Ben Bennett was named CEO of OpenTV in March, after serving as the company’s COO and acting CEO since August, 2007 (he has been at OpenTV since March, 2000). He recently spoke to [itvt]’s Tracy Swedlow about the three-phase strategy he is implementing, which, among other things, has seen OpenTV jettisoning a number of peripheral businesses in order to focus on its core middleware and advanced advertising offerings; about the company’s ongoing efforts to penetrate the US cable market; about its view of the OCAP and EBIF standardization
efforts; about Core3, the next generation of its middleware, which will
support multiple, concurrent interactive TV applications; about why he
believes HDTV, PVR and broadband are bringing about a “perfect
storm” for ITV; about the company’s efforts to develop TV experiences
for the next generation of viewers; and much, much more.

[itvt]: You’ve been at OpenTV since 2000, and you came to the
company through its acquisition of Spyglass, correct? OpenTV
purchased Spyglass for $2.5 billion in stock, didn’t it?

Bennett: I thought you might bring that one up. As I recall, that
transaction happened in March, 2000 when the NASDAQ was at its
peak. That’s what’s called good timing. Those were the good old days,
weren’t they? But those days are long past. The primary reason
OpenTV bought Spyglass was for its embedded browser. As it happens,
the whole Spyglass vision of interactivity and convergence of content
on multiple devices–all of what we were talking about back then–is
actually now starting to become a reality. I think we were too far ahead
of the curve–the practicality curve. There was a fantastic amount of
innovation and thought-leading at that company. We had some pretty
amazing technology as well. It’s just that the market wasn’t there at the
time. As a side note, Spyglass’s Mosaic browser formed the basis of
Internet Explorer. It was also integrated into OpenTV’s middleware,
and is still part of it and is actually doing pretty well in certain markets
around the world.

[itvt]: What have been your roles since joining OpenTV?

Bennett: Initially, I was in charge of the Professional Services group for
OpenTV worldwide, a new group we created to help us deploy our
technology. And then, a few years ago when Jim Chiddix was CEO, I
moved to the UK to restructure and reorganize our European operations
following a string of acquisitions undertaken by OpenTV. These
acquisitions were made in order to fill gaps that we perceived from a
business perspective, but then the integration of these businesses after
we’d acquired them wasn’t necessarily optimal. I think a lot of
companies suffered from the same problem back in those crazy days
when companies were merging all over the place. So, I went back
primarily to restructure some of our operations in Europe, in order to
better integrate all these acquisitions, and also in order to set up a more
formal support infrastructure, because around 50% of OpenTV’s
revenue was coming out of Europe by then. We felt that it was
important that we establish the right kind of customer support and sales
infrastructure to support our customers long-term in that market.

Then, in August of 2007, I came back to the US and took on the role of
COO. Shortly thereafter, I was also appointed interim CEO, and then in
March of this year, I was appointed CEO.

[itvt]: I guess it’s a little unusual that you’ve been with one company for
so long, in an age when senior executives tend to switch between
companies every couple of years.

Bennett: But at the same time, I’ve had lots of different roles within the
company. I really try to encourage that for our staff here, too. I like to
see people progress within a company; people get stale if they’re in the
same role for too long. If people stay long-term with the company, I’m
very much in favor of changing their jobs and giving them new projects
and responsibilities every three or four years. At the same time, though,
you’ve got to supplement that with new blood, because new blood often
brings new ideas to a company.

[itvt]: We were touching on the importance of timing earlier. How do
you feel about the timing of your becoming OpenTV’s CEO?

Bennett: For me, OpenTV is a fascinating challenge and one I’m very
passionate about. And one of the reasons I’m so excited about it is that
the timing is now right for the market to embrace our solutions, and I
believe we have a fantastic opportunity. For a long time during my
career at OpenTV, I felt that we were ahead of the curve, but it
concerned me that the basic infrastructure necessary to support the sort
of truly intuitive enhanced and interactive services that our technology
could enable simply wasn’t there. And, as a result, a lot of interactive
TV applications were “clunky” and weren’t intuitive–and so they got
the kind of support from viewers that they deserved, which was very
little. On the other hand, there were a few pay-TV operators that really
made a go of it, and really made interactive TV work–BSkyB, for
example.

