10/01/12

The road to t-commerce

An Olympian effort illustrates the potential for turning TV into an online shopping portal, but nobody’s yet grabbed the wheel.

Thad Rueter , Senior Editor

As millions of U.S. consumers watched athletes compete this summer in the London Olympics, eBay Inc. was trying to cash in and advance the cause of so-called "t-commerce." That's the marketing shorthand for the concept that consumers watching programming on web-enabled TVs and mobile devices will buy via the web products related to the shows they're watching.

In this case, the online marketplace updated its Watch with eBay feature—which launched as an extension to the marketplace's iPad app in November—for the Games. Consumers could sync the app on the tablet in their lap to the events they were watching on TV and buy from eBay's network of sellers the same types of shoes worn by sprinters, posters featuring Olympic athletes and other products associated with the event.

More than a month after the closing ceremonies, eBay wouldn't say how many products were sold via the Olympic edition of the app or how many shoppers used it, but its Olympian effort represents one of the more notable moves yet in turning the TV into a shopping portal. But while retailers and analysts see great promise, they point out that the number of companies jostling for position—including cable and satellite providers, technology firms and retailers—suggests progress may be slow.

If cable and satellite companies get on board—and they must since those companies today provide the TV signals to most U.S. homes—Internet giants such as eBay, Google Inc. and Amazon.com Inc. could fuel the push into TV commerce. But don't count out the pioneers of this field. Jewelry Television, a retailer that has TV in its blood, operates a TV shopping network, e-commerce site and mobile apps and says it doesn't plan to sit around while other web merchants get cozier with television.

T-commerce's opportunity

There's little doubt that combining TV viewing with online shopping has potential. After all, U.S. consumers watch, on average, 35 hours of TV per week, according to market research firm The Nielsen Co. And at least 60% of U.S. households use the Internet at least once a month while watching TV. From the standpoint of consumer behavior, it's not much of a step from watching an episode of "Big Bang Theory" to clicking on the remote to buy the T-shirt worn by the lead character Sheldon.

More consumers have the potential to do that every day because so many homes now have TVs connected to the Internet. Some 14 million web-enabled TVs will ship in the United States and Canada next year, up from 8 million in 2012, says Paul Gagnon, director of North American TV research at DisplaySearch; within three years, that number will increase to 25 million, meaning that up to 29% of TVs being shipped will be web-enabled.

Forrester Research Inc., meanwhile, predicts that 66.8 million U.S. households, roughly 58% of 114.2 million total U.S. households, will own at least one web-connected TV by 2016, up from more than 39 million, about 34% of households in 2011.

Tablets—another avenue to t-commerce, as shown by eBay—also are finding their way into consumers' hands. By the end of 2013, 47% of online consumers are expected to own a tablet computer, according to a survey conducted by the Online Publishers Association. And 85% of tablet owners currently use the devices while watching TV, according to Forrester Research. It is difficult to say, though, exactly how much t-commerce purchasing potential exists in the United States. "T-commerce is tiny right now, and so little is happening compared with what it will be," says Forrester analyst James McQuivey.

Different paths

Generally, t-commerce execution today take one of two paths: the approach of eBay using its app to sync with TV content and sell directly to consumers, and the type conducted via technology providers such as Shazam Entertainment Ltd. and Delivery Agent Inc., which act as bridges between the parties involved, such as the TV networks, cable providers, retailers and consumers.

With Watch with eBay, a consumer enters her ZIP code and television service provider within the app, then taps the Watch with eBay button and tells the app what program she is watching. EBay then uses keywords associated with both a show and eBay listings to produce product matches. Consumers can sort those results and bid or buy.

PayPal, the eBay-owned payment services firm, is also figuring out how it can participate in t-commerce. It recently signed deals with cable provider Comcast Corp. and set-top box maker TiVo Inc. that will enable consumers to make purchases or donations related to content they see during programs using their remote controls. It is unclear when the services will be available. PayPal said it was buoyed by its own survey that showed 49% of TV subscribers want to buy goods and services associated with shows they watch on television.

"For example, a consumer sees a commercial with a TiVo interactive tag indicating the ability to 'buy now' using PayPal," says Scott Dunlap, PayPal's vice president of emerging opportunities. "The consumer can pause the live or recorded show, complete the transaction using PayPal, and return to watch the program without missing anything, all with a few clicks of their TiVo remote."

Delivery Agent—which has raised more than $100 million in funding rounds—works with more than 40 TV channels and cable providers and sells a tool called TV Wallet. Consumers can register credit and debit cards and PayPal information with the service, and then sign in by entering their phone numbers and PINs to shop with their remote controls. Consumers' payment cards are charged for their purchases.

