Carriers are cramping iDTV in the UK at a critical stage in its development, and a new Report from Forrester Research (Nasdaq: FORR) warns that carriers must begin working with retailers to encourage usage and boost revenues. Forrester also asserts that it will fall to marketers to drive industry standards and then let new intermediaries take the reins, driving the UK’s iDTV industry to £9 billion of new revenues in 2005.
“The cost of walled-garden participation is hampering efforts to generate user demand, plunging walled-garden retailers deep into the red,” commented Tim Grimsditch, analyst at Forrester’s UK Research Centre. “Combined, today’s carriers make less than £100 million in fixed costs from walled-garden fees. However, the weight of these costs on marketers threatens to destroy the embryonic industry by draining interactive TV marketing budgets. Without interactive broadcast ads, usage and purchases on walled gardens will remain low since there is little natural consumer demand for tCommerce services.”
Forrester advises carriers to work with their tenants to increase interactive advertising and walled-garden purchases. These new revenues will far outstrip cash from tenancy fees. In providing iDTV services, carriers perform three roles: customer attractor, portal landlord and technical infrastructure provider. As customer attractors, carriers must give walled-garden tenants favourable rates for iDTV advertising trials. As portal landlords, they must earn their payments by charging fees based on their results. And as infrastructure providers, carriers must also begin pressuring software providers to create less bandwidth-hungry interfaces and investigate new technologies to reduce repurposing costs.
“As market structures fall into place, full-service iDTV agencies will emerge, providing a single point of contact for their iDTV strategies,” Grimsditch adds. “Forward-looking agencies will provide a one-stop solution for marketers, handling advertising buys, walled-garden contracts and technical issues across all carriers — forcing prices down and cross-fertilising ideas between their clients.”
“Forrester predicts that iDTV will generate huge new revenues for broadcasters, carriers and advertisers, reaching £9.4 billion in 2005. These revenues will be dominated by cash from interactive programmes and ads,” Grimsditch concludes. “The 16 million households exposed to more than 400 enhanced broadcast ads per week will increase traditional TV advertising spends by more than 35%. Interactive ads will drive impulse and pre-considered purchases, while interactive programming’s long-form, information-rich formats will push consumers through complex purchases in half-hour slots. Everyday programmes will become retail juggernauts, blending entertaining, independent reviews with opportunities for quick purchases. After substantial consumer education and trust-building, more subtle offers will generate an annual average household purchase of £230 through interactive video by 2005.”
Forrester predicts that by 2005 more than 16 million UK homes will use their electronic programme guide (EPG) for around 15 minutes per day, exposing them to more than 10,000 impressions per year. As audiences fragment across a flood of new digital channels, EPGs will become the last stand of mass-media marketing.