Broadcaster, January 2001

Interactive TV

Wink heads north

Interactive TV company seeks Rogers help to spread its technology

By Greg O'Brien

As a four-year old, Wink is a greybeard when it comes to interactive television technology corporations. Its software, now used in over two million American households, allows customers to plough deeper into their television, to gain more information, request coupons and catalogues or even buy something. Over 70 per cent of its viewers who have access to it use the product at least once per month when they see a little "i" on their TV screens.

It wasn't easy getting to where it is now. Co-ordinating the needs and desires of cable companies, satellite providers, broadcasters, cable channels, consumer goods companies and advertisers and getting them to buy into the Wink interactive concept was a monumental job. However, 40 per cent of on-air content Stateside now has a Wink interactive component embedded in it. Wink counts every major American broadcaster and cable channel as a partner and is deployed with or has agreements to deploy with the two largest satellite providers, six of the top ten U.S. MSOs and Rogers Cable in Canada.

While Canadian cable companies have experimented with, and in the case of Vidéotron and Rogers, rolled out a version of interactive television which is essentially the web on TV, Canadian broadcasters provide very little that allows viewers to interact with a show or an ad via their digital set top box, enhancing the traditional television experience.

Wink's recent licensing deal with Rogers Cable aims to change all that. Rogers will not only deploy Wink technology for its customers, it will also act as Wink's sales agent in Canada, using its considerable weight to, uh, encourage Canadian broadcasters and specialty service operators to speed up their interactive television plans and take advantage of what Wink can offer.

Greg O'Brien, editor of Broadcaster's sister publication, Cablecaster, recently sat down with Wink president and CEO Maggie Wilderotter to find out how Wink works and what plans Wink has for Canada. What follows is an edited transcript.

Greg O'Brien: How many set tops is Wink deployed on in the U.S.

Maggie Wilderotter: We're deployed in a little over two million households, so we're actually on more set-tops than that because in cable and direct broadcast satellite households the ratio is 1.2 to 1.5 (digital set-top boxes) per home.

GOB: And, how many of those are satellite customers and how many are cable.

MW: That number is about half a million cable, 450,000 WebTV Plus boxes and the rest are satellite boxes.

GOB: Now, do these customers have access to the full Wink suite? What can they actually do through Wink on their boxes?

MW: Wink is a free service to consumers, so what happens, we'll take a Charter Communications cable subscriber as an example, as Charter rolls out digital to their home, Wink is simply a part of that service so every digital set-top box that gets installed has Wink as part of that service.

As for our satellite customers, we launched with DirecTV at the end of October (2000) and we've been downloading all of their existing customers on the RCA platform for the past couple of months. And in addition to that, all new customers that buy RCA receivers for DirecTV from the retail channel, Wink is automatically part of that service.

We just turned on two RCA set top boxes today and in the first two quarters of next year, we will turn on with Philips, Hughes Network Systems, Samsung and Panasonic for those boxes with DirecTV and we will turn EchoStar on in the second half of the year.

GOB: With the satellite boxes, those are telco return?

MW: Yes. And, the way we operate, if it's not a priority transaction, i.e. it's not ordering pizza to be delivered, we store that transaction in the box and then we'll dial out on the phone line in the middle of the night so we don't disrupt any phone line service that the consumer might want to use during the day or evening.

GOB: How many transactions did Wink handle in 2000?

MW: Probably a million transactions. We have a tremendous amount of volume of transactions that we're managing. About it, about 70 per cent of consumers who have Wink, use it every month.

GOB: To buy things?

MW: To buy things, to pull up information on sports scores, and statistics, to request coupons and samples, to log their opinion on a poll, like on CNN for the presidential elections. There's a whole host of different applications that our broadcast network partners and advertising partners have put out there for consumers to interact with.

GOB: When transactions happen, how is the money split? Do the cable operators get some of it? The retailer? The manufacturer? The broadcaster? How does it work?

MW: We have a revenue share model so we do provide revenue to our cable (and satellite) operator partners in exchange for them carrying the service and allowing the transactions to take place on their network. We don't share, typically with any of the broadcast networks because what we look at is Wink enables the broadcast network to charge a higher (price) for an interactive ad so there are actually interactive dollars that they can make by having that service available to their advertising partners.

GOB: What are your goals for set-top box deployments or transactions for next year.

MW: Well, as a CEO of a public company, I'm not supposed to make any forward-looking statements so I'll tell you what our analysts are projecting and say that we're very comfortable with their projections: Between five and six million (households) by the end of next year that would be deployed with Wink and we're very comfortable with those predictions.

