Interactive television company OpenTV has announced reduced losses and is continuing to focus on containing costs, but chairman James Chiddix remains optimistic about the prospects for interactive television.

“We continue to see strong growth in our middleware business, driven largely by accelerated digital rollouts that we have seen from network operators around the world,” said OpenTV chairman and chief executive officer, James Chiddix.

“While we continue to assess and evaluate opportunities in the applications market, the global footprint that we have built on our middleware, including our deal this last quarter with UnitedGlobalCom, Europe’s largest cable operator, continues to enhance the underlying platform upon which we expect to build our business as interactivity takes off.”

In the three months to the end of September, OpenTV reported a loss from operations of $6.1m, down from $12m for the same period the previous year. Total revenues for the quarter were $16.5m, down slightly from $17m for the same quarter in the previous year, although an additional $1.6m of delayed revenue is expected to be recognised in the final quarter. Royalties made up $9.2m, up from $6.7m for the equivalent period.

Speaking in a conference call, the chairman indicated that he expected interactive services to become more significant in North America as a result of activity by satellite operators DIRECTV and EchoStar increasing competition with cable operators.

He suggested that the cable market has been slow to embrace interactivity, saying “US cable operators have been focussed on other digital services, primarily to increase channel capacity, offer video on demand as an added-value service, and telephony, to pursue a bundled strategy, and cable operators have had a perception that there‚Äôs not a large revenue upside in interactivity. The example of some overseas operators and competitive pressures are going to change that.”

Citing the example of other News Corporation satellite operations around the world, notably BSkyB, Sky Italia, Sky New Zealand and Foxtel in Australia, he said these demonstrated that “interactivity adds value to digital television”.

However, other than the previously announced five year contract with UGC in Europe, Mr Chiddix was unable to offer analysts any news of immediate deals, although the former cable industry veteran said “Domestic cable customers are the largest single market that we have not penetrated in a big way and given my own background it’s certainly a focus. We are having discussions with virtually every significant cable operator in North America and I’m very optimistic about the prospects for our business with them.”

OpenTV also hopes to deploy its SpotOn addressable advertising system with operators such as Comcast. The system allows selected commercials to be targeted at individual households.

The company aims to roll out its PVR 2.0 application in the second quarter of 2005, with additional launches currently being negotiated. The software, previously demonstrated at IBC, is the first personal video recorder solution that also records interactive applications as well as television programmes.

OpenTV is also moving to address the market for broadband or telco television, extending its middleware to run on IPTV or internet protocol set-top boxes in order to allow them to run the same library of applications currently deployed on satellite and cable.