Now, however, I think we’re getting to the point–and this has really
only happened in the last 24 months–where a lot of pay-TV operators
around the world are looking at their business strategies for digital TV
and finally saying, “Well, we’ve got a lot of competition now, and we
absolutely have to differentiate ourselves by making our service more
innovative.” And, of course, the kinds of innovations they’re looking
can be enabled by our middleware. They’re not only looking at things
like HD, DVR and USB port support, but at more in-depth innovations
around the TV user interface, home networking, and IP-aware services
such as pull-VOD for example. They’re also becoming increasingly
interested in the interactive side of our offering. Earlier on in my career
at this company, interactive TV was generally way down in the
operators’ lists of priorities. Now they’re a lot more serious about it.

[itvt]: So if you feel that current market conditions present OpenTV
with a major opportunity, how are you planning to take advantage of
that opportunity? Could you give us some insight into the kind of
strategies you’re going to be pursuing now that you’re CEO of the
company?

Bennett: Yes. In retrospect, some of the opportunities that we pursued
in the past, including some of the companies we acquired, simply
weren’t core to our business. So one of my top priorities has been not so
much restructuring, but simply taking a look at our operations
worldwide and asking, “What is our core business?”

And the answer to that question is that we have two main international
lines of business that together make up what I would call our “core
business”: one is our middleware and middleware-related head-end
products business, which, as you know, has a 56% market share and a
strong footprint that we’re very proud of and that we need to be
aggressive about when it comes to our competitive positioning.

Our other main line of business–which we feel is very important to our future–is advanced advertising. And we’ve actually made some
acquisitions in that space, as we feel that the advertising space, both in the US and internationally, holds some very interesting opportunities for our company. In today’s time-shifted, ad-skipping, and fast-forwarded world, advertisers are looking for new ways to not only get their message across but also get it across to the right audience. OpenTV has the technology and know-how to address that challenge
and continues to develop new and advanced advertising technologies, such as PVR advertising which we will demo at IBC.

So phase one of the strategy we’ve been pursuing has been to refocus
on our core business–on our standard products. We want to be a
product company, and so we’ve been reorganizing to ensure that that is
the case.

[itvt]: Can you explain how you’ve been reorganizing?

Bennett: Well, we’ve taken the company from around eight business
units to two. What we had a lot of in the company were businesses like
PlayJam, which would generate around $8 million in revenue, but
which cost us $10-12 million to operate. These were bets that OpenTV
had made in the dot-com era. Other examples are BettingCorp and
NASCAR [i.e. the in-car camera application that OpenTV developed
for NASCAR]. They were problematic for a couple of reasons: First,
because they weren’t profitable and I have no tolerance for loss-making
businesses. We’re not in the business of losing money. Secondly, they
caused complexity and were a distraction: a distraction both for
management and for accounting. My feeling was that, unless these
businesses were going to grow at the kind of pace you expect from a
start-up, we were going to have to jettison them.

So a big part of phase one of our strategy was about addressing the
problem of these second-tier businesses. We sold PlayJam; we closed
down NASCAR, and we restructured some of the other businesses like
BettingCorp. And this has allowed us to focus our efforts around what
we consider to be our two core businesses–middleware and
middleware-related products, and advanced advertising. So phase one
was really about getting the company on a firm footing.

[itvt]: You sold PlayJam back to its founder, Jasper Smith, but you still
have an interest in it–so you haven’t completely gotten rid of it,
correct?

Bennett: Yes. We retained a minority interest, but at a level where we
do not consolidate any of its financial results.

[itvt]: What is phase two of your strategy?

Bennett: Well, if phase one is about the simplification of our business,
phase two is about laying a firm foundation for our future growth. In
order to stay competitive, you need to take a long-term approach and
reinvest the money you make in your core businesses. When we had
seven or eight separate businesses to invest in, it spread our
investments too thinly and took our focus away. So now that we’re
focusing purely on middleware and on advanced advertising, it’s easier
for us to identify what the gaps are in the markets for those products, to
draw up long-term roadmaps, and to invest wisely.

