June 14, 2001, 12:00 AM

Interactive TV shopping projected $4.3 billion in 2005

Similar to web shopping, interactive TV buying lets consumers purchase by remote control. I-TV marketers will face the touch-and-feel issues that web retailers face.

Jupiter Media Metrix, Internet and new technology analysis and measurement company, projects that interactive TV will account for 44% of all TV-based shopping by 2005. Revenue from interactive TV will reach $4.3 billion by 2005, with the bulk of buying taking place on iTV shopping programs where viewers use a remote control instead of a phone to buy showcased items. It will represent only a fraction of the estimated $200 billion in Internet shopping by that time.

"Even though our research shows that there`s money to be made in the iTV space, carriers, programmers, advertisers and merchants are struggling with models to justify iTV deployment," said David Card, Jupiter senior analyst. "Outside of video-on-demand, the new business that iTV brings will divide evenly between shopping and advertisements. However, advertising won`t account for more revenues than shopping until 2005, due in part to current US economic conditions, Internet advertising`s seeming ineffectiveness and the lack of a common national iTV technology platform."

Interactive TV buying will take three forms, Jupiter predicts:
* ITV Shopping Programs ($3.4 billion) - Viewers use a remote control instead of a phone to buy items showcased on infomercials or shopping channels such as QVC or USA Networks` Home Shopping Network.
* ITV Malls ($700 million) - Viewers tune in to a web-like catalog or store that carriers and their merchant partners provide within their own areas.
* Integrated iTV Shopping ($300 million dollars) - Viewers interact with offers embedded in commercials or programs, timed to take advantage of impulse buying.

Additional key findings and forward looking analysis from the latest Jupiter digital television research, titled "iTV Revenues: Positioning for Incremental and Diversified Revenue Streams," include:
* According to Jupiter analysts, channel shift will drive iTV shopping. Over the next five years, Jupiter forecasts that $5.5 billion in revenues from shopping channels and infomercials will cumulatively shift from the phone to iTV.

* ITV shopping faces the same barriers as Internet shopping, such as the ability to touch a product, lack of instant gratification and additional shipping costs. Although iTV shopping may exploit impulse buying because of factors such as persistent connection and video merchandising, Jupiter analysts forecast that iTV spending per household will be significantly less than the amount that an average online shopping household spends.


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