Interactive TV to encourage impulse buying

As interactive TV takes off, it will act as a viable alternative to PC Internet rather than a replacement, whose immediate impact will be felt in retailing.

Digital TV is gaining momentum in the UK. About 2.5 million households have access to it and this figure is expected to rise to 13 million by 2004.

Digital TV is allowing the creation of interactive services that will revolutionise the way consumers use their sets. But interactive TV services will complement, rather than replace, the PC Internet.

UK consumers use TVs and PCs for different purposes. The TV has traditionally been an entertainment medium and the PC a tool, and consumers will continue to use both. In fact, technically-savvy Net users are keen to take digital TV to augment their PC use.

So how will interactive TV fare?

The benefits of interactive TV as an ad medium have been much-hyped. It should enable high-impact ads that allow consumers to express an interest and even go on to buy products. Strong brand-building could be combined with immediate results and accountability.

But we have yet to see the new offerings. Platform providers and broadcasters are still deciding what interactive TV ads will look like and how they will work. The process is complicated because a number of different parties will have to work together to produce interactive ads, with roles changing from the analogue world. Without consensus and co-operation, the new industry will take time to get going.

Interactive TV will have a more immediate impact on retailing. The familiar, safe TV environment will help to overcome some of the security fears the Net still suffers from.

There are important differences between shopping using interactive TV and the PC Net. Interactive TV retailing will in the main be offered through “walled gardens” – closed interactive environments which do not provide the opportunity for users to explore other retailing services beyond that dedicated platform. This non-Web-based environment will encourage impulse buying rather than carefully researched purchases. Comparison shopping will not translate easily into TV retailing.

A lack of competition will also discourage TV retailers from advertising heavily and offering big discounts. It is important retailers retain consumer confidence by providing ordering systems that do not crash and, as with all online retailing, reliability.

Shobhit Kakkar is a business analyst at Fletcher Research (www.fletch.co.uk) and author of its report Interactive TV: Models for Growth

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