One thing that we’re very conscious of as being key to our success as a
company is that what we do is TV, and that therefore the products we
deploy have to be robust and of very high quality, because that’s what
that market expects. We cannot survive without great technology–and
by that I mean not just great from a feature standpoint, but also from a
quality standpoint: it’s got to be rock-solidly reliable. So the OpenTV
engineering team has been doing a lot of work to make sure that the
latest release of our middleware–which is version 2.1–is absolutely

rock-solid. If I’m hand-on-heart honest, I have to admit that in the past
it’s not been rock-solid enough. That’s something I learned from my
experience in the field dealing with customers and our manufacturers.
OpenTV originally went for market share, and we did a very good job
of winning it. But sometimes when you stretch a company like that,
some things start to fray. Any company, in order to be successful, has
to focus on ensuring that it has great products with great support, and
so one of the things we’ve been focusing on over the past 12 months is
improving quality via investing in our people, processes and, indeed,
better QA tools.

The industry is also now going into this phase where–certainly in the
middleware area–you need to provide more of an end-to-end solution.
So, while we still obviously offer middleware, we also now provide a
lot more services and enterprise-type solutions at the headend. Being
able to provide an end-to-end solution isn’t so important when it comes
to the huge operators, like BSkyB: they tend to build their
infrastructure by combining best-of-breed vendors. However, when
you’re also targeting emerging markets–and we’re now doing very well
in places like India, and we’re also starting to see some growth in Latin
America–you need to be able to go to the operators with an end-to-end
offering: meaning that you don’t just provide the middleware, but you
also provide a lot of the headend components, and bundle in a lot of
applications, so that you can get these new entrants to the digital
television space up and running and competitive quickly and easily.

So, while we’re still obviously very much focused on our middleware,
we now offer a lot of supplemental products related to that core
business. We offer a lot more TV-related enterprise technology, such as
OpenTV Notify, which is a headend product that allows you to send
messages to individual set-top boxes and groups of boxes. We’re also
paying a lot more attention to user interfaces and to trying to anticipate
how people–people who are kids today–are going to consume

television in the future. We’ve done a lot of work on that, and you
probably saw the results of that work displayed at the IBC last year. If
you look at EPG’s today, the design is basically 40 years old–they’re
still mostly grid-based. But that’s not going to work for much longer,
because a content explosion is underway. There’s too much TV content
out there for people to organize it and access it in a grid: you have
broadcast and cable channels, niche programming on the Web, VOD
and DVR. So you need a totally different navigation paradigm. That’s
where the Silicon Valley/entrepreneurial side of OpenTV comes into play:
we feel that an important part of our being able to offer an
end-to-end solution is being able to offer the next generation of the
TV-viewing experience. Now, that experience still needs to be
practical–it has to incorporate all the good things I was just talking
about: quality, robustness, reliability, speed, etc.–but you have to take
into account that, if you watch kids consuming TV, they’re not
consuming it just on the TV set any more. They’re consuming it on
multiple devices–and, even if they are watching the TV set in the living
room, they often tend to have their laptop open or their cell phone with
them, or whatever.

I’m very conscious of the fact that the way I personally consume TV is
not the way that the next generation is going to. So our various teams
are working to make sure that we are ahead of the curve–not so far
ahead that we can’t make money, but we’re working to realize a vision
of the future of television. Our vision statement is: “To lead the
transformation of TV around the world.” Because TV is definitely
changing.

[itvt]: Let’s talk about your product roadmaps in more detail. What’s
coming down the pike?

Bennett: We always have a three-year rolling roadmap for our products.
I would say that our roadmaps, both on the middleware and the
advertising side, are driven 70% by our customers and 30% by
OpenTV’s own desire to lead the market by being innovative and
entrepreneurial. Our efforts can’t be completely driven by our
customers, as we may come up with concepts that people haven’t
thought of yet, and that’s part of our added value.

Now, talking more specifically, on the middleware side we’re working
on the latest version of Core, which will be 2.1 and 2.2. The next major
release will be Core 3, and we’re also starting to work on that.

[itvt]: Can you say what the new versions of Core will do?

