Twelve Questions With Jim Chiddix: Will Interactive TV Come to Cable?

Jim Chiddix, a respected cable veteran of some 30 years who was inducted into SCTE’s Hall of Fame in June, has taken on a challenging new role as CEO of OpenTV. Majority-owned by Liberty Media, OpenTV is one of the largest providers of interactive software in the world, but it has struggled for a foothold in the United States. Chiddix, who will work with outgoing CEO James Ackerman during a transition period, hopes to change that. CableWORLD caught up with Chiddix earlier this month. CW: What’s your schedule like these days? Chiddix: As the newly arrived CEO, I am trying to learn all there is to know about a very complicated little company that has a lot of pieces and a tremendous amount of potential. I’ve done some traveling and will be doing much more so—the old phrase drinking from a fire hose comes to mind. The stuff that I am doing now is just fascinating, and in the early stages there is lots to learn. My wife and I have listed our apartment in Manhattan for sale and we are looking for a place in San Francisco. We’ve had a home for a long, long time in the foothills just west of Denver, which we will always keep. CW: Are operators showing interest in the news and sports applications OpenTV showed at NCTA? Chiddix: We’re certainly talking to every cable operator. At [NCTA] we were showing news and sports applications that will be developed for our cable and satellite customer in Australia, Foxtel. Foxtel operates both satellite and cable, and recently went all-digital on both platforms. DirecTV is a blood relative of Foxtel, and it shows the kinds of things that cable operators could do with a sophisticated software platform in place. I hope this is a wake-up call to the U.S. cable industry that they are going to see a very innovative use of interactivity by their competitors, and an invitation to tap into all the experience we’ve gained around the world, providing a platform for such things and giving them the tools to develop such things. CW: Why has cable has been so slow to embrace interactivity? Chiddix: One [issue] is the fact that cable set-top box platforms have been closed environments, and it’s required a lot of work to launch new applications. So it’s only when there has been a big, obvious pot of gold with [services such as] video on demand that cable operators and their vendors have gone through the rather painful process of integrating new applications onto the platform. There is also the perception that there just isn’t a lot of money to be made in interactive TV. One thing I found enormously illuminating was to travel—to look at what BSkyB is doing. The whole BSkyB story is interesting—it is certainly not directly applicable to the U.S. satellite/cable dynamic, but in the U.K. when News Corp. launched digital satellite, it did so very cleverly and very aggressively. First of all it gave away boxes, but there was an interesting catch. The box was free only if you promised for some period, perhaps a year, to leave it plugged into the telephone jack so that two-way interactivity would work. And then they bundled into it a variety of interactive applications—simple games and indeed some wagering and e-commerce so you could buy things that were advertised. They set up a competitive landscape within their interactive world, so they made deals with virtually anybody who wanted to play, so there is a competitive incentive for interactive programmers to build new applications that are better than the others. The enabler for all this was a software platform that OpenTV provided, which had developer tools—it provided a pretty uniform software environment regardless of which model of satellite box a customer had. They are now up to, I think, 30-some different set-top boxes that BSkyB customers may have, depending on which vendor, which manufacturer made them and which year you got them. And that’s had the result of dramatically driving down satellite box cost since they’ve got into a competitive market on the hardware side. The upshot of all this was that through clever marketing and through the creative use of interactivity and through shrewd programming, BSkyB was able to really dominate the video market in the U.K. It’s misleading to say that the U.S. is going to follow that pattern, but I think that, in fact, we’ve got two very different but feisty and entrepreneurial and innovative satellite competitors to cable—one of whom has this body of experience from the U.K. and other Sky operations around the world. It’s going to make things pretty interesting for cable. Cable has got a wonderful network in terms of real-time, two-way bandwidth and the ability to download video assets or video streams on an on-demand basis. But that is going to be wasted to some extent if cable doesn’t find ways to take full advantage of it and to overcome these rather closed environments and this very laborious process that currently surrounds introducing new services. CW: How closely involved is CableLabs in developing open standards for interactive services? Chiddix: The industry has been pursuing the OCAP vision for quite some time. It’s a slow process and it’s focused not on today’s set-top boxes but on a future generation of set-top boxes that really are just beginning to appear. As an old cable hand, one of my concerns is that that isn’t going to happen as rapidly as the industry will need it. And again, I’ve only been here for a couple of months and I’ve only been leading the company