Digital TV: The Future of E-Commerce, Part II

As we have seen in Part I of this series, interactive television is now coming on like a freight train and could perhaps match or surpass the impact that PCs have had on the Internet. In fact, we have already received a taste of what is to come, as early systems have emerged worldwide and are achieving spectacular results.

Open in the UK

In This Report:TechnologyVisionCurrent StateConclusionsUK-based satellite television provider British Sky Broadcasting PLC (BSkyB) introduced a free interactive e-commerce system last fall called Open.

What makes Open intriguing is that it does not even use the Internet. The system works with the set-top box used to operate BSkyB’s SkyDigital TV network.

When a viewer wants to access interactive shopping, he or she presses a button on the remote for interactive services and gets a menu that lists such options as shopping, financial services, entertainment, information, e-mail, promotions and help.

Its main weakness, however, is that the system operates in single mode — causing the viewer to miss the television program when interactive services are being used. At this point, Open has no personal TV capabilities and does not operate in a pop-up window.

Product orders are transmitted on a private network operated by SkyDigital, not over the Internet. Hence, retailers are restricted to those provided by SkyDigital, instead of the wide range of vendors available on the Internet.

Shopping a Big Success

Despite limited initial offerings, Open claims that half of SkyDigital’s customers have signed up for the service — generating eight million visits from its launch in October through the holiday shopping season.

In all, it said that 127,767 orders were placed during this period and that 350,000 people registered for its free e-mail.

Satellite Firms Lead in the U.S. As Well

As in the UK, satellite firms in the U.S. seem to be leading the way to interactive digital TV. While EchoStar has taken the early lead, Hughes Electronics-ownedDirecTV is in hot pursuit. The company has signed a deal with personal TV provider TiVo, Inc. to develop a receiver that will combine digital TV recording, interactive TV and satellite television. The firms expect the receiver to be available later this year.

DirecTV plans to provide a free interactive TV service from Wink Communications, Inc. that will operate in a manner similar to how Open TV operates in the UK. In its deal with WebTV, EchoStar plans to charge $24.95 per month for a fully interactive experience, including Internet access.

Wink capability is now being added to DirecTV’s satellite receivers, which are manufactured by Sony and RCA. Hughes Electronics, furthermore, has purchased a four percent stake in Wink, and says that it plans to have Winkcapability installed in four million receivers by the end of 2001.

Wink will not use the Internet for its services. It will, however, add interactive services to advertisements and selected TV shows.

When a show or advertisement is Wink-enabled, a small icon will appear on the screen.The viewer can then press a button to interact with Wink, which will operate in a pop-up window while the television program continues.

Such interaction will include answering trivia questions, viewing statistics, requesting product information or coupons, and placing product orders. To order products, the viewer stores credit card and shipping information in a “digital wallet” that resides in the set-top box. Accessrequires a PIN number.

DirecTV Leads EchoStar in Subscribers

While DirecTV may be behind EchoStar in its move to interactive TV, it is well ahead in terms of satellite customers. DirecTV claims to have more than eight million customers, as opposed to EchoStar’s three million.

However, those figures pale in comparison to the more than 65 million homes with cable TV — and while the satellite firms may have a lead now in interactive TV, it is not clear how long that lead is going to last.

Cable TV: Last But Not Least

While satellite television may have the short-term lead in interactive television, the ability to deliver low cost, high speed access to the Internet seems to place cable TV in a better position for the long term. Cable systems are now being upgraded worldwide to provide such capability.

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