But, we do have 18 million households committed to deploy the service through contracts. In the United States, that's close to 45 per cent of all of the digital households that will have been deployed over the next couple of years and, with 100 million households in the U.S., close to 20 per cent of all U.S. households will have Wink.

GOB: What does your recent licensing deal with Rogers mean for Wink in Canada?

MW: It's a very strategic and important deal, for two reasons. One, it gets us deployed because they licensed our software for their platform and we're very excited about that. But, secondly, what we're doing is putting a venture together with Rogers where they act as our sales agent in Canada for programming and advertising.

Now, we will import the Wink enhancements on the U.S. programming networks that are beamed into Canada that Rogers carries, which are about 10 networks.

There's a whole group of Canadian broadcasting companies that we would really like to have enhancing.

GOB: I'm sure you're probably familiar with the simultaneous substitution we have up here so what happens to the Wink signal when Global, for example is simulcasting Canadian ads during the Friends broadcast or whatever?

MW: If there is a replacement with the simulcast, we definitely want that Canadian ad to be enhanced, because if (the U.S.) ad is a Wink ad, it's going to get blocked out. So, one of the things we've talked to Rogers is being able to have a business where Rogers is in the market to (sell and service) these products on our behalf.

And, we're probably going to install Rogers around the middle of the year from a platform perspective so our goal would be, when we launch with Rogers, to be able to have several of the broadcast networks already signed up and creating content and several of the Canadian advertisers enhancing ads.

GOB: That'll take at least six months.

MW: Since we already have 30-plus networks in the U.S. working with us, we have a pretty good blueprint. It's not like they have to reinvent the wheel. And, we have the heritage --we're not testing something. It's already proven and already works.

We think with the combination of our track record and Rogers' stature and relationships, we should be able to push this through a lot faster than it happened here in the States.

GOB: Talking about interactive TV in general with the technology out there and all of the hype and speculation, do you really think it's going to be everything the industry thinks it is going to be?

MW: The danger today is that it's such a catch-all category. It almost means something different to everybody you talk to. It's bizarre.

GOB: A point I've made before that if you ask five different cable executives about interactive TV you'll get five different definitions.

MW: I think that over the next 12 to 18 months there's going to be a huge shakeout. There are a lot of ideas that will never see the light of day because at the end of the day, you need to have something that is simple and easy for the consumer and adds value to the consumer.

Now, I doubt that any one specific service can be the be-all and end-all, I think there will be a package of two or three different services that become the killer application for interactive TV. And, a lot of MSOs are going to be packaging an (interactive program) guide with Wink's enhanced broadcasting service and video on demand. We're seeing that is pretty much an established package that's starting to roll now in the charter markets, in the Comcast, Adelphia and Time Warner.

The cable operators are coalescing around picking two or three very strong applications that they can bundle together and present to a consumer in a set-top box that is thin. Then it starts to make sense for them from an economic perspective.

GOB: And that's the key. If you want the interactive services to work in the near term, they're going to have to run on that thin box.

MW: That's exactly right. And, with the economic situation these days, in terms of the volatility of the capital markets, that we all know, cable operators can not build out or buy these boxes without capital and there's going to be a real fight -- and there already has been -- on the capital markets, so it's going to make the cable operators hunker down even more.

I think there will be consolidation in interactive TV and there will be a number of companies that close their doors and go home. Some services are going to get rolled because they can make money for the cable operator and they add a lot of value to the consumer.

GOB: Was it difficult to convince the U.S. broadcasters to work with you and provide interactive content to take advantage of what Wink can offer?

MW: Absolutely . . . we could talk for three hours and I could tell you stories about our broadcast network partners and what we had to do to get them to pay attention. I think the good news is they all saw the vision, they got it, they understood what we were trying to do and we're a very broadcast-friendly interactive service because we don't take people away from their video. We're not trying to get people off video to go surf the web, we're trying to enhance that experience so they stay on channel and that was very broadcaster-friendly and I think they liked that. It made a huge difference for us.

There have been a number of false starts because you need consumer electronics manufacturers, cable operators, broadcast and cable programming networks and you need advertisers to all sign up for a specific way of doing something simultaneously and Wink has been very lucky to convince the major stakeholders that this type of application can work in their best interests.

GOB: How much of what you see on TV in the U.S. has an interactive component built in now?

MW: About 40 per cent of the programming is enhanced, so it's very robust. We have nine channels where it's 24 hours a day, seven days a week.

GOB: How much of that is the show itself versus the commercials?

MW: I'd say advertising is today only about 5 per cent of that and the balance is shows and programs and events. We really start from a position where we want to add value to the viewing experience and build habit, in making Wink part of how you watch TV. And, when you have commerce opportunities, it's very simple to do that.

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