Can't you feel the interactive about to happen?

Every year just as the international Consumer Electronics Show is winding down, there's at least one pronouncement that this will be the year interactive TV finally takes off. Amid all the noise around 3D TV this year, though, the decree has gone missing.

So let this be your warning. This year will indeed be the year interactive TV finally takes off — or at least gets its first showing to more than subscribers of a handful of video operators.

For service providers it's been a long road that started more than a decade ago when the former GTE breathlessly launched its fiber-to-the-home/curb trial in Cerritos, Calif., with the “interactive” experience of ordering a pizza from the TV. What makes 2010 the year interactive TV finally arrives without the extra cheese is a coalescing of multiple factors. All point to the service finally getting out of the experimental phase and into a mass-market service:

• Social networking: The rapid adoption of social networking in all its various forms over the last 18 months has changed the way consumers communicate. Already ingrained in both the PC and mobile experience, social networking via the TV is a natural extension. More importantly, consumers have already gotten a taste of how social networking can be blended with entertainment activities — think Amazon's recommendation engine — so the leap to TV isn't as big as one might presume.
• Consumer electronics get in the game: Nothing gets service providers moving like a whiff of competition that really matters. Connected TVs and retail set-top boxes are multiplying like rabbits. The former is priced at too much of a premium, and the latter is still missing some key elements. However, eventually a consumer electronics (CE) vendor will get it right — perhaps teaming up with a Yahoo! Widgets environment — and suddenly interactive TV will be on the menu of every service provider.
• Cable/IPTV battle goes to four alarms: The most important factor pushing the adoption of interactive TV will be the increased competition between cable and IPTV/telco TV providers. Providers on both sides are faced with diminishing returns from adding more channels — and does any consumer actually choose one package over another because it has 700 channels vs. 600 from the competitor? Increasingly, the battle is migrating to one focused on unique and sticky applications, which points directly to interactivity. We're already seeing the beginnings of this with Verizon's FiOS TV Widget Bazaar, AT&T's U-Bar applications and the slow trickle of Tru2Way devices supported by cable operators.

With all signs pointing to 2010 being the year interactive TV comes out of its shell, perhaps the biggest potential barriers now are macroeconomic. Assuming the CE community is able to bring the cost of connected TVs down, will consumers rush to purchase them? Will consumers continue cutting back on premium video packages from service providers, putting a dent in the potential user base of interactive applications?