By Theresa Wise and Andrew W. Sinclair
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Across the world, more people own televisions than personal computers
(PCs.) Ultimately the spread of digital television, with its sharper, wider
images and audio and data programming capabilities, will provide a platform for
two-way personalized communication in the center of most homes. This will make
television commerce a big opportunity for business and a critical extension of
eCommerce. Accenture research shows that over the next three years television
commerce will experience a seven-fold increase over current levels of activity.
These findings are part of an Accenture study "The
Unexpected eEurope,"
which draws on interviews with 840 executives in 25 countries. Among the
findings, the study reveals a high level of interest in the adoption of
television commerce to reduce costs and improve customer service.
Exploration of Television Commerce's Potential Under
Way
Only 4 percent of the study's participants report that
their organizations have started to explore television commerce; within the
next three years that number will grow to 28 percent. Television commerce is
mainly a consumer channel, as indicated by the finding that 33 percent of
organizations operating in business-to-consumer markets report that they take
advantage of television commerce over the next three years. This is more than
double the rate among organizations operating primarily in business-to-business
markets.
  Some industry sectors show more
enthusiasm for television commerce than others. The financial services sector
leads, with 34 percent of organizations planning to go ahead with television
commerce projects within the next three years—not surprising given that many of
them serve the mass consumer market. Some leading banks have already
established interactive television services, and the Accenture research
suggests that many others will shortly follow their lead (see figure 1).
European countries are well placed to exploit television commerce,
especially France and the United Kingdom, which has a higher penetration of
digital television than any other country in the world. But surprisingly, 52
percent of survey respondents expect the United States to be the world leader
in television commerce in three years' time, while only 19 percent named an
Asian or European country. Time will tell whether these expectations are just a
reflection of the United States' past dominance of television or a good
prediction of television commerce's real potential.
Innovative Services Via a Familiar Medium
For consumers, digital television provides more channels, better
picture and sound quality, and the opportunity to access new interactive
services. For businesses, television commerce offers the chance to exploit a
trusted and widely available medium. It puts eCommerce at the center of every
home, providing a new means of reaching untapped segments of the market and
grabbing a greater share of consumer attention. Although revenues from
television commerce are currently low, its characteristics will make it
especially valuable to businesses that serve consumers.
Businesses will use television commerce to build closer
relationships with their customers while cutting costs. Some banks are already
using interactive television to let customers check account balances, transfer
funds and pay bills without having to visit a branch. According to research
firm Celent Communications, the number Europeans using interactive television
banking services should reach 10 million by 2004.
Revenue generating opportunities are also emerging, especially in games,
betting, shopping and advertising. For example, ABN Amro estimates that by 2005
10 percent of betting revenues in the United Kingdom could come via the
television. By linking interactive betting opportunities to live broadcasts,
the UK partnership of British Sky Broadcasting and Ladbrokes, the bookmakers,
hopes to exploit this opportunity to its full potential.
Digital television is also being used to deliver innovative services. In
the United Kingdom, the National Health Service has formed a partnership with
Telewest which would allow customers to put health queries to a nurse by
telephone and simultaneously see the nurse on their television. By providing a
low-cost means of accessing every household, television commerce can transform
the way governments deliver services.
A Variety of Development Challenges
Unlike
wireless and voice commerce, success in television commerce requires more than
simply building a new electronic channel. The structure of the industry means
that companies often need to develop partnerships with broadcasters. And
relative to other media, the technology for television commerce can be
expensive. In addition, businesses are often concerned that a new sales channel
might simply divert sales from their existing channels, thereby adding to the
cost of operations without increasing total revenues.
Entrants to the market may have to challenge consumers' attitudes.
Historically, watching television has been a passive recreation, and it is
unclear if viewers can be converted into active participants. Additionally,
there are security concerns that must be overcome. However, early evidence
suggests that consumers have a strong interest in television commerce. In
addition, as more businesses become involved, implementation costs should
gradually decline. For many companies, the question should not be whether to
get into television commerce but when to do so.
Impact on Take-Up: Government Services, Regulatory
Environment
The amount of traditional eCommerce activity
already going on in a country—as well as that country's culture—is likely to
play an important part in the development of television commerce. But decisive
government action is also crucial. By making their services accessible through
interactive television, governments can not only reduce the cost of delivering
their own services, they can also encourage the faster development of the
broader market of interactive television products.
In addition, the regulatory environment will have an impact on the
take-up of television commerce. Although some European governments are
committed to turning off their countries' analog television signals by as early
as 2006, many others are not. Moreover, considerations related to
infrastructure, such as the amount of competition in the telecommunications
industry, will determine how quickly and at what price alternative television
platforms become available to consumers.
Accenture's research suggests that while currently television commerce is
still in an exploratory stage, adoption will significantly pick up over the
next three years. To ensure their long-term competitiveness, companies must
assess the scale of the opportunities available from television commerce, and
decide on the best moment to move into this new territory. Although early
movers will face risks, those that deliver services to meet market demands are
likely to be well rewarded.
______________________________________ This
Outlook Point of View is based on Accenture's
"The Unexpected eEurope" study. The study draws on 840 interviews carried out during
2001 with board-level executives from 25 countries. Sixty interviews were
conducted in each of the following countries: India, Japan and the United
States. Thirty interviews were conducted in each of the following countries:
Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, the Netherlands, Norway, Poland, Portugal,
Russia, Slovakia, South Africa, Spain, Sweden, Switzerland and the United
Kingdom.
Theresa Wise, partner—Accenture Strategy &
Business Architecture, Communications & High Tech, is based in London.
Andrew W. Sinclair, senior manager—Accenture
Strategy & Business Architecture, Communications & High Tech, is based
in Sydney.
For more information, please contact us.
The views and opinions expressed in this article
are meant to stimulate thought and discussion. As each business has unique
requirements and objectives, these ideas should not be viewed as professional
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