Thinking inside the Box

Digital TV has been slow to get off the ground, but it does offer some interesting e-commerce opportunities for companies wanting...

Digital TV has been slow to get off the ground, but it does offer some interesting e-commerce opportunities for companies wanting to sell online, says Danny Bradbury

What is digital TV?

Digital television is meant to be the next big revolution in the broadcasting industry. Designed to replace conventional analogue television, it uses a different method of transmitting the television signal to your home. Whereas conventional television transmits data in an analogue format, digital TV transmits images and sound as binary data - a stream of zeros and ones.

What are the advantages?

There are three main benefits associated with digital television. Because companies make more efficient use of the bandwidth, they can pack more channels into the signal. This means that digital television opens up the opportunity for more specialist channels and programmes, which will appeal to marketing and advertising executives who will benefit from a more targeted audience.

One of the biggest immediate benefits to the consumer is the increase in picture and sound quality. Because digital television is not as vulnerable to the interference normally associated with analogue transmissions, and the transmitted data is more accurate, everything will appear crisper and sharper, in just the same way that a CD offers better sound quality than a cassette tape.

But the benefit from a marketing and e-commerce perspective is the potential for offering interactive TV services. The digital nature of the transmission signal, together with the processing power inside the set-top box, enables companies to offer games, electronic forms to fill out, and potentially the ability to purchase items via the television.

Who's doing it?

There are three technologies over which digital television can be offered: cable, satellite and terrestrial broadcast. On the cable side, Cable and Wireless is offering a digital service with interactive capabilities. On the satellite side, Sky Digital offers a basic increased picture quality and more channels, along with access to Open, the interactive television service provided by backers including BSkyB, BT and HSBC Bank. Things are less well-developed on the terrestrial side, with major player On Digital offering a digital TV service with limited interaction via a phone link-up.

What standards exist?

One of the main standards for digital television is Digital Video Broadcasting (DVB), a standard kicked off by the formation of the development group backing it in 1993. The group has been promoting the completed standards since 1997. The standards family covers satellite, cable and terrestrial broadcast along with others such as a service information system for navigating through the DVB environment. DVB is based on the MPEG2 multimedia compression standard.

How is the Internet involved?

There has been some tension between two different approaches to interactive television. One school believes that Internet access via your television can only be a good thing, increasing the attraction of the digital service by offering more choice to the consumer. Cable and Wireless offers TV Internet access as part of its own service, for example. The other group believes that Internet access may frighten some consumers who have heard about such scary Web phenomena such as online pornography, viruses and rip-off merchants.

The other, more commercial argument against the Internet, is that content providers don't want to detract from the value of their own content by giving consumers the chance to surf into other areas. As Stuart Nolan, partner in professional Internet services company Oyster Partners, puts it: "If I had the second advertisement in an ad break, and the first advertisement included a link to the Internet, I would not be happy." The second approach, often called the "walled garden" has been adopted by companies such as Open.

What are the e-commerce opportunities?

The opportunities for companies moving into the e-commerce field are vast. The interactive nature of many such services potentially enables advertisers to grab the attention of the audience more effectively, offering them interactive games that will heighten their awareness of the product, for example. You can envision in the future the ability to display 3D models of packaging, for example, but in the near term, it enables advertisers to offer much more information than they would normally do in a 30 second TV slot. Watching the commercial and then clicking on a small icon could take you to a page of text and graphics describing the product in further detail. Payment mechanisms could be provided by having the cost of a product added to your television bill, but failing that, it may be possible to use smartcards with electronic cash on them that plug into a slot in the set top box.

Mondex, a company offering electronic cash on smartcards, has teamed up with FutureTV, a maker of digital TV sets, to include a Mondex smartcard slot within the devices. Online purchasing is still in the early stages, but some companies have showed signs of success. Woolworths claims to have taken 5,000 orders per week for its toys and entertainment products in the run-up to Christmas last year, after offering an online purchase option over the Open service.

What is the take-up like?

The take-up of digital television is still very slow, and one of the primary reasons for this must be the competing players, which have bought confusion to the end-user community. Interactive TV services have suffered from a lack of end-user education, says Nolan, meaning that when asked whether they would like interactive TV, many aren't even sure what it is.

Nevertheless, it looks like digital TV will take off over time, because the analogue television channels will eventually be phased out, meaning that people will have to use the new devices. But this won't happen for the next 15 years or so.

What skills are available?

Nolan says that there is still a distinct lack of skills in the digital television market. People who understand how to program content and interfaces for a television-based medium are still relatively thin on the ground, and because one of the major development environments - that used by Open - is proprietary, it makes things very difficult for companies who want to provide content for this particular medium. You have to learn to use the company's Service Creation Environment (SCE), a development environment combining hardware and software that includes the company's own development tool called OpenAuthor.

Unfortunately, it is a catch-22 situation, because until digital television becomes more ubiquitous, few people will want to invest the time learning to program software for it. This will contribute to the slow take-up of the technology.

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