ITV pulls plug on interactive gaming deal with Sportech

ITV's interactive betting and gaming contract with the specialist provider Sportech has been terminated amid acrimony, leaving the broadcaster without gaming services.

The deal with Sportech, was due to run for another three years but it was announced yesterday that it had been ended, with immediate effect, "by mutual consent".

Sportech has been taking heavy losses on the contract, and it is understood that the company blamed lack of promotion of the service by ITV for very low use of the interactive services. ITV, however, said yesterday Sportech's services, which used the Littlewoods brand, were simply not attractive enough.

A spokeswoman for ITV said: "Littlewoods' Gaming products did not capture the imagination of our mass-market audiences. We will be looking for another provider."

The Sportech services, under a contract signed in 2002, provided a betting facility for viewers to place a wager on the outcome of competitive hit shows such as I'm a Celebrity, Get Me Out of Here! and X Factor. It also provided sports betting for ITV viewers and a number of interactive games where prizes could be won. The gaming was available on-screen if viewers pressed the red button on their remote controls.

Ian Penrose, who took over as Sportech's chief executive in October last year, said that the ITV contract would have landed his company with a loss of up to £30m over the next three years, in payments to the broadcaster and operating losses. So far the deal has lost Sportech £12m. The company's closed down 10 per cent at 11.75p.

The deal carried minimum guaranteed payments that had to be made by Sportech to ITV each year and these were due to rise heftily. Sportech will take a £14m charge to cover termination of the ITV contract.

Mr Penrose said: "Given the size of investment [made by Sportech] and the minimum guaranteed payments made to ITV, it is most surprising that so few viewers were aware of the services available behind the red button and that showed in the revenues." He declined to put figures on the revenues seen for the service. However, analysts suggested that, after paying winnings, the gaming on ITV was providing revenues of less than £5,000 a week. Sportech's services available on the BSkyB satellite platform and the attheraces horse racing channel are understood to be far greater.

"Some £5,000 a week for our biggest commercial channels [ITV] is peanuts. Most people were just not aware of what, if anything, can be accessed by pressing the red button when watching ITV," one source said.

The ITV spokeswoman insisted the broadcaster was growing interactive revenues, which stood at £31m in 2004. Among the interactivity still available on ITV are dating services, a Coronation Street video streaming facility and information on Champions League football.

She said ITV was aiming for annual interactive revenues of £500m by 2010. The broadcaster will not be able to offer betting services until it finds a partner to replace Sportech.