Bennett: Yes, at the 50,000-foot level. Here’s a good example: I won’t
mention the name of the operator I’m referring to, but they’ve deployed
set-top boxes that happen to have USB ports. And now they’re
wondering what they can use those ports for. Well, they could
download the next generation of OpenTV’s PVR-enabled middleware
to those boxes, in order to activate the USB ports and get a basic DVR
service. All the consumer would have to do is install a cheap USB
plug-in–they could get one for around $7–and then the middleware
would allow the operator to transfer a small file system for DVR

functionality onto that USB device. And what that would mean for the
consumer would be that they could record a few programs and pause
and buffer them–kind of a PVR consumer teaser! This kind of thing
addresses the fact that DVR penetration is still not huge, even though
everyone agrees that the future of television is going to be time-shifted,
even in emerging markets. So what version 2.1 of our middleware does
is provide some of our existing customers with the ability to enhance
their offering with DVR functionality, even on legacy set-top boxes.

Core3, the next major release of OpenTV’s middleware–and this is
pretty exciting–will give operators the ability to do multiple concurrent
apps. Do you remember when Microsoft went to Windows and a
concurrent operating system–when they went from a single-tasking
system to a multi-tasking system? Well, the next major release of our
middleware will offer that capability. So, if you were watching TV, you
could, for example, have a small window open on the screen that would
have a feed from a babycam, so that you could keep an eye on your
baby; and, at the same time, you could have an instant-messaging app
open, so that you could talk to your friends, and so on.

Now, there’s always going to be a need for lean-back TV. There are a
lot of people out there who just aren’t going to buy into the idea of
interacting with the TV. However, the kids–the next generation–are
going to. They’re much more used to multi-tasking, and to using
multiple devices at the same time. And this new generation of TV
watchers is the group that the next generation of our middleware will
address. Because you’ve now got HD, because you’ve got DVR,
because set-top boxes are equipped with Ethernet connections that give
them the bandwidth to suck down large amounts of information from
the Internet, and so on, the whole TV-viewing experience is changing.
People will multi-task, and they’ll not only watch content, but share it
with their friends. It will be a very different experience from the
lean-back experience. So these are the kinds of emerging phenomena
that our R&D teams are working to address with our middleware.

[itvt]: Let’s talk about your roadmaps on the advertising side of your
business…

Bennett: On the advanced advertising side there are three things in
particular that we’re currently working on: extending our current
EclipsePlus system to embrace advanced advertising features such as
ad insertion for VOD, an end-to-end addressable advertising solution,
and interactive/participation TV. We’ve made some acquisitions in the
campaign management/traffic-and-billing space–traffic and billing
being a very US-centric concept, by the way, and having to do with
local cable. We are getting good traction with EclipsePlus, our
next-generation campaign management tool, which successfully
deployed with Comcast Spotlight in May this year.

This is all part of a bigger issue: the TV advertising industry in the
US–and lately the world–has a very big problem right now. It’s a $70
billion market, but the advertising spend is starting to leak at an
alarming rate to new media. And this is something that we, as a TV
company, need to address. So we hired Paul Woidke–formerly with
Comcast Spotlight–who is very knowledgeable in advanced
advertising, and wants to do something about this problem that the TV
advertising industry is facing. It’s not a problem that people in the
industry want to talk about in public, but this leakage of advertising
spend to the Internet is in the range of $12 million a day, or around $4
billion a year. And one of the ways to stop this leakage is through
making TV ads more targeted and later, interactive for the consumer.
The reason it is happening is pretty simple: advertisers are saying,
“Well, I can make my campaigns more targeted if I take some of my
spend and use it to buy advertising on the Internet.”

[itvt]: And they’re also aware that Internet advertising can be easily
tracked…

Bennett: Measured and tracked, exactly. OpenTV has been doing some
trials with Comcast on addressable advertising, and we have systems
where we can digitize demographic data about people–say that you’re
married with a 10-month old and you have a pet. We can take this data
and digitize it, push it to your set-top box, and, based on that data and
some clever software, your set-top will play out the more “relevant” of,
say, four different possible commercials that are being broadcast
simultaneously to your home. We’ve learned a lot from these trials: for
example, that bandwidth, HD and scalability are all issues.

