eTV - E-Commerce
Business Models
While traditional broadcast and Internet models still have some relevance, the new technologies coupled with current economic conditions require updated business models.
Four models can be applied to interactive television (CRTC 2002):
- Advertising
- Pay-per-use
- Subscription
- T-commerce.
Advertising – Interactive advertising is promising. There are many possibilities of alternate and contextual ad placement in interactive programming. Banner-type ads can be placed in EPGs. Clicking on the ad could draw the viewer to the sponsor’s Internet site or to a “walled garden.” (A series of web pages contextually related to the jumping off point. They let viewers explore additional information and purchase products and services.)
Wink uses an on-screen icon, which signals the viewers that additional information is available. Clicking on the appropriate button on the viewer’s remote provides additional on-screen information on the product. If there is Internet connectivity the user could visit a dedicated advertising location (DAL) to make purchases or explore an accompanying walled garden.
Pay per use (PPU) - Video on demand and pay-per-view movies and events are well-established examples of the pay per use model.
The video rental business provides a ripe market for potential PPU customers. As consumers become comfortable with purchasing movies and games through STBs, satellite and cable distributors are likely to see PPU revenues soar. This could result in a decline in the video rental business from $11 billion in 2000 to $5.9 billion in 2010 (Advanced-Television.com 2002).
Pay per play – PC gamers have been participating in network battles for years, recently joined by X-Box and Playstation users. Similar to VOD and PPV, pay per play lets users buy whenever the impulse strikes.
Sky Active’s customers can access pay per play games with their remotes and participate in betting and sports games, and play versions of Space Invaders and Who Wants to Be a Millionaire. Two Way TV, an iTV developer has even announced an adult play-per-play application called “Sex Games.”
Subscription – Users of broadband, cable, satellite and any other distribution service pay periodic subscription fees. One advantage of the subscription model is that distributors are not directly dependent upon advertising revenue.
T-commerce – Refers to purchasing goods or making financial transactions through iTV services.
Middleware companies are tracking user buying and viewing habits so they can sell demographic data information to advertisers and national programmers.
“By accumulating this data, local operators would have a new revenue source providing more specific and immediate information on consumer television habits and activity than has ever been available.” – C.J. Fredickson, Director ATVEF 1999.
Internet Models - Internet TV should lead to greater efficiencies in five areas (Waterman 2002):
- Reduced delivery costs and capacity constraints
- More efficient interactivity
- More efficient advertising and sponsorship
- More efficient direct pricing and bundling
- Lower costs of copying and sharing.
While his study focused solely on Internet propagated television, points 2, 3 & 4 should resonate with eTV proponents, especially considering that the Internet is quickly becoming an established provider of television content.
Like the Internet, eTV can cater to niche markets, providing advertisers with extremely focused sponsorship opportunities.
Would a marine supply company rather purchase advertising on a cable network seen by millions or a boating web casting site seen by thousands?
Just as cable and satellite distributors can provide bundles of program packages, the Internet offers equally, if not more customizable options.
Introduction - Applications - Models - Impact - E-Commerce - Conclusion - Reference