Turning couch potatoes into online consumers has proved more difficult than expected. Despite the rapid uptake of digital television in the UK since 1999, market leader Sky and its cable industry rivals admit that sales from interactive retail ventures have been disappointing. Now, amid signs that significant numbers of content providers are preparing to vote with their feet, Sky has revamped its technology to integrate e-commerce more closely with its broadcast output.
Something had to be done. In a report published in August, business intelligence company Forrester Research warned that around 30% of retailers with a presence on interactive digital television (idTV) were considering pulling out when their contracts came up for renewal. According to Forrester, retailers had invested £150m in idTV ventures against sales of just £50m. As if to emphasise the point, Argos and Woolworths announced last month they were withdrawing from all idTV operations.
Sky Interactive's commercial director, Tobin Ireland, ought to be showing signs of being under siege, but he remains confident the broadcaster is on course to get its e-commerce formula right.
Central to Sky's strategy is the introduction of a browser-based interface powered by a variation on the WML markup language used to create content for Wap phones. This may not seem an enormous leap but the new browsers offer a picture-on-picture facility that is enabling the broadcaster to wrap interactive menus and applications round the conventional broadcast pictures.
The menus not only provide access to added-value content, such as programme-related quizzes, but also offer links to a shopping, banking and information area that was once isolated on a standalone channel. Viewers can now browse through online stores while watching TV.
"We are bringing all our content in behind the interactive button. That means we can drive traffic from the channels," says Ireland. And this has opened the door to the kind of contextual retail targeting that has long been a feature of the web.
For instance, the interactive menus that relate to Sky's movie channels carry prominent links to a ticket sales service launched this month by Odeon Cinemas. The sports clothing retailer Kitbag.com has taken it further. When viewers link to Kitbag from a Sky Sports channel menu, they are offered products specific to the sports event on screen.
Kitbag managing director Chris Gibson says he can tailor microsites to individual events, and update offers in real time. "If Michael Owen scores a goal, we can immediately offer an Owen shirt." This is possible because Kitbag has built its microsites using WML, rather than the OpenTV programming language.
WML's open standards enable the company to connect its Sky sites directly to an in-house content management system.
Domino's Pizza is also committed to moving to the WML format. Its sponsorship of the Simpsons has made it a pioneer in linking online sales to a presence on the broadcast stream. Sales and marketing director Chris Moore says there is "Simpsons rush" before and after the programme and he expects picture-on-picture to provide a further boost. "Most people don't want to interrupt their viewing to make a purchase."
Ireland says that retailers who want to be successful on idTV must think of it as a strategic tool rather than a cut-down version of the internet. "People will buy if you put the right thing in front of them at the right time."
This ties in with a wider strategy of offering other contextual content such as programme information and Sky Play, a football game in which play is linked to real-time on- screen action. But where does that leave retailers not catering for a niche audience? Ireland argues that WML also addresses the quality of the interactive experience. Sky's shopping area attracts about 10% of the user base per month, but conversion rates have been relatively low: Forrester puts it at 2%. Ireland argues by migrating from OpenTV technology to WML retailers will offer a faster, more user friendly experience.
Sky is ahead of the pack but not alone in putting more emphasis on links between the broadcast stream and interactivity. Cable companies Telewest and NTL are committed to rolling out picture-on-picture interfaces this year. Jeremy Davies, head of content at NTL predicts an evolution of the walled garden model, with retail content becoming more accessible.
By creating contextual links, platform operators hope that the success of betting and game play will be repeated in the retail sector. But with set-up costs remaining high - particularly on Sky - content partners will want to see evidence that a real return is possible.
