilliant. Everybody believes everything you say. Everybody thinks it’s like samizdat postings from inside the Kremlin. Why is it that just because you’ve got a blog you’re authentic? I’m sorry but I’ve been in the writing business for 23 years. I know enough about writing to know that a professional guy can turn out something unpolished pretty easily.”

There’s a notion that this medium belongs to us. We want it to be democratic and every time Paris Hilton releases an album on it it feels like a betrayal. Every time someone advertises at us in there it feels less like our space. Following in the same theme as insurance adverts whose cheap-and-cheerful production values belie the vast companies behind them, and shaky mobile-video-style government warnings, blogs have become part of the media arsenal that says ‘trust us’.

“But let’s not go too far. There are an awful lot of people who have tried to do it and been unpicked. But I still find it disconcerting.”

Futurelooking

Where, for a man who’s seen it all, does the immediate future lie?

“I’m very interested to see how search and recommendation plays out. There’s something there that’s just starting to emerge. Search hasn’t really moved on. The basic search experience is pretty much the same. If you do a search for plumbers you get three thousand responses. Two years ago that was great. Now, I don’t want three thousand plumbers. I want three.

“It’s the same problem as in music. There are 40 illegal downloads for every legal one and A&R people [who search for new bands] are being made redundant in large numbers. Consumers don’t care that they were listening to three million crap bands to find the three good ones. So companies go for safe bets and people only get what the record companies know for a fact will sell. Mediocre stuff. People don’t care. They don’t know that’s the trade they’re making.”

The problem is exactly the same for the TV industry. If the record labels and the broadcasters can’t – or won’t – find the new talent, will we simply run ourselves into the ground until ten years from now all we have to entertain us is endless episodes of Friends and Simpsons, and albums by reality TV stars? Nutley thinks there’s a way out. Revver is a user-generated video sharing site that, unlike YouTube et al, allows its authors to attach adverts to their uploads and share in the potential ad revenues.

“Revver is very interesting. It goes back to the notion that if you want to make something you want it to make you. Something like Revver suggests a world where you can get some money for every view, every click. That seems to be bridging a gap between people who are just amateurs and people who are semi-pro.”

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About Morgan Holt

Morgan Holt is senior strategist at Wolff Olins, the global game-changing brand consultancy. He is also chairman of the Branded Content Marketing Association, and a non-executive director of CN Media Group.

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