The TV Portal
Digital television takes off in the U.K.
It’s no longer true that the revolution will not be televised – the revolution is television. In the United Kingdom, it’s beginning to look as if more consumers will access e-commerce and e-services through their TV sets than via a PC.
After a shaky start, set-top boxes are experiencing a dramatic rate of adoption and are turning the very limited television set (remember, there are only five TV channels in the U.K. available free of charge) into an unlimited dig there are only five TV channels in the United Kingdom available free of charge) into an unlimited digital interactive portal.
It looks as if Brits prefer to let their thumbs do the work via a remote control, rather than their forefingers via a keyboard. “In the U.K. there is a lower penetration of PCs in the home and a much higher penetration of cable and satellite than in the U.S.,” explains Chris Townsend, director of interactive services at Telewest.
Digital TV also has a much lower entry cost for consumers. Set-top boxes are being given away free of charge. There is usually a one-time connection charge of around 50 British pounds, depending on the service, and consumers have to subscribe to a second telephone line in order to use the interactive elements. Apart from phone charges, the only cost is the monthly subscription fee.
“They are being heavily marketed, led by BSkyB, ONDigital and the cable companies as well as the retailers, who are keen to get the products through their doors,” says Townsend. “Combined with consumer demand, there will probably be up to 5 million digital homes by the end of 2000.”
At the moment, the toughest choice facing consumers is which digital platform to choose. Three main contenders are fighting for share – terrestrial, satellite and cable – with different content, services and advantages. The existing TV antenna can be converted to receive ONDigital, which provides an expanded number of channels but currently no interactive facilities. Its major advantage is in reaching every household in the country with a TV set, but so far only 552,000 have gone digital.
Leading satellite broadcaster BSkyB has around 6 million subscribers. Of these, 1.8 million had signed up with Sky Digital. This provides free access to the only interactive service currently available nationwide, called Open…., which has led the way in developing the type of interactive content being offered and the way it’s accessed.
Cable broadcasters may drive access to e-commerce even faster. Cable and Wireless Communications (CWC) is available to 4 million homes in the North West, East Midlands and South Coast of England, where it now has 850,000 subscribers. Of these, 100,000 have taken up its digital TV package, with 63,000 of them actively using the interactive services.
According to Martin Graham-Smith, head of broadcast public relations for CWC, “Our main difference with Sky Digital is capacity. We run at 2 megabits per second compared with 155 kilobits.” He believes this will make cable interactive services more attractive to its rivals, and also to the Net.
CWC was the first cable network to launch an interactive digital package, which gives subscribers 14 TV channels, free e-mail and a “walled garden” (so-called because you cannot access the Internet from it) of 33 interactive service providers for 9.99 pounds per month. Significantly, this price also includes telephone line rental, which Sky Digital subscribers have to pay for on top of the service fee.
The content and service providers cover eight categories, from major retailers, like leading grocery chain Tesco; to travel providers, such as British Airways and Lastminute.com; to other service providers, such as breakdown recovery organization RAC, and classified ad publishers Loot and Autotrader.
Graham-Smith says the ability to interact is proving to be a major draw. “It’s very much a driver for new subscribers – 50% of the take-up is from new customers.” As the service is made available across its network through the year, TV and radio advertising, combined with direct mail, are being used to promote the service.
Telewest will begin offering interactive services this month. It currently passes 4.5 million homes, of which 1.5 million are subscribers. “We are driving to achieve 500,000 digital TV homes by the end of the year,” says Townsend, “rising to 2 million by December 2003.”
The firm is offering a package that provides 18 TV channels, interactive services and telephone line rental for 15 pounds per month. Initially 45 content and service providers will be available, covering retail, travel, information, education and entertainment. This will rise to 100 by the end of the year, with a target of 500 over the next three years. The actual number of sites accessible could be even higher, with a single publisher providing up to five sites within its area on the service, for example.
For many of the homes signing up, this will not only be their first exposure to the digital world, it may be a whole new experience. “It’s important to distinguish between the look and feel of TV and PC content. As part of our agreement with content providers, they have to create a televisual experience, not a Web experience,” says Townsend. Strict guidelines are in place covering visual content, typefaces and even colors that can be used.
Ensuring that interactive digital TV is not much harder to navigate than the standard TV service is critical to its success and adoption. The breakthrough decision by Open…. was to ensure just four colored buttons would provide full on-screen navigation. All of the other providers have followed suit. Interestingly, it was Townsend who pushed hard for this when he was putting together the Open…. proposition when previously employed by Sky Digital.
All the indicators are that interactive digital TV is what U.K. consumers have been waiting for. In its pre-Christmas sales period, Open…. saw online sales peaking at over 1 million pounds per week. Cell phone retailer Carphone Warehouse sold more product online than through one of its flagship stores in London’s prime retail location. Critically, interactive digital TV sales have already surpassed Web sales for one travel company, while e-tailer Toyzone says it accounted for 40% of pre-Christmas sales.
At this rate, it seems likely that e-commerce will happen through the TV set rather than the PC for most U.K. consumers. For DMers this represents exciting possibilities, not the least of which is the ability to track and capture data. In the first stage of digital services, content providers will be able to identify consumers as they click onto their sites, even before asking them to register, since their ID is stored in the set-top box. Later this year, all platforms will allow credit card details to be stored on the broadcaster’s server, eliminating the need for them to be transmitted with each order.
Interactive digital TV also opens up new dimensions for distance sellers. Home shopping channel QVC has already introduced services on CWC and expectsto be on Sky Digital shortly.Richard Burrell, QVC’s director of digital media, says the technology transforms the traditional DRTV experience. “As a TV channel, we run 24 hours a day, with themed shows offering eight or 10 products,” he says. “That’s great for impulse buys, but if you wanted to make a considered purchase from us, it would be frustrating. If your coffeemaker broke in the morning and you wanted to buy one, but we were featuring fashion items, you couldn’t buy from us.”
The solution has been to launch QVC Directory as an interactive digital service. Subscribers can browse 300 products, watching video clips and downloading detailed product information. “It works and feels like a TV brand, but with the selection of products and different departments you find on our Web site,” says Burrell.
On its current cable offering, “Customers have to have bought from us once in order to get on,” says Burrell. This is because registration is via an eight-digit account number and four-digit PIN issued to shoppers the first time they buy. If cable subscribers are new, they can ring the call center to register or access the Web site via PC. “We could pick it up via set-top boxes now, but we don’t think people are ready for it,” he says. “That will be one of the advantages. As a technologist, that’s exciting. But customers don’t care about technology, they care about the products they’re seeing. You can’t blind them by science.”
Aside from the ability to deliver a rich, TV-like experience with all the depth of a Web site, interactive digital TV also looks likely to create a new data gold mine. At the moment, files of online activity are generally held separately from databases of mail order buyers and cable subscribers, for example. With digital, all of these are merged. Not only will DMers know what their audience is buying and what information they’re looking for, they’ll know when and what they buy.
And that really is revolutionary.
