Interactive TV Shopping On The Upswing - Report
By Ian Stokell, Newsbytes
NEW YORK, NEW YORK, U.S.A.,
14 Jun 2001, 2:42 PM CST
According to a new digital TV report from Jupiter Media Metrix [NASDAQ:JMXI], interactive television (iTV) shopping will account for 44 percent of total US TV-based shopping by 2005.
However, advertising on iTV will comprise only 7 percent of US TV advertising in the same year, the company predicts.
David Card, Jupiter senior analyst, says that though research shows that there's money to be made in the iTV space, carriers, programmers, advertisers and merchants are struggling with models to justify iTV deployment.
The report, called "iTV Revenues: Positioning for Incremental and Diversified Revenue Streams," estimates that iTV shopping revenues will total $4.3 billion by 2005, with the bulk of buying taking place on iTV shopping programs where viewers use a remote control instead of a phone to buy showcased items.
However, while Jupiter predicts iTV advertising to be a $4.5 billion business, it will be fragmented across networks, carriers and third-party response networks.
Card believes the new business that iTV brings will divide evenly between shopping and advertisements. However, advertising won't account for more revenues than shopping until 2005, due in part to current US economic conditions, Internet advertising's seeming ineffectiveness and the lack of a common national iTV technology platform, he says.
The report identifies three streams of iTV shopping revenue: iTV shopping programs, iTV malls, and integrated iTV shopping.
ITV shopping programs are predicted to account for $3.4 billion, with viewers using a remote control instead of a phone to buy items showcased on infomercials or shopping channels.
ITV malls, which are predicted to account for $0.7 billion, will allow viewers to tune in to a Web-like catalog or store that carriers and their merchant partners provide within their own areas.
Integrated iTV shopping, meanwhile, will account for $0.3 billion and have viewers interacting with offers embedded in commercials or programs, and "timed to take advantage of impulse buying."
Interestingly, while Jupiter forecasts that $5.5 billion in revenues from shopping channels and infomercials will cumulatively shift from the phone to iTV, iTV shopping faces the same barriers as Internet shopping, such as shoppers' inability to touch a product, their lack of instant gratification, and additional shipping costs.
Shipping and handling (S&H) costs could prove to be a problem, just as they are for the Internet shopping industry.
Just a few days ago a report from Jupiter Media Metrix said that 63 percent of consumers say they don't complete online purchases because they distrust S&H charges, despite 45 percent of online merchants' claims they are losing money on such costs.
That survey also found that 73 percent of consumers evaluate the total price of products, including S&H, before making an online purchase. Jupiter said then that companies profiting on S&H run the risk of increasing distrust among consumers.
ITV contrasts with the Internet, says Jupiter, in that the Net has a stable set of technologies and platforms, whereas iTV will be fragmented by geography and technology for the next 18 to 24 months.
However, Jupiter adds that this very fragmentation presents a "unique opportunity" for third-party advertising networks "because they will be the only ones able to service national iTV campaigns."
One niche in the iTV market is online gambling. Another report out today from Datamonitor, says that big money is riding on online and iTV gambling. Datamonitor predicts that combined revenues from online and iTV gaming in the US and Europe will grow from $6.7 billion this year to $20.8 billion in 2005.
Aside from online gaming, the company also says that iTV gambling is well out of the gate and could reach a potentially massive market as the technology spreads and bettors realize how easy it is to make a wager. The market will be further induced as enhanced TV technologies enable companies to overlay gambling functions on live events, such as sports.
And there has already been the beginnings of serious corporate movement in the iTV industry with mergers, acquisitions and partnerships designed to position companies for potentially lucrative years ahead.
Just last week Microsoft continued its movement into the global iTV business when the software giant's Microsoft TV division launched its iTV services in Portugal. Later this year Microsoft TV plans to have two more international ventures up and running in Mexico and Israel.
Reported by Newsbytes.com, newsbytes.com
14:42 CST
(20010614/WIRES ONLINE, PC, TELECOM, BUSINESS/) |
