The news that BSkyB is to close Open rounded off an extraordinary
week that saw the cable companies getting cosier and ONdigital
recognising its parentage. Although it was taken as an opportunity for
the platforms to rationalise their debt-ridden businesses, it really
should be remembered as the week that finally launched the interactive
Last week's news has been on the cards since July last year, when BSkyB
announced its intention to take full control of Open. The move was no
doubt hastened by losses at Open in the first six months of BSkyB's
financial year. With only 650,000 transactions on the service the retail
model has hardly been a runaway success.
Advertising revenues will not have contributed anything yet as
interactive advertising is still not on the radar screens of most TV
buyers. For the few buyers in the know, it's clearly not cheap as chips;
who wants to advertise in a virtual mall? And putting a value on the
interactive element is still not possible.
The shift of Open into BSkyB is certainly going to help address some of
these issues. BSkyB's sales team will now handle the interactive ad
proposition as part of their traditional TV portfolio, which makes a lot
of sense. They have the relationships with the TV buyers in place; it's
just a matter of time before deals are done. Get the ball rolling and
the value issues will start to go away as more case studies appear and
metrics become better established.
And they're not the first to do this. Ntl took the uncomfortable step of
sacking their sales force and handing the job over to Telewest, who also
have a good team in place. If they weren't both so crippled with debt,
undoubtedly they would have tied the knot in a much more permanent way.
Nevertheless, one buying point across the UK cable network with both
companies converting their analogue base to digital as fast as they can
makes them a much more potent threat to BSkyB. That's good for business
in this fledgling industry.
Of course, don't expect BSkyB to wait for a fair fight. Now they have
control of Open there is no competition clause preventing them from
launching other interactive services outside their virtual mall. Now it
can turn its attention elsewhere - aside from an explosion of
interactive betting opportunities we should also see interactive
advertising develop around other programmes.
This has always been a weakness for BSkyB and the core strength of their
arch-rival ONdigital, which has also been busy rebranding to ITVdigital,
undoubtedly strengthening its overall consumer proposition and making it
easier to do business.
All in all, in the week that was, the industry is now simpler, the offer
more compelling and, in the current climate, the value proposition more