In this special report, we present the results of the Playback/Blue Spark iTV Convergence Survey.

Like it or not, interactive television is fast becoming a reality, and, although no one knows exactly how, the television industry will be irreparably changed once it is widely in place.

The iTV revolution encompasses personal video recorders, which enable the viewer to digitally record programming onto a hard drive as well as manipulate live broadcast; video-on-demand, through which viewers can order programs from a substantial digital backlog; and, eventually, shows with which viewers can interact.

We wanted to hear our readers’ opinions on the state of interactivity as it relates to broadcast, and what you think lies ahead. The survey, assembled by Toronto-based interactive services company Blue Spark, was included in our Convergence special report Aug. 6, as well as posted on our website and distributed at the Convergence – iTV and Beyond conference in August in Toronto. The response was overwhelming, indicating that, although there might be no consensus on exactly what iTV will bring, everyone certainly has an opinion.

The make-up of respondents is as follows: TV producers and distributors – 29%; TV broadcasters – 14%; new media – 13%; film producers and distributors – 9%. The rest were representatives from the academic, financial, legal, government, advertising, hardware and software development and other sectors.

The issue over which the industry seems to be feeling the most anxiety is ‘What will be the most significant challenges to TV profitability over the next five years?’ The three most commonly mentioned responses all relate to advertising. Sixty percent expressed concern that with all the new content that will become available in the digital universe, too many TV stations will be vying for the same ad dollars. We are already getting a preview of that with the fall launch of more than 40 new digital networks.

The first ratings for the new diginets reveal low numbers. For example, in the Sept. 3-23 period, WTSN, the women’s sports network, drew an average primetime audience of only 600 viewers. Admittedly, world events have turned eyeballs towards news programming, but, by the same token, the new channels are currently free to the 2.2 million Canadians who have access to digital. What will the ratings be like once consumers will have to pay for these stations?

Ad time on the new diginets is reportedly being offered at bargain basement prices, and the future of these networks, as expressed by many pundits from the outset, is seriously in doubt.

Forty-nine percent of respondents mentioned the capability of PVRs skipping commercials as threatening to TV profitability. But companies will still have the need to promote their products (although 35% foresee a decline in ad budgets), so the traditional TV revenue model will have to change. Seventy-three percent believe product placement will grow in importance, which is not good news to the commercial production industry, but perhaps explains why some commercial prodcos are branching out into long form.

Sixty-one percent anticipate consumers having to watch some form of locked-in advertising in intros to VOD content. These two responses point to a method of promoting product awareness that harkens back to the pioneer days of TV – the sponsored program, as in ‘You Bet Your Life, brought to you by Elgin-American Compacts.’

A minority of poll participants, 29%, believes the Internet poses a threat to TV. When the Web went through its initial growth explosion, many of those in traditional media panicked that the future was online, and so invested heavily in Internet ventures and merged with or bought up Web companies galore. Now they are at a loss as to how to make money from these ventures.

The computer offers a different, ‘lean forward’ experience, and if anything, will continue to serve as a support system for traditional media. This is illustrated by the responses that the Internet is most important to broadcasters in offering additional programming not available on-air (average score 3.7/5) and serving as an archive of on-air content (avg. score 3.6/5).

The full poll results are available at www.playbackmag.com and www.bluespark.com.