OPEN FOR BUSINESS: Digital interactive TV is here at last. But is Sky’s service really anything more than a shopping channel for the internet-shy? Trials suggest it is. Richard Cook reports

Interactive TV officially arrives in the UK in October. Controversy and energetic debate ride in its wake. The doubters, and there have been many of them, dismissed this exciting advance in technology as flawed long before this month’s so-called ’soft’ launch. They sneeringly referred to it as ’internet lite’. They even claimed that Open, the interactive shopping platform on Sky Digital that is financed by the might of BSkyB, BT, HSBC and the electronics giant, Matsushita, would simply never work.

Interactive TV officially arrives in the UK in October. Controversy

and energetic debate ride in its wake. The doubters, and there have been

many of them, dismissed this exciting advance in technology as flawed

long before this month’s so-called ’soft’ launch. They sneeringly

referred to it as ’internet lite’. They even claimed that Open, the

interactive shopping platform on Sky Digital that is financed by the

might of BSkyB, BT, HSBC and the electronics giant, Matsushita, would

simply never work.

Already, it seems that the doubters are wrong.

Their criticisms seemed convincing enough. Why, after all, would

consumers want to access what is essentially a limited shopping service

through their TV sets when there remains the prospect of accessing the

whole of the internet in the same way - courtesy, that is, of the

supposedly imminent arrival of digital cable?

But the debut of digital cable has been put off more times than a

double-glazing salesman and it is now quite clear that the Sky service

will be leading the way into the brave new world of interactivity. All

the same, these doubters ask, why would consumers want to access this

limited platform after they had spent so much time, money and effort

learning how to master the limitless potential of the internet on their

home PCs? After all, the penetration of these portals to interactivity

continues to grow at an exponential rate.

What is most likely to silence these doubters is the success enjoyed

over Open’s trial period. Now, as the company prepares to embark on the

first stage of its pounds 20 million launch campaign, hard evidence is

emerging that Open could really be everything that its shareholders have

always claimed it could be. Open could even be better than its fans in

the City thought possible. Analysts at Henderson Crosthwaite originally

pencilled in a valuation of pounds 1.4 billion for the service before a

single trial had even been initiated. They are now frantically tapping

at their calculators anew. Open is here at last, and the chances are it

will do nothing less than help change the face of broadcast advertising

in the UK.

What is now exciting even the hardened launch team at Open are a couple

of children’s games. Beehive Bedlam and Fathom have been up and running

on the trial Open platform over the summer. But there has been no

marketing effort to alert the 1.2 million Sky Digital Subscribers to the

presence of these games. Curious couch potatoes who have chanced upon

the Open set-up were encouraged to play by the offer of frankly

lacklustre prizes - jars of honey, for instance, or the odd weekend away

for the lucky few who managed first to get to level eight of the ten

available in the game and were then successful in a lucky draw. These

competitions drew an incredible 61,000 responses a week. Open, it seems,

is really going to make some impression.

’The interesting thing is that clients have always been really excited

by the potential of the service, it’s the agency community that has been

sceptical, or which has largely ignored it,’ argues Paul Longhurst,

managing director at the new-media consultancy, Quantum. ’Agencies

haven’t got involved at all. I think I’m right in saying that all the

companies that have signed up so far - except our clients - have done so

by directly approaching Open themselves. In other words, they have

received no advice as to how this huge advance in the advertising

landscape will fit in with the rest of their advertising plans. They are

happy to go to small new-media agencies for help in designing their

presence on the service and so on, but the advice and leadership from

the mainstream agency world is just not there. And I think they are

going to regret that.’

Longhurst has already steered his first client, Domino’s Pizza, into a

relationship with Open and is now in talks with two more. Domino is a

particularly good example of how retail and service providers will use

the medium. They have the advantage over the mainstream FMCG or car

advertisers at the moment because Open is not yet able to offer true


From the spring of next year, the make-up of Open will change again as

mainstream advertisers will then be able to build in an interactive

element into their TV advertising that will alert viewers to special

offers, or specific requests for further information. One click on the

button will take them into the advertiser’s own website, register their

interest and then return them to the channel they were watching. Until

then, the bulk of the interactivity will be confined to straightforward

retail commerce like Domino’s, Woolworths and Iceland.

’For Domino’s Pizza the procedure is the same as for the other retail

clients. Consumers will access the Electronic Programme Guide to go into

Open and then to the shopping site where there will be something asking

if they want to buy pizza,’ explains Longhurst. ’And there will be

special TV-related names for the pizzas and so on. But the key is that

the actual process of buying is so simple. You have to enter your credit

card details, but the system knows where you are located and orders from

the nearest store and your pizza arrives within the usual 30


The advent of e-mail facilities - compiled with the help of a natty

iMac-style console - is expected to help further familiarise consumers

with what Open stresses has to be a truly accessible and easy-to-operate

service in order to be effective.

