Future of iTV depends on retailer investment

Retailers looking to take advantage of interactive TV as a sales channel need to widen product ranges, focus on programme...

Retailers looking to take advantage of interactive TV as a sales channel need to widen product ranges, focus on programme integration and work with digital TV providers to drive awareness, Forrester Research has said.

The analyst firm said the UK iTV retail, or "t-commerce", market showed disappointing results in 2001, with only £105m spent across the platforms - just 2.6% of the £4bn spent via the Web last year.

Although 32% of the UK's adult population has access to iTV, just 12% of those - 4% of the adult population - have used it to buy products, Forrester said.

Low consumer awareness of iTV capabilities, lack of product choice and a retail experience well below the quality of the Web have all contributed to viewer apathy, according to Rebecca Ulph, an analyst at Forrester.

"Many retailers offered small product ranges, failing to inspire casual browsers," she said.

"Forrester estimates that iTV retailers realised just £9m in net profits in 2001 - no wonder 30% said that they were unlikely to renew their contracts and that Woolworths and Argos bailed out," Ulph added.

However, Forrester predicts that as viewer awareness increases and improved marketing efforts begin to take effect, 2003 will see a revitalisation in the t-commerce market.

"By the end of 2003, long standing iTV retailers will share almost £100m in net income," Ulph said.

The route to future profits
To take advantage of these potential profits, iTV retailers must:
  • Drive awareness by ensuring every TV advertisement they place has an interactive element, pushing viewers out of ad breaks into a retail environment
  • Achieve successful retail and programme integration by developing shared risk and reward business models and incorporate video streams into the retail journey - especially for impulse purchases
  • Make wider ranges available for consumers in search of rare finds

  • Balance bandwidth constraints with a wide product range and guided choice navigation.

Source: Forrester Research

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