And then there’s interactive advertising, which is part of the puzzle as
well. Even if you successfully address the specific demographic you’re
looking to reach, you still want to be able to provide interactivity in
order to drill down even further–so the ability for the viewer to press
the red button, or to use some other interactive means, in order to watch
a long-form video about the product that’s being advertised or to
receive a brochure. The interactive side is extremely important for the
advertisers, because it enables a one-on-one experience. And, then, on
top of that, you want to be able to measure the clickstream generated by
an interactive ad. So you can see how our knowledge of the set-top box
space positions us very well to be a major player in the advertising
space.

[itvt]: Can we assume that you’re fairly closely involved in Project
Canoe, the US cable industry’s effort to develop a national platform for
interactive and addressable advertising?

Bennett: I wouldn’t use the term “closely involved,” as it’s still too
early. At this point in the game, we’re aware of and we understand the
Canoe objectives. We’re involved, certainly, but it’s too early to talk
about in-depth involvement or about becoming vendors to Canoe.
Obviously, though, having Paul on board might help us a bit in that
respect, when the time is right.

[itvt]: Let’s talk a little about the US cable industry’s push for
interactive TV standards–so ETV/EBIF and OCAP/tru2way. What’s
your opinion of those standardization efforts?

Bennett: Well, proprietary middleware in the US market will not fly,
and tru2way/OCAP is definitely gaining ground. As I’m sure you know,
OpenTV is actually an OCAP licensor, so when OCAP boxes get
shipped, we make money through our OCAP-related patents. But I
personally think OCAP/tru2way still has its challenges and I’m hoping
that OpenTV can help solve those challenges. We are very open to
helping in a number of ways. It may not be through our Core
middleware. It may be more through our headend technologies and
through the expertise that we have gained from deploying our
middleware solutions around the world.

One of the biggest challenges the cable industry is up against with
tru2way is the interoperability issue–by which I mean that you already
have a lot of different tru2way stacks out there in the market. The set-
top box and television manufacturers are going to incorporate different
stacks, and then the cable industry is going to have to ensure that the
applications it launches are interoperable across all these different
devices and stacks, and that they offer the same level of performance
on each of them. They’re going to have to ensure that they have the
right kind of headend infrastructure to enable that.

[itvt]: Now, while OpenTV has strong relationships in North America
with DISH Network and with Bell TV, you haven’t historically had
much success penetrating the US cable market. What’s the status of
OpenTV’s relationship with US cable today?

Bennett: We’re a US public company, so for me having a strong
domestic business is critical for the long-term future success of the
company. Even though we’ve had a lot of success internationally, we
absolutely want to also have a strong business with US cable and
satellite, and with US telcos too. And we’re definitely making a lot of
marketing efforts in those areas. As far as the US cable industry is
concerned, at the moment most of our relationships with the cable
companies are on the advanced advertising side.

At the same time, a major part of our strategy involves us going after
emerging markets–which is why we’ve had a lot of success in places
like India and in Latin America. Latin America is a particularly
interesting market for us: we’re seeing a lot of demand there for the
kinds of products and services we offer. And we’ve also had some
successes in Canada: we have other operator customers there in
addition to Bell TV. So we view the Americas–both North and South
America–as markets that are very important for us as a company.

[itvt]: How are you going about penetrating the US cable market?

Bennett: Right now, in the US a lot of our efforts are in the advanced
advertising arena, and specifically around campaign management. I
think that, over the past six months or so, our teams have done a good
job of delivering our next-generation campaign management platform,
EclipsePlus, which provides an array of new features for US cable
operators. These new features have been extremely well received. A
few months back, I was delivering a keynote for our user group
conference in Texas: it was obvious that the end-users were extremely
pleased–and that’s how you get traction in a market. If you deliver
great quality and the features users need, you get grassroots support.
We now need to make sure that our roadmap for our advertising
offerings extends our campaign management solutions to address the
problems that the US cable industry is facing with TV advertising–i.e.
we need to ensure that our advertising solutions enable addressability
and interactivity.