’We have been very encouraged by the response we’ve had in the trial

period and before we’ve spent any of the first year’s pounds 20 million

advertising budget,’ Charles Ponsonby, Open’s strategy director,

explains. ’Because we are a mass-market product, we have to be easy for

people to use. But we are not saying that this is the service we are

launching - take it or leave it. It is going to evolve and to keep

getting better. We want to improve it as we go and help develop the

service as Sky Digital subscriptions increase.’

The facts certainly suggest that digital TV interactivity is here to

stay. According to the investment bank, Morgan Stanley Dean Witter,

there will be more than 11 million households with digital TV from

either Sky Digital, cable or ONdigital by 2005.

Open’s chief executive, James J. Ackerman, sums up the opportunity: ’In

1998, retail sales via the internet in the US reached a level around

dollars 13 billion. Some analysts predict that in 1999 retail sales in

the UK will reach the pounds 1 billion mark. While these figures are

impressive, in relative terms they still represent less than 1 per cent

of total retail sales in the UK and US economies. Or in other words,

e-commerce hasn’t reached the mass market. That’s all about to change.

We are now bringing e-commerce to the mass market.’


Abbey National, HSBC, Woolworths, Manchester United, Kitbag, e-trade,

Going Places, WH Smith, Argos, Dixons, Somerfield, Iceland, Next,

Carphone Warehouse, Yellow Pages, Yalplay, Press Association, Ford,

Unilever , Scottish Power, First Call, Domino’s Pizza


James J. Ackerman

Chief executive

Ackerman was appointed chief executive of British Interactive

Broadcasting (BiB), in August 1998. He was formerly the managing

director of Sky Ventures Ltd, a wholly owned subsidiary of BSkyB, where

he was responsible for BSkyB’s joint venture channels, including

Nickelodeon, Paramount, the History Channel, National Geographic

Channel, Granada Sky Broadcasting channels, QVC, Sky News Australia and


October 1994-May 1996 Vice-president, international for A&E Television

Networks in New York, responsible for launching international versions

of the History Channel, including a joint venture between A&E and


March 1992-October 1994 Vice-president, development, Hearst


Nick Mercer

Marketing director

Appointed marketing director in November 1997. He joined BiB from First

Direct where he was business development director. Previously he spent

eight years with Air Miles, initially as marketing director, setting up

the database and establishing the programme and the brand through a

pounds 6 million launch campaign. Later, as sales director, he developed

and implemented leading customer loyalty programmes with key partners

including Sainsbury’s, British Airways Executive Club, BT and Shell.

Charles Ponsonby

Strategy director

Appointed strategy director in February 1999.

1996-1999 Strategic director of Selfridges. He joined the Selfridges

board in 1996, prior to which he was with Andersen Consulting for four

years. A graduate of Cambridge University, Ponsonby’s first job was as

an economist for Maxwell Stamp.



The high street music retailer initiated an eight-week trial with Open

at the beginning of June this year. At that stage only 1,000 subscribers

had access to the system. Called Woolworths Entertainment, the trial

store offered the top ten CD albums, videos and books plus the top 20

computer games. A transaction took 90 seconds from first pressing the

remote control to get into the Open service and just four clicks of the

button to process the order through to Woolworths’ distribution company,

Entertainment UK, and then on to the consumer. The pledge was that every

order would be dispatched the next working day.

’The trial worked really well,’ Woolworths’ spokesman, Mike McGann,

confirms. ’Approximately 2 per cent of viewers used the facility every

week, while the average transaction price was over pounds 15. If we get

the same response now with a million viewers we would be looking at

something like 17,000 transactions a week. And that’s without any

promotion for the service at all.’ The Woolworths Entertainment range

has been increased to more than 300 products for the September



Iceland was the first retailer to get involved with British Interactive

Broadcasting, opening negotiations in November 1998. ’We felt at the

beginning that there was much more potential in digital interactive TV

than there ever was in the internet,’ Iceland’s general manager of

marketing, Sara Jamison, explains. ’And although this week we have

changed our minds about the internet and launched a huge home-shopping

initiative there, we are still completely committed to the idea of Open.

We are easing into the service though - in the trial period we had some

information about the company up but we elected not to run any quizzes

or anything like that but just to wait for people to get acclimatised to

the service. When they do, I’m sure that the ease of shopping on the

service will make it very important. The idea of the e-mail service was

another thing that attracted us because I’m sure it will help people,

especially older people who are not happy using PCs.’ Iceland will be

offering a full shopping service, similar to the one that it has now

launched on the internet, offering free delivery to customers spending

above a certain sum. ’We are hedging our bets a little about the

internet and digital interactive TV,’ says Jamison, ’but I’m sure both

will have an important part to play in the future.’