iTV-based retail (also known as 'tCommerce') was originally seen as the 'killer application' of interactive television but poor early results have caused widespread scepticism, according to a new Datamonitor report.
The report, iTV branding and retail: Business model and service development to 2006, argues that iTV
Datamonitor suggests that, for most product and service types, branding-focused strategies will be more appropriate than iTV-based retail, with the result that television will remain primarily a brand-building environment.
The main initial focus of digital TV operators (such as Sky Digital and NTL) on iTV based retail owed a great deal to the hype surrounding eCommerce. The early development of iTV in Europe coincided with the height of the dot-com boom. Such iTV services were seen as providing a familiar alternative to the internet, giving consumers more convenient access to interactive services and allowing companies to target those who did not have internet access.
However, the early iTV experience turned out to be disappointing for both consumers and retailers, with a lack of awareness and a low level of functionality that restricted both usage and revenues. Meanwhile, the associated costs made it almost impossible for companies to achieve any return on their investment. Many companies soon discontinued this investment, and the iTV development focus shifted to entertainment - particularly the enhancement of popular programming such as sports events, reality TV, and quiz shows.
Hindered by the economy
The more advanced European digital TV markets are now reaching the point where there is sufficient awareness and usage of interactive TV to enable the development of the next stage of iTV strategies. The increasing sophistication of enhanced programming enables the provision of a broad range of branding and retail services within editorial channels and retail channels, either on a stand-alone basis or linked to 'walled garden' services - completely transforming both their positioning and the users' experience.
But the financial difficulties and advertising recession facing many digital operators will hinder development, with groups being anxious to avoid the mistakes of the past few years, and focusing on achieving a reliable return on new investments.
As a result, Datamonitor expects a very gradual development, with certain operators leading the way. And over the next few years iTV branding and retail are set to become core components of operators' and broadcasters' portfolios of interactive services.
What lies ahead
According to the report, operators must now develop integrated interactive TV strategies, positioning iTV branding and retail within a broad portfolio of interactive and programming interests, and exploiting its associated synergies and links in order to drive general awareness and usage.
And, due to a high level of association with scheduled programming and its often emotive nature, travel and media items are expected to provide the greatest variety of iTV retail opportunities, and to dominate consumer iTV retail spend.