Digital TV: The Future of E-Commerce
By Stephen Caswell
E-Commerce Times
March 20, 2000
For the average consumer, the phrase "Digital TV" conjures up images of
crystal clear pictures and ear-popping sound. In actuality, however, the
new technology promises more than just enhancements to the audio-visual
experience -- it will allow a greater and more diverse population around the
world to participate in the Internet Age.
Digital TV will do far more than show television in a digital format. The term actually describes
a series of interrelated technologies that will allow television to become interactive, so that
viewers can play along with game shows, get information from the Internet as they watch a
show, or buy a vast array of products and services online.
The implications are enormous. E-commerce companies will finally be able to reach consumers
who are unable or unwilling to buy a personal computer. E-commerce will also turn the TV into
an instant procurement machine.
Interactive television will not require the purchase of new systems. Existing TVs will simply
require set-top boxes that will receive the digital signals from broadcasters or from the
Internet and translate them to analog signals. (The new "digital" televisions that are now
available play High Definition Television (HDTV) shows that must be broadcast by all major TV
stations in compliance with FCC requirements.)
In the following special report, the E-Commerce Times explores the digital TV phenomenon
and takes a close look at what e-businesses and consumers alike can expect as this dynamic
market force matures and explodes into the mainstream.
A Tale of Three Ways
Digital television can be subdivided into three closely related models of operation. The first
method, called "single mode," allows the viewer to switch between the television program and
the interactive application. When the viewer finishes the interactive activity, he or she
returns to regular viewing.
Single mode is now being used by such systems as WebTV, WorldGate, and Open in the
United Kingdom.
The major drawback of single mode is that viewers cannot view the television program while
shopping or interacting with information or services. Consequently, developers have been
working toward more technically advanced modes of operation to enrich the interactive
experience.
Simultaneous Mode
In the second model, known as "simultaneous mode," the viewer pops the interactive
application into a picture-in-picture (PIP) window on the television screen and is able to
interact while continuing to watch the program. For example, a viewer would be able to
answer questions along with the contestants on a quiz show.
Simultaneous mode can also be used to view information, such as Super Bowl statistics, while
watching the actual event, and to make simple purchases.
So far, Scientific-Atlanta, Inc. and General Instrument Corp. have developed the most
advanced digital set-top boxes for this method. Scientific-Atlanta offers a particularly
effective demonstration on its Web site of how it expects interactive digital TV to operate,
although it requires Web access at 128K bps or higher for proper viewing.
Pause Mode
The third model, or "pause mode," records television programs to a hard disk, thereby allowing
viewers to pause the program in order to use the full screen to take advantage of the
interactive service. When the interaction is over, viewers can continue the program at the
point where it was paused.
Pause mode capability is already available in such stand-alone products as TiVo and
ReplayTV. In essence, these systems enable viewers to create their own mini-television
stations by customizing their own programming according to tastes and preferences.
However, while pause mode is critical to e-commerce on interactive digital TV, it does come
with a cost. Many analysts believe that allowing viewers to skip over commercials will destroy
the economic structure of the television industry.
Personal TV Added to Interactive TV Products
While this type of personal TV system is now available as a stand-alone product, the same
capabilities are also being added to interactive TV products. For example, satellite television
company EchoStar and wholly-owned Microsoft subsidiary WebTV Networks, Inc. have
partnered to develop systems that provide a fully-interactive TV experience -- including
satellite television, Web browsing via WebTV, personal TV-based digital recording and game
playing.
The DISHplayer 300 and 500 systems are available for $399 (US$), plus installation. Above
those costs, consumers pay per use for the various services. Satellite television packages
begin at $19.99 per month, while there is an additional charge of $9.99 per month to add
personal TV capabilities.
For full Web access, personal and interactive TV services, and video games, the price is
$24.95 per month on top of the satellite television viewing package.
More Than Web Access and TV
WebTV is working with multiple advertisers and broadcasters to provide interactive services in
which viewers can answer trivia questions, play along with select game shows, and jump
seamlessly to Web sites to buy products and services.
