Putting the web on TV – Next Generation of pay TV?

Tom Cape, managing director of Capablue, looks at the commercial opportunities surrounding internet TV…

Many people, including our team at Capablue, have spent the last few years (and lots of sweat and tears) putting TV on the web. Now with the new generation of internet connected TVs and set-top boxes, including the emergence of YouView, the natural move forward is to put the web on TV.

So, where is it taking us and what does the future hold for the two sides of web on TV and TV on the web? Also, importantly, what are the new commerce opportunities of this new medium?

Internet connected TV devices should support and enhance commercial opportunities. It is easy to argue that TV commerce could equal or exceed PC based e-commerce someday soon. The question is how?

The main functional difference between TV and PC e-commerce is the opportunity to link your TV device to your payment account. This allows immediate identification on subsequent visits, avoiding the hurdles of multiple Identification and Verification (ID&V) steps for each payment. This is a similar model to iTunes and iPhone, but without the annoying application installation.

This ‘one-click’ un-obtrusive payment mechanism lowers users’ payment tolerance threshold because it is no trouble for them to quickly make smaller payments. As we have learnt from iPhone, if the payment is small enough (probably less than about 50p) the price point is also unobtrusive so potentially a commercial ‘micro payments’ market will flourish.

There are but three main challenges with this model.

Although one-click payments work well, no-one is going to want to set-up and manage your account on the TV with the poor input interface (remote control). These functions are best done on a PC with a keyboard and mouse. Therefore, critical to a good TV payment solution will be the co-existence of management services on PC (and possibly mobile) as well as the main TV consumption service. This is already successful with iTunes, iPhone and Oyster card.

• It is important not to just put your existing website on the TV as it is. In the same way the best mobile services have been developed specific to the content, you need to think about the content and functionality that is relevant to the medium and environment and build your new TV service accordingly. This will take some clever thinking and additional site development work.

• Payment processing costs are too large for individual payments, so require aggregated payment mechanisms such as pre-pay and post-pay collection. These require clever algorithms to minimise exposure, debt and risk relevant to the nature of your product or service.

These challenges are easily overcome with the right solution analysis and design work relevant to the product or service. The potential new commercial opportunities may make it worth the effort.

Commerce opportunities from platforms like Capablue’s Connected include the following:

• Video-Commerce – micropayment and interactive functionality opens up all kinds of interesting ‘click to watch’ content services, whether linear, VoD, subscriptions or freemium. Critical will be the appropriate level of price-point for linear broadcast quality content. Potentially micropayment pricing could be higher than the equivalent ad revenue while still remaining small and unobtrusive.
• Shopping Channels – building one click payment in to shopping channels – watch product demo and buy. Too obvious to warrant much further discussion.
• Gaming / Gambling – live betting while watching events. As with the shopping channels, watch a sport and bet on the race or match you are watching.
• ‘TV-Commerce’ – putting e-commerce on the TV. This has to be done intelligently and appropriately for the interface. So while you may want to do your grocery shopping, while watching TV, but you will probably only want to select from a favourites list but not perform complex searches with the remote control. Opportunities to use video to support the sales process are particularly interesting. Ultimately we may see a convergence of Shopping Channels with web e-commerce with some interesting new combinations of video – web content (recommendations etc) – and one-click payment functionality.
• Applications – other games and utilities in the model of iPhone app store. Pay per application or service. Opportunity for some much better services with the bigger screen and processing power of the STB above phone capability. Again the services would need to be designed and built specifically for the TV context.

In the same way no one predicted SMS as the ‘killer application’ for the phone, I suspect the killer app for TV will be something we just don’t expect.

Capablue recently launched Connected – a platform for the rapid development and deployment of video sites to TVs. Connected delivers a simple managed solution for content owners to provide a fast, immediate VoD service with user-centric content discovery and delivery solutions.