So I think we’re pretty well positioned with the US cable industry:
thanks to our advertising products, we now have a good working
relationship with them, based on the fact that they understand that we’re
delivering something that’s of high quality. We have a good
relationship in place now, and we’re hoping to expand it. Now, on the
middleware side, I don’t see much activity in the North American
market for OpenTV’s proprietary middleware–at least in the short term.
But I do feel that the good relationship we’re building with the cable
industry through our advertising solutions could result in them tapping
us to help them with their tru2way efforts.

[itvt]: You have some stiff competition in the advanced advertising
space–there are companies that claim that their platforms offer all
kinds of measurement capabilities, including the ability to generate
moment-by-moment data…

Bennett: Well, internationally we have a broad footprint of set-top
boxes, and our Core2 middleware has a measurement client embedded
in it that gives the operator the ability to collect all the clickstream data.
Now it varies from market to market whether the operator can take
advantage of that capability–there are often privacy and regulatory
issues that need to be addressed before that data can be analyzed. At
any rate, OpenTV’s technology certainly has the capability to do this
kind of measurement–and, in my view, in a much more consistent and
accurate fashion than the Nielsens of the world, which simply
extrapolate from a few thousand homes, rather than rely on real data
from a broad base of set-top boxes.

However, in the US, where our middleware isn’t widely deployed by
cable operators, it’s a very different game altogether, because until
there’s a consistent set-top platform, it’s going to be very difficult to
scale the kinds of features–measurement, addressability and
interactivity–that the advertising industry needs. Right now, there are
deployments of addressable advertising to 8,000-20,000 households.
But that isn’t going to be of much use to the advertising industry until
the deployments are in the 10 million range. Now, I believe there are
some competitors out there who are boasting that they can collect all
this data–but what kind of footprint are they talking about? 20,000
subscribers in one market is not going to light up the advertisers and the
advertising agencies at all. The whole reason why they’re leaking to the
Internet is that it gives their ads an audience that is both addressable
and a mass audience. What the TV industry needs to do is to come up
with a mass-audience solution for advanced advertising. That’s
doable–and we have some practical solutions we’re going to bring to
the table–but it’s tricky. The reason it’s tricky has to do with bandwidth
restrictions and HD: you can’t broadcast a choice of four addressable
commercials in HD. Now, the reason Canoe was set up is in order to
meet these challenges. And that’s something we’re extremely supportive
of.

[itvt]: Another company that has an interest in new TV advertising
technologies is Google, which recently announced a relationship with
DISH Network. I was wondering if OpenTV has any kind of
relationship with Google in the works…

Bennett: I see what you’re getting at: because Vincent Dureau is now
there, correct?

[itvt]: Exactly. Or do you think you could eventually be competing with
them?

Bennett: Well, Vincent and I do occasionally talk. But we have very
different business models. Remember that OpenTV is primarily a
technology licensing services company–we have great technology and
we license it to our customers–whereas Google earns its money on ad
share. We certainly don’t overlap or compete at DISH Network, and I
don’t know that we’re ever going to end up competing against Google
anywhere else. One thing I can say, though, is that a lot of our other
customers are extremely wary of Google’s intentions in the pay-TV
space. I’m sure you can understand why. But Vincent is a very, very
bright person, and I’m sure he’s got all sorts of plans, so we’ll see how it
pans out.

[itvt]: What’s the latest on your participation TV platform, OpenTV
Participate? I understand you recently made a deal for it with NBC…

Bennett: Yes, the deal with NBC Universal is an exciting one, because
they’ve selected it to power a lot of the interactivity that they’re going to
be offering around some big events that are coming up. OpenTV
Participate is a relatively small part of our business, but it’s an
interesting one that we feel could present us with some good
opportunities down the road. One thing it does, is that it allows us to
build strong relationships with the content community, as well as with
the pay-TV community–as you know, the product allows broadcasters
to offer cross-platform interactivity. We also believe that Participate
will present us with some advertising opportunities in the future, which
is why it’s under our advanced advertising group, which is led by Paul
Woidke.

[itvt]: What do you feel about the emergence of IP technology as a
means to deliver television, whether on the open Internet or on
telco-operated IPTV systems? Do you think it’s just a short time before
all television goes IP?