The combined service, however, has one weakness: Web interaction takes place over a
dial-up local telephone line at 56K bps. Microsoft is attempting to address this issue by
evaluating high-speed technologies, but has not announced plans to upgrade.
In the meantime, the overall interactive TV service may lose its instantaneous nature as the
users wait for about a minute while the WebTV system dials in to a local line, establishes a
connection, and then loads its Web site at 56K bps.
Coming Like a Freight Train
So, what can we expect from here? Gerard Kunkel, senior vice president of WorldGate
Communications, Inc. believes that the world of interactive TV will soon be "coming on like a
freight train."
"Interactive television is now in the early stages of deployment by every cable and satellite
TV company in the world," Kunkel told the E-Commerce Times. "It is no longer a question of if,
but when."
Open in the UK
UK-based satellite television provider British Sky Broadcasting PLC (BSkyB) introduced a free
interactive e-commerce system last fall called Open.
What makes Open intriguing is that it does not even use the Internet. The system works with
the set-top box used to operate BSkyB's SkyDigital TV network.
When a viewer wants to access interactive shopping, he or she presses a button on the
remote for interactive services and gets a menu that lists such options as shopping, financial
services, entertainment, information, e-mail, promotions and help.
Its main weakness, however, is that the system operates in single mode -- causing the
viewer to miss the television program when interactive services are being used. At this point,
Open has no personal TV capabilities and does not operate in a pop-up window.
Product orders are transmitted on a private network operated by SkyDigital, not over the
Internet. Hence, retailers are restricted to those provided by SkyDigital, instead of the wide
range of vendors available on the Internet.
Shopping a Big Success
Despite limited initial offerings, Open claims that half of SkyDigital's customers have signed up
for the service -- generating eight million visits from its launch in October through the holiday
shopping season.
In all, it said that 127,767 orders were placed during this period and that 350,000 people
registered for its free e-mail.
Satellite Firms Lead in the U.S. As Well
As in the UK, satellite firms in the U.S. seem to be leading the way to interactive digital TV.
While EchoStar has taken the early lead, Hughes Electronics-owned DirecTV is in hot pursuit.
The company has signed a deal with personal TV provider TiVo, Inc. to develop a receiver
that will combine digital TV recording, interactive TV and satellite television. The firms expect
the receiver to be available later this year.
DirecTV plans to provide a free interactive TV service from Wink Communications, Inc. that
will operate in a manner similar to how Open TV operates in the UK. In its deal with WebTV,
EchoStar plans to charge $24.95 per month for a fully interactive experience, including
Internet access.
Wink capability is now being added to DirecTV's satellite receivers, which are manufactured
by Sony and RCA. Hughes Electronics, furthermore, has purchased a four percent stake in
Wink, and says that it plans to have Wink capability installed in four million receivers by the
end of 2001.
Wink will not use the Internet for its services. It will, however, add interactive services to
advertisements and selected TV shows.
When a show or advertisement is Wink-enabled, a small icon will appear on the screen. The
viewer can then press a button to interact with Wink, which will operate in a pop-up window
while the television program continues.
Such interaction will include answering trivia questions, viewing statistics, requesting product
information or coupons, and placing product orders. To order products, the viewer stores
credit card and shipping information in a "digital wallet" that resides in the set-top box.
Access requires a PIN number.
DirecTV Leads EchoStar in Subscribers
While DirecTV may be behind EchoStar in its move to interactive TV, it is well ahead in terms
of satellite customers. DirecTV claims to have more than eight million customers, as opposed
to EchoStar's three million.
However, those figures pale in comparison to the more than 65 million homes with cable TV --
and while the satellite firms may have a lead now in interactive TV, it is not clear how long
that lead is going to last.
Cable TV: Last But Not Least
While satellite television may have the short-term lead in interactive television, the ability to
deliver low cost, high speed access to the Internet seems to place cable TV in a better
position for the long term. Cable systems are now being upgraded worldwide to provide such
capability. |
