December 17, 2000

CTAM (Cable & Telecommunications Association for Marketing) has released a study analyzing consumer interest in Interactive Television services through the eyes of the cable TV customer, using video demonstrations of commercially-available services, rather than concept descriptions. The study, Interactive TV: Are Consumers Ready?, shows 79% of digital cable and 55% of analog cable customers are very or somewhat receptive to Interactive TV features. The findings, in general, show that digital cable customers, who have experienced the Interactive Program Guide, crave additional interactive options. In turn, analog cable customers express greater interest in digital cable television when they are exposed to the Interactive Program Guide.

Eight selected interactive TV services were demonstrated to 263 digital and 262 analog customers in six major markets across the US, where digital cable is widely available. After viewing each demonstration, customers were asked to evaluate the appeal of the feature and indicate willingness to purchase. At the end, they were asked to force rank the most-desired service.

Video On Demand (VOD) (58% of digital and 55% of analog cable customers) and Personal Video Recorders (PVRs) (59% and 53%) were the most appealing of the core interactive features.

Customers were most willing to buy VOD services (71% digital and 67% analog).

In the forced ranking, VOD (35% digital and 40% analog) and PVRs (26% and 20%) came out on top, with the availability of local news and information on TV ranked third (10% and 10%).

In order to provide marketers and product developers with greater insight into the target customer, the viewing and Internet behaviors of those receptive to interactivity was also studied. This segment reported often watching TV with families or in groups (78% digital and 69% analog), flipping or surfing through channels (69% digital and 60% analog), and watching two or more programs at the same time and going back and forth between them (43% digital and 36% analog). In essence, they are simulating interactivity in the absence of other applications.

Furthermore, cable customers who are drawn to interactivity are creating their own ITV environment. For example, in PC homes, 86% of very receptive digital customers and 80% of analog customers co-locate the PC in the room with their TV. In addition, those with co-located PCs report simultaneous usage.

Overall, the research concludes:

Cable customers, particularly those with digital service, are ready for the additional benefits of ITV;

VOD and PVRs appeal to more than half of all cable customers;

Cable customers most receptive to ITV features are already experimenting with other forms of rudimentary interactivity;

In profile, customers seeking ITV are likely to be digital cable TV customers or analog cable TV customers familiar with digital cable TV, 18-34 years old, premium channel subscribers, and frequent Pay Per View purchasers and videotape renters;

Receptive consumers are more likely to engage in online or offline interactive behaviors, own big screen TVs, DVD players and high speed Internet.

Barbara Gural, CTAM Vice President of Research says, "This study is unique because we focused on the cable television-viewing customer, as opposed to the PC and Internet user. When interactive TV features are demonstrated, these customers are definitely receptive."

Data collection was executed by the Ipsos-Reid Corporation via online interviews conducted in mall locations between September 25 and October 29, 2000. Analog cable TV customers were recruited from all visitors who had digital cable services available to them. Digital cable TV customers were pre-recruited to the mall via telephone invitation. Participants viewed a video demonstration of an interactive TV service followed by a set of targeted questions, in a repeated series. At a 95% confidence interval, at 263 interviews, the margin of error is +6.04% for digital and +6.05% for analog.

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