Bennett: Well, you can certainly argue that the whole world is going to
turn IP and that broadcast television will be dead, but I think that’s a
long way off. People will make projections about this, based on their
own self-interest, but in my opinion it’s at least 10 years down the road.

However, one thing that is going on right now and that we find very
interesting is the emergence of hybrid solutions that mix some kind of
broadcast technology with IP. We’re seeing more and more of these
hybrid deployments–Verizon being a very good example–where an
operator is delivering content via broadcast–for example, via DTH–but
also has an IP backchannel. Especially once the available bandwidth
increases and more next-generation set-top boxes are deployed that
have broadband connectivity through an Ethernet port, you’re going to
see a lot of television deployments where you have middleware with a
browser, and a lot of interactive content that’s sourced from the
Internet. The emergence of these kinds of hybrid networks is something
that we are actually addressing today with our Core platform: our
middleware is IP-enabled, and we’re also building partnerships with
some key companies around the world. So we’re very interested in
things like pushing content to a hard drive in a set-top box via the
broadband link, and in enabling viewers to access online
content–including interactive content. I think we’re very well
positioned to enable these kinds of IPTV solutions.

[itvt]: How important a part of OpenTV’s strategy is developing
interactive TV applications in-house?

Bennett: That’s not a primary part of our strategy, though occasionally
we will offer applications as part of an end-to-end solution to get, for
example, an emerging-market pay-TV operator up-and-running
quickly–i.e., so that we can offer them an all-in-one package that
includes middleware, headend, user interface and applications. Our
primary model is to take advantage of our open platform by
encouraging an ecosystem of third-party developers to create new,
intuitive applications. One of the reasons our platform has been so
successful is that we provide an SDK and development environment
that allow both small and large companies to develop interactive
services for consumers. Developers don’t even need a set-top box to
develop for our platform: we can emulate our software environment on
a PC. So we definitely encourage development of third-party apps for
our platform and we also provide training on our platform for
developers: we formed an educational services group around a year
ago.

Our strategy as a company calls for us to open up our platform. I think
that this area–encouraging third parties to develop applications for our
middleware–was neglected for the past few years. But now, as part of
our phase two strategy that I was mentioning earlier, we’re proactively
cultivating partnerships with companies that can develop for our
platform. One thing we’ve been doing is training more and more local
developers in markets like China and India. We also try to avoid being
too controlling of the development process: one thing we’ve found is
that smaller companies can be a lot more entrepreneurial and
fast-moving than OpenTV can when it comes to developing useful
applications for their local markets.

[itvt]: Are you bullish about the future of the interactive TV industry?
If so, why?

Bennett: Well, there’s certainly still a long way to go: of the 1.7 billion
TV households in the world, I think only around 15% are digital. But
I’m definitely optimistic about the future of the industry, for a number
of reasons. One of the main reasons–if not the main reason–why
interactivity didn’t take off in the past was because of the limitations of
the set-top boxes out in the field. One big limitation was that they didn’t
have a broadband backchannel for two-way connectivity. Sure, you
could offer an EPG and other simple applications on those boxes, but
you couldn’t really offer a great two-way interactive experience. But
now, operators are starting to roll out much more powerful boxes with
DOCSIS modems and so forth. We’re seeing a lot of our customers in
the cable space deploying boxes with two-way capability, and our DTH
customers are also offering boxes with this always-on return path that
you need for real-time interaction. And, of course, these
next-generation boxes have a more powerful CPU and more memory,
and they support HD.

Also, I think the advent of HD, coupled with support for better graphics
from the middleware and OS perspective, is making it possible for the
industry to make interactive applications and services more intuitive
and better looking. That just wasn’t possible a few years back:
interactive TV services were, for want of a better term, “clunky.” Using
them was completely unintuitive: you’d have to reach a portal that was
behind a menu that was behind another menu, and so on. Now,
however, they’re much more in the mainstream, so to speak. Anyhow,
all these improvements to the set-top box and broadcast infrastructure
are happening, and they make it a lot easier for us to upsell the value of
our middleware–it’s not just about commoditizing.

