Interactive TV games are not doing as well in the Antipodes as one originator, Australia's Two Way Limited, had hoped. But recently-launched betting services through the TV have met the company’s targets.
Reporting its full year results, Two Way said: “Revenues from the company’s games channels on Foxtel, Austar and Sky New Zealand were below expectations, particularly in the second half of FY08.”

To address the issue, Two Way said it had launched a number of promotional inititatives, including the launch of branded trivia games with big-name partners the Australian Football League (AFL), National Rugby League (NRL) and music channel Max.

The games will also be extended from pay-TV to online, with soft launch of a revamped games portal which Two Way hopes will “add value to our broadcasting partners and sponsors”.

But games will come second to the company’s number one focus – the gambling service, Sky Racing Active. The first two months of the gambling offer saw turnover and revenue from the service meet the company’s internal targets (although these have not been specified). Marketing of the service so far has been limited with an insubstantial calendar of events over winter. A greater focus will come with the start of Spring Racing, traditionally one of the busiest periods in Australia horse racing.

Still a problem, however, is that only the state of Victoria allows viewers to make bets through the TV. While Foxtel and Optus TV subscribers in both New South Wales and Victoria can access detailed race and wagering information through their TVs, only bookmaker Tabcorp’s Victorian account holders can access their accounts and place bets.

Two Way CEO Ben Reichel said: “The initial performance of the Sky Racing Active service is encouraging. While it is early days, we are very pleased with the positive feedback on the service, and the smooth operation of our technology. The service is quickly becoming established as a valuable and popular new service for Tabcorp’s wagering customers and viewers of the Sky Racing channel.”

But the importance of the TV wagering platform to Two Way’s future business is a big risk for the company. Should the remaining six states and territories hold out against allowing betting through the TV, it could be hard for Two Way to reach break even.

According to chairman Stuart McGregor: ““The most important initiative during the year was the building and launching of the Company’s TV wagering service. The successful launch of the service required our team to overcome numerous commercial, technical, regulatory and political challenges.

“The Company is now focused on the successful growth of our TV wagering service, and its expansion around Australia. In due course, we will look to deploy our technology overseas.

“The new financial year will be a defining one for the Company. We continue to work with our partners to secure the launch of the Sky Racing Active service in other States.”

With most of its eggs in the betting basket, the company needs at least one other state to change its mind on TV betting.

During its 2008 financial year (to end-June), Two Way slashed operating costs to A$4.636 million from A$7.304 million the previoous year, meaning its operating loss improved from negative A$5.186 million to negative A$3.361 million. Revenues fell from A$2.118 milion to A$1.275 million as the company closed down or handed over to third parties unprofitable Asian activities.

As well as the TV wagering business, Two Way also operates the Way2Bet online and mobile information portal for punters. The company said Way2Bet performed strongly in the second half of the year and was “generating good sales growth and momentum. While total revenue over FY08 was modest, this service has much lower upfront and ongoing costs than the Company’s previous activities in Asia.”

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