The fact that the four dots after its name were considered critical
to the identity of BSkyB's interactive shopping service Open ..., which
closed last week, says much about the new, electronic economy. Though in
some ways more clever and more productive than the old economy, it has
proved itself subject to the same laws, beginning with getting the
business model right before you worry about how many dots should appear
after the name.
It is not just that Open made mistakes (we all do and, after all, this
was the beginning of interactive TV anywhere in the world) but that it
made such basic ones. Here was a business that had everyone caught up in
its valuation at pounds 2 billion soon after launch when the reality -
an interactive service that did not allow access to the internet and
which could only be accessed when you were not watching television - was
way behind the giant leap that everyone was raving about.
Open started out with four shareholders: Sky, BT, HSBC and
As more than one chief executive found out to his cost, those four
shareholders had different objectives. The changing chief executives, in
turn, gave the early business different approaches. Its sales story -
based on high fees and commission deals - drained the interactive TV
marketing budgets of brands and even served to put off new entrants.
It wasn't just the high fees and commission deals that put advertisers
off. Some clients, particularly retailers, were nervous of what amounted
to giving Open ownership of their database of consumers by being on the
service. Tesco is thought to have looked at Open at length and concluded
they wanted to own the customer themselves. While clients such as Van
den Bergh Foods did not have this fear, they were never going to sell
much direct to consumer, unlike the retailers. But Open's business model
was built on a share of each transaction and this model was going to be
in trouble if the retailers were not there en masse.
Indeed, the fact that Open talked at all in terms of transactions - it
generated only 650,000 in total - suggests that orders taken was its
chief measurement of performance. But surely that was to miss the
crucial point: it's one thing to interact with advertising, for we do it
all the time via traditional media. It's another thing altogether to
interact with an advertiser via unfamiliar technology.
So is that it for interactive TV? No, of course not. It's a drawback in
terms of shopping on TV but not for the other basic interactive services
provided by digital television such as banking, travel services and,
most successful of all, gambling. Penetration figures suggest that
interactive television will be the most popular means of accessing the
internet in Europe by 2005. But smart people in the future will learn
from Open's mistakes.