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Sunday nights once found North American families crowded around the television watching the Ed Sullivan Show. Family activities were even planned to accommodate the TV. But not any more. What does a typical household look like on Sunday night now? Sis is on her computer downloading her favourite show. Mom is in her home office watching a specialty cooking show (without commercials, thanks to her digital video recorder), and Dad is in the basement watching a football game.

TV is experiencing a profound transformation driven by the changing viewer and new technologies. Today, busy consumers are looking for ‘on-demand' media content. They want to customize their TV viewing schedules, and with all the channels available, they have more power and choice than ever. In short, they want to interact with and be more engaged in programming.

Such trends are having a major impact on the broadcast industry. TV, once thought to be the best way to reach consumers with advertising messages, has undergone a shift due to changes in how people watch. The result is “lost eyeballs” for TV advertisers. As viewers stream online video and use their DVRs to tape shows, traditional TV advertisers have begun to decrease their budgets for conventional commercial spots; it's been estimated that TV ad revenue will decline by $18-billion (U.S.) by 2009.

This doesn't mean TV is facing extinction. Nielsen Media Research estimates that the average viewer watches more than four hours of TV a day. The current challenge is how networks capture and engage viewers, and how advertisers target consumers. What market drivers are creating so much change in TV viewing today?

Niche programmingViewers spread their viewing time among hundreds of channels, resulting in fewer “eyeballs” per channel. In 1950, a top-10 TV show averaged a rating of 44.8, but in 2005 it scored only 13.4.

DVR adoption

Two years ago, one in 13 American households had a DVR, now it's one in five, and in 2010 it could be one in two.

Streaming online video

With websites like YouTube, consumers have access to more “on demand” content. As with DVRs, viewers of online video can skip commercials and access the content they want.

Media multitasking

Viewers are increasingly comfortable with simultaneous media usage, which can be anything from surfing the Web while watching TV to “texting” and listening to music. And, as viewing has become an interactive, multimedia experience, people can compress the time they spend on media use.

Real-time, interactive technology represents an evolution of the TV industry, and will become even more prominent as broadcasters seek new ways to engage audiences and recoup the losses resulting from viewer erosion. Two-screen solutions allow for information about a TV show to be accessed through the Internet via a mobile phone, laptop or desktop PC. How? The content of the computer is synced with live TV programming, so users interact with shows they're watching. Viewing becomes an interactive, multimedia platform. Our company is using this technology right now for live telecasts involving football, baseball, NASCAR, and reality TV.

Take football. Viewers play along on their computers during NFL games. While the game is on, they make predictions in real-time about what the next series of events will be: a touchdown, a run, a pass. And they keep score of how they're doing and compare their score to competitors. But the viewer doesn't pay because it's made possible through a corporate sponsor, in this case, an auto maker.

Real-time interactive TV offers benefits for networks, advertisers, and viewers. You eliminate ad skipping because viewers watch shows in real time to participate. You enhance the viewing experience, gain loyalty from fickle TV audiences, and meet viewers' desire for media multitasking, which Generation X'ers are certainly doing.

We surveyed viewers of a reality TV show who participated in an interactive experience when tuning in. They made real-time predictions, answered trivia questions, and responded to instant-recall challenges during each episode. We found that only 26 per cent of those who played along channel surfed during commercials, compared with 67 per cent of non-players (i.e. traditional TV viewers). And 94 per cent of those who played along watched the entire show, versus 77 per cent of non-players.

The key is the corporate sponsor. Advertisers will pay for a chance to reach those elusive viewers who skip TV commercials using their DVRs and spread their attention across many channels. But advertisers have flexibility. With real-time interactive technology, they can choose the type of ad or sponsorship that will be most effective for their particular brand or product.

Real-time interactive technology is the next logical progression in TV. Who knows? Maybe one day, they'll bring back the Ed Sullivan Show. This time you'll play along on your computer and guess how many times Elvis swiveled his hips during Hound Dog. If you're right, the sponsor might offer a trip to Nashville. Anything is possible.

Robert Riopelle is Co-Founder and Vice-President of Business Development for LiveHive Systems, a Waterloo, Ont.-based software development company that specializes in interactive entertainment technology for TV broadcasters, fantasy sports sites, and Web portals.