Repost: iTV, Participation & Gambling via TV

I've been asked to re-post a piece I wrote about iTV, participation and gambling TV. I originally took it down for not being a 'proper' blog style piece, but I’m always happy to oblige.

I prepared a version of this as a Paper for a gambling conference in Singapore at the start of last year. It's now a little out of date, but the basic overview is still very useful, especially for those outside the UK wanting an overview of 'Call TV' and gambling via TV.

What I find interesting is looking back within the context of the Call TV scandals hitting the UK recently. Whilst gambling is often seen as bad (and there is no doubt it's dangerous) it is at least transparent and honest when taking your money, as opposed to some sectors of the ‘participation’ market who behaved a little like street hustlers parting punters from their cash, rather than offering a genuine chance to won for each pound bet.

So, not a blog post, but a Conference Paper posted in a blog ….

The Growth and Evolution of iTV and Gambling:
A Rapidly Developing Sector

Prepared by

Vlad Lodzinski, MC3 Global

What is iTV and participation TV?

The term iTV or interactive television is often misused or misunderstood. The term normally refers to either cable TV or satellite TV where the viewer’s cable or satellite box has a ‘return path’. A return path basically means a telephone line that allows the consumers box at home to interact with the TV show they are watching.

It is more useful to talk about ‘participation TV’ which basically means TV where the viewer at home somehow takes part with the show they are watching, no matter what technology they use, be that phone, internet or iTV.

Participation TV can mean anything from viewers voting on American Idol or Big Brother, through to calling in and winning prizes on game shows, right to sports betting or casino games on events seen on TV.

Why are broadcasters interested?

TV channels and ‘platforms’ like cable companies are interested as in the world of new media revenues from advertising or subscriptions are coming under pressure. The new trend is for money (revenues) coming directly from customers. This can also mean ‘home shopping’ or auctions on TV.

• increased audience figures
• zero investment from broadcaster or channel
• quick revenue generation
• proven higher revenues to broadcasters and teleshopping
• wide range of quiz and game formats
• more cash prizes where jackpot payments help to build newer communities
• programmes can be aired in previously dead air time
• full white label offering.

Participation TV is a format that generates substantial viewer involvement in programmes and this new interactive format will help drive the shape of gaming formats internationally and these will evolve into new gaming and new TV gambling formats.

Participation TV

The following details some of the changes that we are seeing in view of behaviour and interactive TV and in particular focuses on one of the new phenomenon Participation TV formats.

Formats whose sole aim is to engage viewers by encouraging them to participate directly with the programme and where the key focus is participation rather than entertainment.

The following are some of the changes that we are seeing:

• TV consumption is changing - its role within our lives is altering.
• Rather than passively receive mass communications, viewers actively use TV to meet their specific individual needs – the traditional paradigm has not disappeared (it has evolved).
• The widening inspection of content and formats both reflects and prompts viewer interests – building communities and delivering new content streams.

How did gambling on TV start?

There are 2 main kinds of gambling on TV. One is ‘sports betting’ where you bet on pre-existing events such as live horseracing, formula one or other events. This betting can be through either iTV services, or over the telephone.

The other option is betting on games specifically created for TV. These can be keno games, virtual races or in certain market casino games such as Roulette can be offered. These games tend to be fixed odds.

Gambling on TV first took off in a major way in the UK market due to a number of favourable conditions. These included Sky’s aggressive push into the digital TV market creating a large market (very quickly at 6 Million homes), with legally guaranteed access for new channels and heavy investment from businesses looking to explore new revenue streams.

Businesses such as Sky and DITG quickly realized there were huge revenues to be made from sports betting and fixed odds betting, as long as costs of content (eg.rights to show sports events) were not too expensive.

We No Longer Watch TV We Use It

• TV is the driver of new interactivity and communities is not a new phenomenon:
• 74.7% of people use TV as a talking point with friends and family.
• Adults who live together spend nearly 2 hours per day watching TV together
• Approx 33% of viewers have used TV interactively in the past 6 months.
• Nearly 66% of viewers agree that TV helps them learn new and different ways of doing things.
• 44% of consumers report using the internet and the TV at the same time.