for a few weeks, but I’m struck that OpenTV has some technologies that perhaps could really be helpful to the cable industry in pursuing this OCAP vision. CW: Interactivity is far down the list of priorities for U.S. cable operators, after digital, HSD, cable phone, HDTV. Do you see that changing in the near future? Chiddix: I don’t think it’s a matter of priorities changing so much as the fact that in an intensely competitive environment businesses have to make advances on many fronts at once. I don’t think that there will be the luxury of sort of serially dealing with video on demand and then HDTV and then VoIP. Those are all important things to do—they all have potential revenue tied to them. They’ve all got competitive ramifications, but I think that the pace of business is going to need to accelerate in this increasingly competitive world. CW: What genres, in addition to sports, news and commerce, lend themselves to interactive applications? Chiddix: One pedestrian-sounding one that has a lot of implications is customer care—there is no reason at all why customers shouldn’t be able to consummate most of the transactions that they would ordinarily phone a cable or a satellite operator about on-screen. Perhaps you would call a human if you were going to downgrade, but if you wanted to upgrade, make that as transparent as possible. Then, talk about commerce—now that can cover a lot of ground. There is no technical reason that cable operators and programmers can’t collaborate in allowing program-related interactivity to happen in a way that generates revenue for all concerned. One example is a project we are undertaking with Charter and QVC in terms of allowing people to click a button on the remote and buy things off a QVC channel. That easily can be extended to other shopping services and into other kinds of channels. There is no reason that interactive games couldn’t be linked to a game show network. CW: OpenTV is working with News Corp. subsidiary NDS at Foxtel. Do you expect similar deals in the future? Chiddix: We are working with NDS in a lot of markets where they provide the conditional access to the network operator and we provide the middleware. There are markets where we are competitors—NDS has a middleware arm as well, so it’s one of those complicated business relationships. But we’ve got a long string of successes for network operators working with NDS. CW: The big question analysts are interested in is who will be the middleware provider for DirecTV. Chiddix: I guess we’ll have to see how things work out. But my assumption is that it will be NDS for both conditional access and middleware. But we do have a long relationship with News as affiliates, and we’d be happy to help out. But I don’t think that’s the direction things are going. CW: Is the world of hi-def ripe for ITV applications? Chiddix: High definition is a wonderful medium for interactivity because the graphics are much higher resolution, and if you look at the screens and the guides on Voom it really is visually stunning. So there certainly is opportunity there. CW: Is DirecTV as threatening to the cable industry as many people in the industry assumed it would be in the months before its acquisition by News Corp.? Chiddix: DirecTV is certainly growing robustly at the expense of cable, but I don’t think we have yet seen the real News or Murdoch plan in action yet. I expect at some point we will see a new burst of marketing energy and new services. It’s interesting that it’s actually been so quiet. CW: How can the cable industry answer the challenge? Chiddix: Cable is capable of providing very good interactive services because of two things: its real-time, two-way network, and because of the huge amount of downstream capacity it has. So if cable can develop interactive services that incorporate video streams from servers with other kinds of experiences it’s really a lot of potential there for cable to play with. But first it’s got to figure out what its software platform is going to be and how to get scale on that platform and how to get the kinds of development tools it needs to rapidly build new products and new platforms. I’d like OpenTV to provide some of those tools. CW: [OpenTV’s games channel] Playjam has deals with several satellite and cable operators overseas. Who are you talking to in the U.S. cable market? Chiddix: We’ve begun talking to various folks about Playjam, which is one of those examples of something that could rapidly be brought to bear for cable or for other network operators once a real software platform is in place. We have done some exploration of ways to integrate Playjam directly into S-A boxes, for example. But I think it’s still early. There certainly is potential there—it’s a very successful games service we developed with a bunch of developers and graphic artists who keep up with fresh games, because people do get bored and may not stick around too long. There certainly is potential there, but it’s not something where deals are imminent. 30 Seconds With Jim Chiddix Proudest Accomplishment: Working with industry gurus to advance technologies, from HFC architecture to VOD and interactive television. Favorite Music: The blues. Favorite TV Show: NewsHour, but for entertainment, I love Scrubs. Hobby: Working (trail and log cabin construction) and biking in the woods. And trains. I’m particularly focused on the Oahu Railway, about which a friend and I are writing a book. Most Admired Industry Figure: Joe Collins, who led Time Warner Cable for many years.