I also think that the interactive applications space is maturing: there’s a
lot of great innovation out there, and people are really starting to figure
out the kinds of applications that work. An example of a really
innovative and useful application is one that’s offered by a customer of
ours in the Asia Pacific region, and that uses our OpenTV Notify
technology. When there’s a bush fire that’s threatening a group of
houses, the application pushes a little burning icon to the TV screens of
the houses that are in danger, letting the people who live there know
that they need to evacuate. Obviously that kind of thing isn’t going to
generate a huge amount of income, but it really enhances a TV service
by making it more valuable to a community. Another kind of
application that is really proving the worth of interactive TV is
interactive customer care, which is being deployed by a number of
operators out there and which can result in a huge savings. If you’re a
large operator and you can divert some of the volume from your call
center operation to an on-screen, intuitive interactive service, this kind
of application can save you in the millions per month.

So a lot is changing: the infrastructure is improving; the middleware is
more advanced and IP-aware; HD helps because it allows for better
graphics and better-looking applications; more and more great
applications are becoming available. And, because of all this, another
important thing that’s happening is that broadcasters are now embracing
interactivity more than ever before.

Another catalyst that bodes well for the future is competition. A lot of
operators used to effectively have monopolies, but now they’re facing
competition from telcos and other companies that are starting to offer
video services. So what happens is that both parties–the incumbent and
the upstart–need to differentiate their services as much as possible,
and, of course, one very good way to do this is by rolling out advanced
services like interactive TV.

[itvt]: So what’s next for OpenTV?

Bennett: Well, we’re currently working on completing phase two of our
strategy: so ensuring that our products are of the highest quality;
opening up new markets; appointing some key leaders; and making
sure we can maintain sustainable, profitable growth–for me, it’s not
about just having one year of profitability, but about having sustained
profitability. We have a good cash position, so I may look for gaps in
our portfolio and, down the road, make some acquisitions.

Anyway, once we’re done with phase two, I believe we’ll be pretty
well-positioned competitively and we’ll probably increase our
marketing visibility a little bit more. Then there’ll be phase three.
Obviously, we’re not there yet, but one of the things that we believe
will be important–and it’s something we’re already starting to work on
and that I know a lot of companies in this space are looking at–is the
whole user experience. So phase three will see us working on Core3
plus developing navigation tools that can really help navigate the mass
of content that’s starting to flood end-users–whether it’s from broadcast
TV, from VOD, from the DVR or from the Internet. The ability to
easily find and consume TV from all those different sources is going to
be key–and it’s very important to bear in mind that it’s not just going to
be consumed on the TV set in your living room: TV is going to be
consumed on multiple different devices. And I think that that will open
up some opportunities for us–like it has already opened up
opportunities for us with NBC for our Participate product.

[itvt]: You showed a prototype of some of your new navigation
technology–a video-navigation EPG–at the TV of Tomorrow Show
last year. When do you think it will actually be deployed?

Bennett: I expect it will available in late 2009 or early 2010.

[itvt]: Do you feel that mobile TV will be an important part of your
strategy?

Bennett: You know, even though I come from a mobile background,
I’m not convinced yet that people are going to make money from that.
But I’m definitely willing to keep an open mind about it and we are
exploring the advertising angle through initiatives such as participation
TV.

One thing we have been doing a lot of work on is advanced PVR
technology–PVR, along with HD and broadband connectivity in the
set-top box, being part of what I would call a “perfect storm” for
interactive TV that’s now starting to happen. Once you have a hard disk
in the set-top box, you can add all kinds of content and capabilities to
your interactive applications. It’s especially useful for interactive TV
advertising. So we’re actually doing a huge amount of work around
PVR.

However, it is important to bear in mind that the emerging markets, and
even a lot of markets in Europe, still haven’t embraced PVR. But the
prices are coming down rapidly, so I think that that situation will
change. And once we have this interactive “perfect storm” of PVR
technology, HD and broadband connectivity, we’re going to be able to
do a lot more with our technology, both in the middleware space and in
the advanced advertising space. It’s taken a long time for all this to
come together–and it’s still in the process of coming together. But I’ve
always known that it would come together, and that’s one of the reasons
I’ve stayed with this company for so long.

URL: OpenTV