These are the facts.

Through empowering viewers to interact with programming there is a unique opportunity to capitalise on these trends, exciting viewers, building loyalty and deriving new and exciting revenue streams.

Interactivity also enables greater knowledge and understanding of consumers from which communities and direct communication can be developed.

Viewers are Fundamentally Changing

• Viewers have fundamentally changed.
• Viewers define themselves through participation – with their community and brands.
• TV has become a key driver of viewer reality and identity – it is part of the fabric of the individual.
• TV creates awareness of issues; reflects our concerns; stimulates conversations; and provides definition for how we express ourselves – it is part of the fabric of society.

• TV has responded new content types.
• Examples - Maximising content across increasing number of platforms.
• Examples - Big Brother, Pop Idol, Who Wants to be a Millionaire, I’m A Celebrity, X Factor, Hells Kitchen.

But we have only scratched the surface.

UK market as example

In the UK there are in excess of 30 TV stations and services offering either sports betting or fixed odds betting. Sky Bet, which has 2 keno TV station and also takes sports betting increased its revenues by 37% in 2005, and is expected to have revenues of over £300 Million through its TV services in the next financial year.

ITV Play, part of the UK’s largest commercial TV broadcaster made profits of £2 Million pounds in its launch month.

Research released in the UK expects the gaming on TV to be a billion dollar industry by the end of this decade. That process can only be hastened by the convergence on traditional TV, and TV delivered over the internet.

The main barrier to entry are regulatory issues (both TV regulations and gaming ones) but solutions exist that allows them to access customers even in some countries where local operators could not run gambling via television.

Whilst the UK has by far the most developed market for gambling on TV there are notable experiments in other countries such as Premiere Win in Germany and Gemstar in the USA.

What are the Opportunities?

Enhanced viewer experiences.

• Interactivity is globally proven down to internationally proven new revenue streams to interactive programme.

Participation (Games) TV

• Interactive TV formats have been a phenomenal success globally through outputs of production houses including Endemol, Celador, and Fremantle Media.
• Whilst traditional interactive programming (incl. Big Brother, Idol, Who Wants To Be A Millionaire) has included interactivity as a compliment to traditional passive viewing, next generation Participation TV programming is built around the premise of viewer interaction.
• PTV is the next generation of interactive programming – instead of interactivity being used as part of the programme, it becomes the programme.
• PTV is still relatively new – but the results cannot be ignored:
• $US800M p.a. industry in Germany.
• ITV (UK) has recently announced the launch of a 24/7 PTV channel (ITV Play) – capitalising on the recent substantial revenues generated by their early morning programming in what was previously unviable commercial air time.
  
  

These are some of the typical results from one supplier.

• Generates large audiences higher than many Hollywood blockbusters.
• Typically generates a three times higher response to formats such as Pop Idol.
• Introduces viewers to gaming.
• CRM techniques used to up-sell viewers to gambling formats via mobile and internet marketing.
  

The Gambling opportunity

This new area of business is not without its challenges. However gambling solutions exist that have been especially designed to service multiple markets around the world and allow broadcasters and other partners to participate in this new, fast growing and exciting business opportunity with minimal risk and maximum returns. One solution by Vlad Lodzinski is particularly interesting in markets where there are limited opportunities to gamble, or those with limited entertainment options.

With a TV service and brand designed by a team who were instrumental in the development of channels such as MTV, it is an entertaining and engaging proposition that has been especially designed to attract both broadcasters and a mass audience.

The simple to use, but high tech back office will offer fixed odds betting on very high quality virtual horse races 24 hours a day. Viewers will be able to watch the races on the internet, on ‘gambling’ TV services or even watch the same race of non-gambling TV stations where they can ‘play for fun’ and maybe decide to try to gamble for real at a later stage.

Conclusion

The UK experience has proves that there is a massive appetite from both broadcasters and viewers to have these kind of services and proves that the revenue streams are highly lucrative. As with any major new lucrative format, such as ‘Who Wants to be a Millionaire’ it is simply a matter of time before these reach out across the world.