Backchannelmedia

DMNews, June 13, 2000

Real-Time T-Commerce Battle Under Way

By William T. Foley

A recent announcement by interactive television service provider Wink, Alameda, CA, that it will provide home shopping channel ValueVision with real-time order processing by the third quarter seems to have a competitor in the realm, Commerce.TV, beaten to the punch.

Several interactive television companies have the capability to allow viewers to order products directly through their set-top boxes, but before Wink's announcement, Commerce.TV was touting itself as the only ITV service that could update product orders in real time for both the consumer and the merchant.

Wink also said it is in discussions with both QVC and the Home Shopping Network to provide similar services. Real-time order updates and processing are essential to home shopping networks like ValueVision because during their broadcasts they give a live count of products sold, and thus can offer only a limited amount of each product featured.

"This is the process of the future and will allow us to keep the same business process and constantly update product counts and orders," said Anthony Giombetti, ValueVision's director of communications.

Most of Commerce.TV's business-to-business marketing strategy has centered on its ability to provide consumers and companies with an immediate tracking number for products ordered through interactive television. The systems works much like an ITV catalog, with products being offered that have a connection to, though often not associated with, the programming.

"Commerce.TV is much like an online catalog on your TV - so they need to acquire product to make their engine work," said Michael Kokernak, president/CEO of backchannelmedia Inc., Boston. "Wink is trying to control the content - the data stream of the programming and the advertiser. But other companies that are out there that can do real-time transactions are going to soon compete with Commerce.TV and Wink. It's going to be a real serious competition in that their transaction fees - which both companies quote as being between $1.25 and $1.50 per transaction - are going to end up being pennies."

Wink's system has been in use in major markets, such as New York, through Time Warner, for more than a year. Currently, it is in more than 20 cable markets reaching 200,000 subscribers and expects to be in 3 million homes by the end of the year. The jump is attributed to launching on satellite provider DirecTV this summer on both new and pre-owned units and the WebTV platform.

Commerce.TV will debut on the eighth-largest cable provider, Insight Communications, in the third quarter. The company also recently signed a 10-year agreement with OpenTV to provide its real-time t-commerce system to OpenTV in North America.

"I doubt they will have it [real-time processing for ValueVision] ready [by the third quarter]," said Evan Saks, director of marketing at Commerce.TV, Dedham, MA. "Even if they can do it, people will only be able to answer 'yes' or 'no' to purchasing something."

In fact, Wink's system will be updated to include personalizing of orders when the cable operators they are working with deploy more advanced digital set-tops. Regardless, these personalized offers are not a mainstay of home shopping, and the system can handle the only personalization necessary, which is a customer choosing either a single- or multi-pay scenario.

"The industry has been talking about selling products for year though television, and we're finally doing it," said Allan Thygensen, executive vice president of sales and business development at Wink. "By the third quarter of this year, we will be on the air with ValueVision. Most transactions don't require real-time inventory, but ValueVision does because they treat product as a finite commodity. We will have responses in real time and an interface to their fulfillment system. It will be general-purpose enough to be used with Home Shopping Network, QVC or any other of the shopping networks."

Meanwhile, Wink also announced that the first stage of its t-commerce applications is available to viewers of programs including "The Tonight Show With Jay Leno," "Behind the Music" and World Championship Wrestling's "Thunder" and "Nitro" programs. These applications allow a viewer to answer "yes" or "no" as to whether they want to order a specific product offered during the show, such as a CD, T-shirt or book.