We test the hypotheses using a household panel data set
from a large European interactive TV (iTV) provider. The
iTV technology enables customers to interact with their
television, for example, by browsing an electronic program
guide or watching VOD. Furthermore, iTV offers enhanced
image quality over regular television. To use the iTV service,
customers need a broadband digital subscriber line Internet
connection from the same company and a set-top box that
decodes the digital signal. The focal company is the only
provider of digital television through a digital subscriber
line; at the end of the observation period, it had a market
share of 31% in the digital television market. Its main competitor,
which offers digital television through cable,