Digital TV: The Future of E-Commerce

For the average consumer, the phrase “Digital TV” conjures up images of crystal clear pictures and ear-popping sound. In actuality, however, the new technology promises more than just enhancements to the audio-visual experience — it will allow a greater and more diverse population around the world to participate in the Internet Age.

Digital TV will do far more than show television in a digital format. The term actually describes a series of interrelated technologies that will allow television to become interactive, so that viewers can play along with game shows, get information from the Internet as they watch a show, or buy a vast array of products and services online.

The implications are enormous. E-commerce companies will finally be able to reach consumers who are unable or unwilling to buy a personal computer. E-commerce will also turn the TV into an instant procurement machine.

Interactive television will not require the purchase of new systems. Existing TVs will simply require set-top boxes that will receive the digital signals from broadcasters or from the Internet and translate them to analog signals. (The new “digital” televisions that are now available play High Definition Television (HDTV) shows that must be broadcast by all major TV stations in compliance with FCC requirements.)

In the following special report, the E-Commerce Times explores the digital TV phenomenon and takes a close look at what e-businesses and consumers alike can expect as this dynamic market force matures and explodes into the mainstream.

A Tale of Three Ways

Digital television can be subdivided into three closely related models of operation. The first method, called “single mode,” allows the viewer to switch between the television program and the interactive application. When the viewer finishes the interactive activity, he or she returns to regular viewing.

Single mode is now being used by such systems as WebTV, WorldGate, and Open in the United Kingdom.

The major drawback of single mode is that viewers cannot view the television program while shopping or interacting with information or services. Consequently, developers have been working toward more technically advanced modes of operation to enrich the interactive experience.

Simultaneous Mode

In the second model, known as “simultaneous mode,” the viewer pops the interactive application into a picture-in-picture (PIP) window on the television screen and is able to interact while continuing to watch the program. For example, a viewer would be able to answer questions along with the contestants on a quiz show.

Simultaneous mode can also be used to view information, such as Super Bowl statistics, while watching the actual event, and to make simple purchases.

So far, Scientific-Atlanta, Inc. and General Instrument Corp. have developed the most advanced digital set-top boxes for this method. Scientific-Atlanta offers a particularly effective demonstration on its Web site of how it expects interactive digital TV to operate, although it requires Web access at 128K bps or higher for proper viewing.

Pause Mode

The third model, or “pause mode,” records television programs to a hard disk, thereby allowing viewers to pause the program in order to use the full screen to take advantage of the interactive service. When the interaction is over, viewers can continue the program at the point where it was paused.

Pause mode capability is already available in such stand-alone products as TiVo and ReplayTV. In essence, these systems enable viewers to create their own mini-television stations by customizing their own programming according to tastes and preferences.

However, while pause mode is critical to e-commerce on interactive digital TV, it does come with a cost. Many analysts believe that allowing viewers to skip over commercials will destroy the economic structure of the television industry.

Personal TV Added to Interactive TV Products

While this type of personal TV system is now available as a stand-alone product, the same capabilities are also being added to interactive TV products. For example, satellite television company EchoStar and wholly-owned Microsoft subsidiary WebTV Networks, Inc. have partnered to develop systems that provide a fully-interactive TV experience — including satellite television, Web browsing via WebTV, personal TV-based digital recording and game playing.

The DISHplayer 300 and 500 systems are available for $399 (US$), plus installation. Above those costs, consumers pay per use for the various services. Satellite television packages begin at $19.99 per month, while there is an additional charge of $9.99 per month to add personal TV capabilities.

For full Web access, personal and interactive TV services, and video games, the price is $24.95 per month on top of the satellite television viewing package.

More Than Web Access and TV

WebTV is working with multiple advertisers and broadcasters to provide interactive services in which viewers can answer trivia questions, play along with select game shows, and jump seamlessly to Web sites to buy products and services.

The combined service, however, has one weakness: Web interaction takes place over a dial-up local telephone line at 56K bps. Microsoft is attempting to address this issue by evaluating high-speed technologies, but has not announced plans to upgrade.

In the meantime, the overall interactive TV service may lose its instantaneous nature as the users wait for about a minute while the WebTV system dials in to a local line, establishes a connection, and then loads its Web site at 56K bps.

Coming Like a Freight Train

So, what can we expect from here? Gerard Kunkel, senior vice president of WorldGate Communications, Inc. believes that the world of interactive TV will soon be “coming on like a freight train.”

“Interactive television is now in the early stages of deployment by every cable and satellite TV company in the world,” Kunkel told the E-Commerce Times. “It is no longer a question of if, but when.”