MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--April 23, 1996--In 1995, interactive television service and advertising revenues grew to more than $554 million and the market is expected to reach $12.87 billion a year by the end of 2002.
Concerning this topic, Frost & Sullivan announces the release of its most recent report on: U.S. MARKET FOR INTERACTIVE TELEVISION CONSUMER SERVICES AND ADVERTISING.
The total market in 1995 ($554.8 million) consisted of more than $545 million in on-demand service revenues, more than $8 million in interactive service revenues, $6 million in transaction service revenues-with no measurable revenues in interactive advertising.
The total breakdown of the expected $12.87 billion in revenues will consist of more than $5 billion in on-demand service revenues, $400.9 million in transaction service revenues, and $1.71 billion in interactive advertising revenues.
Interactive television is a concept which can be traced to the 1970s and 1980s, and, in fact has a foundation in the late 19th century when visionaries imagined that telephone lines would one day also transmit video.
Today, evidence reveals that consumers and businesses now have a desire to interact via commercial on-line services indicate a growing tendency to meet this desire.
A major trend contributing to the market's growth is a full- service provision to be offered by the cable and telephone companies. With one-stop shopping, even if there is more than one service provider, the customer now only has to deal with one consumer interface. Some cable companies recognize, and perhaps are too optimistic that the outcome of all this will result in fewer dominant companies.
Proof of these consolidations is visible in US West's acquisition of Continental Cablevision Corporation, Time-Warner's merger with Turner Broadcasting, the formation of a full-service provider entity around Sprint with partners Comcast, TCI and Cox, and the numerous acquisitions of smaller cable systems by larger cable systems that have been occurring in recent years.
On-line services are operating as a test bed for interactive offerings. The Internet is also serving to test ideas that can be transported to interactive television. Currently, the merging of television and the Internet is already underway in terms of an Intel group called Intercas, which is a consortium of industry leaders existing for the purpose of exploring this new technology, allowing both web-pages and television programs to be delivered to personal computers within the television signaling program.
First introduced in 1994, Direct Broadcast Satellite service has sold beyond initial expectations. The experience of DIRECTV and USSB (United States Satellite Broadcasting) has been that our on- demand customers increase their buy rates of services such as pay-per-view and near-video-on-demand dramatically -- revealing buy rates of 150 percent as compared to the national average of 23 percent.
The end result has meant: lower prices than cable delivered pay- per-view, more channels than cable delivered pay-per-view, barker channels, and a clearer picture from digital transmission technology.
Other major growth factors include: advertisers' optimism about the future of interactive advertising, pay-per-view industry intensifying promotional campaigns, new economic paradigms being formed out of interactive television, and the developing trend in high-speed video telephony.
Frost & Sullivan is an international high-technology market research and consulting firm headquartered in Mountain View, California. It produces a variety of strategic worldwide industry and customer research reports. A free executive summary is available to the press on this report. -0-
Report: 2881-64 Publication Date: April 1996
CONTACT: Frost & Sullivan
Jonathan Moore, 415/961-9000 (Mountain View)
Kristina Menzefricke, 44 171 730 3438 (London)
Nadge Keryhuel, 33 1 4742 9127 (Paris)
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