The trouble with going interactive

Paxman's sneer grating on you tonight? Tell him by text message. Want the 10 O'Clock News back at nine? Schedule bulletins to suit you. Confused by Panorama's Afghan special? Demand to see extra maps and interviews - all while watching the football on another part of your screen.

In the past week, technology has given you something that John Birt never quite achieved - control over the BBC's news output. Admit-tedly, that control is rather limited at this stage: if you have digital satellite, you can now press the red handset button to watch bulletins when you want, choose extended coverage of stories, and question selected journalists by e-mail or SMS. But to excited BBC executives, two-way interactivity offers "an entirely new way" of making television by putting the viewer in charge.

The same excitement is being felt at ITV Digital, which on Saturday launched an interactive version of Who Wants To Be A Millionaire? As well as 35p-a-call revenues from couch players who compete in a prize draw, the game claims to "deliver advertisers a fantastic new opportunity to reach a mass-market audience". Finally, through the "return path" that links set-top box with studio, the interactive TV revolution has hit middle England. Richard Deverell, the BBC's head of new media for news, insists "evolution" is more appropriate than revolution - after all, the unfulfilled hype surrounding interactive TV makes dotcom hysteria seem restrained.

Forrester Research breath-lessly told us that that iTV (as it's known) would generate £9 billion by 2005, which the Ovum consultancy ratcheted up to £70 billion; actual revenue has proved more elusive, as the Open shopping service, and other victims such as the Money Channel, found to their cost. Commercial realities, however, are not the BBC's prime concern.

"Our activities are driven by our public-service obligation to maximise the audience," Deverell says. "People will increasingly consume media not in a live stream, but on demand, and with a specificity of choice." The BBC needs to be there to offer those choices - across every platform, from cable to tomorrow's video-watches.

This means offering a range of live video feeds, and providing extra depth to stories that viewers can click into - say, a bonus 40-minute interview with King Abdullah of Jordan, or an audience chat with Rageh Omaar in Kabul. "It's getting into ever-more niche areas," Deverell admits, "but the marginal costs of producing it are tiny. The trick is to create content once and provide it across the various plat-forms."

Frustratingly, the technology is not so advanced as to let him know how many viewers bother to interact. "Measurement systems are at 1938 levels, compared with Barb and Rajar (for TV and radio). The BBC is concerned about this - all investments have to be judged in terms of value for money." Britain, with almost 40 per cent of homes able to inter-act with digital television, is considered a world leader in iTV. But though the BBC gained critical acclaim for its interactive Wimbledon and Open golf services, Sky was the pioneer in news - a service that Richard Deverell praises as "very good".

Alas, Steve Bennedik, editor of Sky News Interactive, is less complimentary in return. "We've seen it (BBC News Interactive) and we're not impressed," he says. "They are launching news 18 months after us, and they're barely coming up to what we were doing." The service's "clunky and cumbersome" interface looks like nothing more advanced than "a text service backed up by video", he says. "But they've got public funding, and you've got to take them seriously. Eventually they'll come up with a good product." (The BBC has initially budgeted around £2 million for interactive news, compared with the £330 million overall news budget.)

Sky News Active, the establishment old-timer to Greg Dyke's brash upstart, launched way back in June 2000, 10 months after Sky Sports Active. In March this year, it gave viewers the chance to vote through the set: almost 90,000 did so in 24 hours when asked if the UK should join the US air strikes.

By July, Sky had integrated a personal video recorder into its set-top box; then came a deal with Cartoon Network to add Scooby Doo and pals to Sky Active's stable of 16 pay-to-play games and quizzes. An interactive betting service, involving Ladbrokes, was abandoned last month over competition-law issues, but five days later Sky Sports was back, announcing "the world's first play-along football competition" that lets viewers predict scores for cash.

"Interactivity is all about community - connecting broadcaster and audience in a shared experience," Bennedik says. "The dual path (returning via cable or phone line) frees you to send something out and achieve a reaction. It turns the digibox into a box of tricks where we can enhance communication: the last time we had bad weather, we asked people to e-mail us images of snow."

Sky's focus groups suggest that programme editors are still needed: some viewers resist making their own choices, for fear of missing the big news story if they stay with Kylie. But despite sparse viewer data, Steve Bennedik's research suggests that 30 to 40 per cent of his viewers regularly press the red button, mostly for headlines and weather.

Yet it's entertainment, not news, that iTV hopes will earn its fortune. Game shows such as "Millionaire" are attracting huge responses from viewers: ITV2 thinks that "most" of the 215,000 viewers played along on Saturday. The key to profit is the premium-rate phone line: some five million Big Brother votes were cast by remote control at 25p a go.

Shopping, betting and game-playing are forecast to generate huge profits in future years; meanwhile, advertisers are excited at the prospect of targeting individual viewers, based on the vast data the set-top box can accumulate about their viewing and clicking habits.

Privacy campaigners are not happy, but City analysts are still talking up the sector's future - although nowadays interactivity is seen as something "contex-tual" that's part of the broadcast, rather than a magic new medium.

"There's a lot of low-hanging fruit out there," says Neil Blackley, head of Merrill Lynch's media research team in London. "Quizzes, contests, voting - bringing a share of premium-rate phone calls. These are revenues you can get right now, before the eventual nirvana of video-ondemand."

The windfall has yet to arrive. "It's been tough," says Andrew Howells, head of BMPtvi, a London agency that specialises in interactive advertising for clients including Sony and Hasbro. Today, his agency has just five clients, but forecasts 400 per cent growth next year.

"Even though the TV industry is down the toilet now, it hasn't affected interactive TV - that has always been bad," he says. "The sector has been a victim of hype - with too many doom-and-gloom merchants lately."

The BBC's arrival could, Howells believes, showcase the potential of iTV. "Its use has been fairly pedestrian and Heath Robinson so far - you click out from an emotive television advert into a (static) PowerPoint presentation. Anything that's got quality and good creativity behind it is good for the business. iTV has a very good future - it's just caught a bit of a cold."