Some are calling them the sofa surfers: mass-market consumers who want net access but do not want to buy a PC. They are the target of digital television operators who want to sell interactive services - shopping, banking, above all gambling - via the set top boxes that sit on top of their televisions.
But the trouble to date is that the boxes have not always met expectations. BSkyB's set top box (STB) has come with a sluggish 28k modem. Its internet access is limited to sites - vetted by Sky - written in WML, the language usually reserved for Wap phones. The cable operators offer fuller net access, but you can't send attachments, access newsgroups or download MP3 music files. For those used to surfing the web on a PC, sofa surfing has been an altogether more passive ride.
But the next generation of STBs (Sky's is due out in September and Nokia's next year) promises to change all that. Not only will they offer digital television and the internet, they will also come with powerful hard disks capable of recording hours of television or storing computer games. And what's more, the sofa surfers will be willing to cough up hundreds of pounds for them. Or so claim the manufacturers.
A recent report placed STBs in a quarter of UK homes at 5.3m, an increase of 1.7m this year. But take-up of the interactive services that run on the boxes has been slow. A further report by media consultancy Continental Research claimed that only one person in 10 has used an interactive TV service in the UK and only one third knew they could send emails via their STB.
But there has been good news too. The BBC reported 4.5m unique viewers (a third of all sofa surfers) tuned in to the BBC's two summer interactive sporting events - Wimbledon and The Open golf championship. Meanwhile, over at music channel MTV, a new series called Video Clash uses SMS messaging to allow viewers to vote for their favourite tracks. It has become its most popular show - and earns a pile of cash for the channel to boot.
To date, STBs have been basic machines with little or no memory. They have usually been given away free as part of a subscription deal. Companies such as Philips and Scientific Atlanta also manufacture STBs, but two models threaten to dominate the market for the next generation of boxes: Sky+ built by Pace Technologies of West Yorkshire and the Nokia Media Terminal. Both boxes will come with significantly more memory and consumers are expected to buy the box from high street retailers, rather than be given the devices by their television provider.
Pace Technologies operates out of Saltaire Mill near Shipley, West Yorkshire - an area that once powered Britain's industrial revolution. In the past decade, Pace has grown from a tiny company selling external modems for PCs to an international firm employing more than 1,300 people. The company has made fortunes for its two founders, local boys David Hood and Barry Rubery. Hood is reportedly the highest earner in the north of England, while Rubery has spent a large slice of his fortune as chairman of Huddersfield Town.
In May, Pace Micro Technology announced it was cutting 470 jobs at Shipley when it shifted production of STBs overseas. In June it announced profits before tax up 61% to £44.3m.
The Sky+ is the first of Pace's next generation boxes. It is also its first box to feature a TiVo-style hard disk recorder, or personal video recorder (PVR) to allow users to record up to 20 hours of television, pause live TV and "time shift" programmes - effectively create their own schedules. Sky+ will retail at £300.
"The key thing is that you have to roll out the services gradually," says Kuldip Johal of Pace. "Consumers can feel overwhelmed by technology. Sky has timed their PVR to come out after people have got used to digital TV and some basic interactive services."
But it is not just the internet and TV that Pace wants to offer through Sky+. Pace has also moved into the games market. Earlier this year it signed a deal with Sega that will allow sofa surfers to download Dreamcast games on to the Sky+ hard disk.
"With Sega announcing that it was not going to make hardware anymore, the logical step for it was to move into STBs," says Johal. "The whole concept behind the deal was that you have now got a device in the STB that is effectively a storage medium, so why restrict that storage to TV?"
Pace has something approaching a monopoly of the UK market. It supplies each of the UK's four main operators (BSkyB, ITV Digital, NTL and Telewest) and is better placed than most to extend its dominance into the next generation of boxes. But if a market for the new boxes does emerge, it is not going to have it all its own way.
Nokia has been building STBs, mostly satellite decoders, since 1976. This autumn it will launch the Media Terminal in Germany and Sweden (the UK will have it next spring). The new device includes a heady mix of digital TV, gaming, email, instant chat, and - via a 40GB internal hard drive - the ability to store MP3s, movie and picture files.
Interestingly, Nokia has opted for an "open platform" that will allow other companies and software programmers to integrate their software with the device. To Nokia, the Media Terminal is essentially a PC that supports digital television. For the IT community, the most exciting aspect of the Media Terminal is that it is based on Linux's open source computer code.
"We've moved away from being a manufacturer of low-powered, broadcast-based STBs with a little bit of memory and some internet capabilities," says David Harby of Nokia. "What we have got with the Media Terminal is something completely new. It's an internet platform built on Linux with broadcast TV on top. It also means that the sort of chips you usually associate with PCs going into a STB type device."
This is why Nokia says the device will cost between £500 and £600 - although the company claims the eventual price could be lower.
Initially, the Media Terminal will support ITV Digital - the 15-channel terrestrial package that requires no subscription. Eventually Nokia hopes it will attract enough partners - banks and retailers - who will sponsor the Terminal and reduce the retail price.
But the Media Terminal is not quite a PC by another name. Where it differs is that users will not be able to open up the box and start tailoring it to their needs. However, Nokia says it plans to offer retail partners who will upgrade the box for you. And the Media Terminal will allow consumers to upgrade their software and will support plug-ins such as Real Player Macromedia's Flash. "There are some key issues that we have to think about when we talk about the UK market," claims Harby. "The government wants to get analogue TV switched off as quickly as possible. And they also want to get the internet to everybody by 2005. "We see the Media Terminal as an ideal platform to achieve those goals."
It doesn't have to be a straight choice between TV and PC. Some of us will want both, some will end up with none. Simple things like checking football scores or the weather will be easier through the TV, rather than going through the rigmarole of booting the PC and going online. Serious surfing, word processing and spreadsheets will stick to the PC.
No one is arguing that the STB threatens to replace the personal computer because, after all, sofa surfers are consumers rather than producers. But its advocates are saying that the STB is capable of soaking up the majority of UK homes that remain without net access.
And finally, consider that the PC has just celebrated its 20th birthday. Since IBM launched the first model in 1981, it remains essentially the same peerless machine. Just how long can its absolute dominance last?
Opening the home gateway
As if the convergence of the internet, digital television and the games console was not enough, both Pace and Nokia are working on a generation of STBs that will further extend their reach.
The home gateway will wire the whole house via the STB. It will funnel bandwidth through the box and then distribute it wirelessly to extra television sets, PCs and handhelds, for example.
If the popularity of interactive services over the TV continues to grow, family squabbles over who controls the screen are bound to increase. The answer, says Pace, is several screens and it is even developing a special handheld device to help spread the load.
Nokia sees the Media Terminal morphing into a media server and will also distribute an internet connection through the house.
The home gateway is something the network operators want too. After all, what better way to increase their average income per household than to have people spending on different screens at the same time?
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