ImaginOn Technology and Interactive Television by David M. Schwartz, CEO, ImaginOn, Inc.  11 May 1998 The Concept of iTV Since its inception, television has been a broadcast medium aimed at a passive audience whose only choices during viewing are changing the channel or switching the TV set off.  Advocates of advanced television systems have proposed fully interactive TV ("iTV") that will allow viewers to play games with other people or with a video game software program, shop for merchandise and purchase it, navigate and view remote locations anywhere on Earth, participate in classrooms, direct the outcome of theatrical presentations, select any movie and watch it anytime, and so on and so forth.  There has been no lack of ideas regarding desired capabilities and content for iTV. Barriers to iTV There are at least three types of obstacles barring the path to iTV implementation:  technical, economic and regulatory.  This paper will not consider the regulatory barriers, on the assumption that if the technical and economic barriers are overcome, suitable regulatory accommodations will be made.  The economic obstacles are arguably the most formidable at this time; affecting all aspects of iTV.  Many of the technical barriers to iTV implementation have been hurdled in either field or lab demonstrations, though some troublesome issues remain. Technical Issues The technical problems related to iTV that have been solved include head-end system speed, bandwidth and storage, user back-channel systems, TV set-top boxes, user interfaces and internet connectivity.  Among the biggest technical problems that remain are distribution channel bandwidth and user-feedback latency.  Although brute-force solutions to distribution channel bandwidth and user-feedback latency are conceivable, they are so far from practical as to remain technical, not economic, issues. The bandwidth limitation of coaxial cable or hybrid fiber/coax distribution systems is presently at about 500 digital TV channels encoded using MPEG 1.  For iTV applications such as movies on demand or home shopping, this number of channels is probably sufficient.  Two-way oriented applications, such as World Wide Web browsing and chatting, quickly consume all 500 channels, even at relatively low 128 kbps connection rates, allowing only 10% of a 50,000-customer cable system to be online simultaneously.  3D video games consume a channel per user, allowing only 500 simultaneous users, unless the game is downloaded to the set top box.  Interactive classroom and remote viewing applications fall somewhere in between video game and internet bandwidth requirements. User feedback latency in two-way communications is highly variable among trial iTV systems and demonstration systems.  A few iTV systems have demonstrated round-trip response times of as little as 50 milliseconds, while many systems average over 500 milliseconds.  For almost realtime iTV applications such as home shopping, latency is not an issue.  For other applications, such as multi-user video games and internet telephony, this factor is one of the keys to user satisfaction. Economic Issues To date, the economics of iTV have discouraged commercialization. Only one limited form of iTV, movies on demand, has proven economically viable in some markets.  Cable and satellite distribution system owners have not been able to find a business model that justifies the costs of the upgrades and new capital equipment required for iTV.  Presently, the economics are marginal at best.   For example, for a 50,000 customer overhead cable plant in a suburban area, the estimated cost of upgrading the plant, plus new equipment and set top boxes is about $500 per customer.  Such a system can provide users with "500 Channel" two-way digital service.  Assuming that a 20% annual return on investment is acceptable, the cable operator must find a way for the iTV system to generate $5,000,000 per year of net profit.  Clearly, the customer base can not be counted on to provide the entire ROI needed, though they might carry half the burden.  The other half would have to come from advertisers or channel sub-licenses. Compounding the fundamental problem of paying for the upgrade or conversion of the plant, is the content problem.  Two obvious sources for interactive content, films and the internet are readily available, with known price structures.  Beyond those, content sourcing at reasonable cost is an open question.  Existing home shopping service providers, such as QVC, do not offer any method of increasing interactivity beyond the telephone dial-in already in use.  Interactive adult video content is either internet or CD ROM-based and does not have any iTV-specific application. Video games are only practical for iTV if the game software can be downloaded and executed on the set top box.  However, very few video games have been ported to any set top box environments.  Multi-user head-end server-based games are few and far between. Distance learning systems are presently all PC-based, with no provision for iTV support.  Price aside, there isn't much iTV content available. iTV Solutions The economics of iTV will improve over time in at least four ways.  The costs of the physical plant upgrades and additions will continue to decrease as all computer-based and computer-related products decrease in price.  Improvements in the quality and quantity of interactive content for use in the new channels will become compelling enough to generate premium usage fees.  Innovative methods for delivering advertising embedded within iTV programming will attract more advertisers.  Methods for increasing the efficiency of bandwidth allocation and maximizing the usage of the new channels will be implemented. ImaginOn software technology impacts iTV economics in three of the four areas mentioned above.  On the content creation side, ImaginOn software tools reduce the production cost of original interactive content based on film, video or animation.  These same software tools can be used to re-purpose existing film, video or animation assets for interactive use.  "Mining" existing archives of film and video can yield large numbers of iTV programs in a short period of time, since no new production is needed. Interactive movies made with ImaginOn's software tools consist of hundreds of short clips that are assembled together in real time.  During playback, the viewer's position in the timeline of the movie is recorded.  Advertising or promotional clips can be spliced into the movie anywhere that makes sense, at any time.  This combination of known user position and instant splicing makes "just in time" highly-targeted advertising possible.  For example, ImaginOn movie playback software can be linked to an advertising sales function so that the actual number of viewers approaching a scene in the movie can be used to offer an upcoming advertising slot only minutes before the ad will be aired.  The highest bidder for the slot gets their ad dropped in on-the-fly.  For iTV systems with internet connectivity, ImaginOn playback software displays an on-screen "Go On Line" button that instantly pauses the movie and connects the viewer to whatever website is paying to be shown at that point in time. Ideally, every customer of an iTV system should feel like they have control over what they see and when they see it with the fastest response time available.  With 500 channels available, full frame-by-frame forward, reverse and pause video control of movie playback by each viewer in a 50,000 customer system is impossible, since each person would need their own separate video stream.  Aggregating viewers into groups by assigning movie playback starting times is the typical solution.  ImaginOn software provides a powerful new method for conserving bandwidth during playback of interactive movies by a multitude of viewers: looping.  As discussed above, movies produced with ImaginOn tools are composed of numerous short clips strung together in real time.  Any of those short clips can be seamlessly looped. When a film clip is designed to be a seamless loop, it is relatively unobtrusive and useful from both the cable operator's point of view and the viewer's.  On the operations side, film loops provide locations in the video stream playback where multiple asynchronous video streams can be re-synchronized on-the-fly.  For example, two video streams offset by 1 second can be re-synchronized during a two-second loop by holding the first stream in the loop for one "extra" loop to allow the second stream to "catch up". From the viewer's perspective, loops are convenient places in a movie to make a choice about what should happen next.  For example, while watching a travelogue of San Francisco, a film loop repeatedly showing a view of the Golden Gate Bridge on one hand, and Chinatown on the other, gives the viewer a chance to select which part of the city to see next.  Viewers maintain control of the content via decision loops, while operators conserve channels via resynchronization loops; two sides of the same coin.