The company showed off its capabilities this summer by enabling buying for fans of "Picked Off," a reality series about antique hunting that debuted in July on History, a channel owned by A&E Television Networks. Some 4 million consumers who subscribe to Internet, TV and phone service through Verizon FiOS could use their remote controls to purchase replicas of collectables shown on the program.

"Consumers press the FiOS TV button on their remotes when prompted by an interactive overlay that History runs periodically on the upper right corner of the screen," a spokesman for the company explains. "With the touch of a button on a remote, the screen will split in two, with items for purchase on the right."

Delivery Agent did not say how many consumers bought during the show, nor did it provide specific details about the revenue split with Verizon and History except to say that all parties received cuts of the transactions. For such t-commerce, Delivery Agent powers the e-retail operations of the participating networks, says CEO Mike Fitzsimmons, but he says the company will announce direct partnerships with major retailers in early 2013.

Another t-commerce enabler is Shazam, a web-based service available via an app on tablets and smartphones that, when activated, identifies music tracks by name and artist. Its Shazam for TV tool, which works for more than 160 channels in the United States, can similarly identify the programming being watched and offer up related information. A July integration with an episode of Worldwide Wrestling Entertainment's "Raw," for example, let TV viewers accessing the app buy tickets to upcoming WWE events, WWE apparel and the wrestlers' theme songs. Shazam declined to reveal details on how many viewers purchased.

Old school

But not everything in t-commerce is so new. Jewelry Television, or JTV, is a home shopping network and e-retailer that was established in 1993. The retailer sees t-commerce as a further development of its business, says chief strategy officer Tim Engle.

He imagines JTV connecting its products to awards shows that sparkle with the bling worn by actresses and to dramas featuring fashionable characters; he envisions JTV would enable shoppers to buy via remote controls on web-enabled TVs. As a first step JTV now feeds its live programming to Roku, an online streaming video service provider that lets consumers stream web content to their TVs without going through a cable or satellite TV provider.

But JTV finds it difficult to put too much faith in a single video or TV platform because no single service works easily across all TVs and related devices to facilitate t-commerce, Engle says, echoing a point made by analysts. "Until that happens, it is difficult to commit resources in a way that can support all the various platforms," he says.

Where's Amazon?

There are at least two companies with the deep pockets and brand recognition that could potentially create a unified TV/web selling service—Google and Apple Inc. But both have stumbled in trying to extend their reach to the TV set.

Google TV—which operates via a small box located between a cable or satellite receiver and a consumer's TV—launched in 2010 and is designed to facilitate web use via televisions. Experts say it has failed to gain much traction. Google also has started to offer broadband Internet, TV and DVR services in the Kansas City area—Google says its Nexus 7 tablet can act as the remote control—but the t-commerce implications are not immediately clear beyond giving consumers access to digital content.

Google did not respond to requests for comment. Neither did Apple, which in March launched the third generation of its Apple TV digital media receiver. It provides access to iTunes, Netflix and other services on TVs. But Apple TV does not facilitate much e-commerce beyond computers, music players and digital content—nor does Apple offer access to an endless shelf of other retail products that online consumers want, analysts note.

And so eyes turn to Amazon.com, which has that inventory, and which has been moving deeper into streamed TV show and movies with Amazon Instant Video, the app for which comes pre-loaded on hundreds of late-model web-enabled TVs, Blu-rays, game consoles and digital video recorders. Amazon did not comment, either.

McQuivey says it's hard to imagine anyone but the biggest of e-commerce players thriving in t-commerce. "You've got to have incredible scale, so no matter what someone chooses to watch, you will have a product suitable for him," he says.

But for even the large operators, the road to t-commerce will include some big potholes, he says. That's because there will certainly be fights over how t-commerce revenue is split. "That will be the biggest challenge, and believe me, it will be ugly," McQuivey says. "Programmers' blood will boil when they think of others making money off their content."

For its part, eBay didn't have to make any specific deals with the notoriously controlling International Olympic Committee, nor NBC, for the sale of Olympic products via the app; eBay dealt only with individual sellers, Steve Yankovich, eBay's vice president of mobile, says. But as t-commerce becomes more complicated—perhaps by more deeply synching the content on the screen with products on a tablet—more deals will have to be made, he says.

Looking at t-commerce right now seems more like studying a map than gliding on some long, flat highway. But for consumers the TV and the web are already converging, which suggests online shopping via the TV remote can't be far down the road.

thad@verticalwebmedia.com

@ThadRueterIR

Topics:

Amazon, Apple, Apple TV, Delivery Agent, digital content, e-commerce and TV, eBay, Forrester, Google, Google TV, iPad, James Mcquivey, JTV, m-commerce, Mike Fitzsimmons, mobile commerce, October 2012 Magazine, Olympics, PayPal, Scott Dunlap, Shazam, steve yankovich, t-commerce, Tim Engle, TiVo, TV, web-enabled TV

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