This is the write-up / introduction towards my market survey for my final MBA project – AN IPTV Solutions Provider Biz Plan. (I received my degree in March 2008).Produced as is:
INTERACTIVE TELEVISION AND HOME SHOPPING
The introduction of Internet Protocol Television (IPTV) provides a huge opportunity to bring
e-commerce to the drawing room of television viewers around the world. T-commerce can now be
brought to the masses.
T-commerce or commerce via the television has always been around in the form of
commercials that advertised products and services on the idiot box. Providing information about
products and their availability has been the prime purpose of advertisements and television
commercials, at the outset, were extensions of the newsprint media. Of course, television evolved
to use the medium to sell dreams, making the most of a newer, more effective channel. The efficacy
of television in influencing viewers can be gauged by impact of televised US presidential debates
that make or break presidential hopefuls. Television shopping channels such as QVC and
Shop@Home are examples of successful attempts to sell products that are either innovative, have a
niche market or are not freely available. The key categories in these channels are health & beauty
care products and innovative kitchen, household & hygiene products.
IPTV and the entry of telecom companies into the broadcasting industry using high-speed
broadband networks is an evolution , caused by the convergence of technologies namely networks,
computers, telecom and broadcasting. A natural corollary would be the provision of similar services
by mobile network companies for realising the benefits and uses of 3G networks.
The current IPTV offerings include interactive games, video-on-demand (VOD), sports-casting
and the ubiquitous broadband connection. Other features include cable telephony and VOIP.
The Internet & E-commerce
Ever since the explosion of internet technologies beginning from the year 1995 and the
internet boom and bust of the late 90’s to early 2000’s, the use of the internet as a channel to sell &
buy goods & services has grown exponentially. The late introduction of the internet as an enabling
technology in emerging markets has not hampered growth; rather it has enabled the building of
newer infrastructure that has fueled the embrace of an empowering medium.
The next phase of the internet boom also more widely know as Web 2.0 has enabled the
building of huge online communities; so far, very few companies have managed to leverage this
huge base except perhaps as a marketing expansion displacing the traditional word-of-mouth or to
collect customer feedback (with limited success) but no enterprise wants to be left behind. The use
of Web 2.0 technologies by firms is not visible externally but the use of PODcasts , secure
messaging and other technologies within the company intranets points to their preparedness.
Online retailing in the US, capitalised on the US consumers’ inclination to save time shopping
for gifts during the holiday season by offering great deals and has then since built on this usage to
now become the source of over 50% of clothing sales in the US.
Services such as banking, brokerage and insurance are freely available online with lower
transaction costs to consumers.
Interactive Shopping: Possible Approaches
If the power of online retailing could be harnessed and brought to the television, what would
the new paradigm look like? Interactivity is key; else it would be old wine in a fresh decanter!
How different would this be from the disconnected banner ads that keep popping up at the
bottom of screens on most television channels? The next link in the chain is connectivity; I , as a
viewer, should find a connection with what I’m watching and the banner ad streaming into my
consciousness. And can you find a way to do that without annoying me? The next link is user
friendliness, empowering the viewer to either turn on or off or even push the offending ad into a
neutral part of the screen’s real estate.
Video On Demand (VOD) has piggy-backed on digital media formats namely the MPEG2 format
for motion pictures that offers comparable audio & video quality. MPEG4 , the later standard, allows
the amalgamation of multiple media formats & streams that include audio, video, html and tagged
meta-data. The ability to insert tags and content into all television media and to explore aspect
oriented features while viewing played digital content would be one way to drive interactive sales,
with topicality being critical for impulse purchases. A logical extension or a related driver with
topicality or linked sales keys would be DVD sales; what if you could have deals offered solely to
DVD buyers and the ability to purchase them hooked into your IPTV?
This model of interactivity envisages investment into content creation and editing tools, and
more importantly interactivity with frames within the digital content; automation would relieve some
of the tediousness of numerous content tagging; intelligent image recognition technology and at
speeds so that the appearance of smoothness is not lost.
The other option is to control the synchronization from outside i.e. Via tag triggered display
of ads with allowance for user control to forward or back to his interest ; the ability to mark
products as they appear to be part of his wish-list and/or shopping cart thus providing a local
retailing software solution on the set-top box that is channel independent. The ad triggering would
use a Google-like system of tag word recognition, user ranking and preferential treatment premiums
for increased display priority. This system might reduce specificity but would increase flexibility in
tailoring content and displayed ads to different regions and demographics.
Dis-intermediation & Implications of Choices Made
The first approach of inserting tags, content and data into the digital content lends itself to
selling associated products, movie memorabilia, special promotions bypassing the medium through
which content is provided. Selling is direct and related but offers can be time-constrained and very
specific. Margins would be higher due to dis-intermediation and selling would be more suited to
limited items and larger volumes. This is a sort of cross-selling and selling sponsor’s products,
besides games, clothing and perhaps, pre-bookings of DVDs and/or books.
The exception would be the shopping channels; their televised format is more easily
malleable and allows a wider variety of goods to choose from.
The second approach lends itself to intermediation, both via the telecom/cable operators and
the online retailers whose products are now pushed to the telly. Why would online retailers accept
dis-intermediation? Are there any similar models that could be cited as drivers? Amazon.com and it’s
relationships with other online retailers such as Office Depot, Target & WeightWatchers , practicing
a form of intermediation. How the revenue is to be split; could either be transaction based with a
%age cut or a flat fee such as a carriage fee.