Magazine article Marketing

BSkyB Suffers Setback in Interactive Plans: The Decision by Two Major Brands to Cease Selling on Sky Active Is a Blow to iTV. (Analysis)

Magazine article Marketing

BSkyB Suffers Setback in Interactive Plans: The Decision by Two Major Brands to Cease Selling on Sky Active Is a Blow to iTV. (Analysis)

Article excerpt

BSkyB, with its Sky Active service, is the standard bearer of interactive TV as a commercial proposition. Woolworths and Argos were two of the brands that pioneered its use as a retail channel. So their decision to pull the plug on their Sky Active shops last week was a blow to the iTV industry's confidence.

After all, Sky Active - formerly marketed under the Open brand until Sky bought out launch partners BT, HSBC and Matsushita - commands the lion's share of the UK's iTV audience, reaching 5.4 million households. ITV Digital reaches around 1.27 million with iTV, NTL 2.1 million, and Telewest more than 641,000.

"Sky Active will be very disappointed," says Howard Unna, Woolworths' former e-commerce director who took the retailer onto Open in 1999. "Brands experimented with iTV in the early days out of their research and development budgets, but they are now demanding a return on their investment."

The costs of being a retailer in Sky Active's walled garden of brands are high. Annual fees come close to [sterling pounds]1m for many and Sky's sales commissions are understood to be between 5% and 10%.

While these costs give content providers access to Sky's 5.4 million subscriber base, for retailers of low-margin goods, such as Woolworths, the figures soon become prohibitive.

"It's time for it to wake up and change the business model," says Unna. He suggests this should include reconsidering the idea of a limited walled garden of partners.

Paul Longhurst, interactive consultant at The Allmond Partnership, says the departure of Woolworths and Argos from SkyActive is part of the natural development of iTV. …

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