This, undoubtedly attractive, idea has been around for a while. You’re watching your favorite sitcom or celebrity show and you see it — the perfect blouse or purse or watch. Wouldn’t it be great if you could just aim your remote at the TV, push one button, and buy it? The attraction is undeniable. You get instant gratification, buying the objects you see on your favorite shows. And content creators would get extra revenue — profiting directly from the desires they have long cultivated in their audiences. While this notion, sometimes called Enhanced TV, Shopification, or T-commerce has been around for decades, it has never been fully realized. Now thanks to cord-cutters, the shift to OTT, and the release of some futuristic new technologies, T-commerce may (finally) be just a click away.
Yes, Virginia, Profits and Products drive Television
To understand T-commerce, one must first understand the true purpose of TV. Profits and products have been an intrinsic part of the television experience from the very beginning. Ask most viewers what a television is and most will say that it’s a box or format for delivering entertainment and education. While this is true for public access and public broadcasting companies, television is primarily a for-profit enterprise driven by the need to share information about, drive desire for, and sell…stuff. The first television commercial, The Bulova Test Pattern which aired before a baseball game in 1941, cost the Bulova Watch company a whopping $9. Programming specifically designed to sell products to the American housewife came into vogue as the Soap Opera jumped from radio to television. Beginning with These Are My Children in 1949, the daytime soap became a fixture of American daytime TV in the 1950s. The television advertising market has remained the most enduring of monetization models with worldwide television ad spend topping $190 billion in 2017.
Operators are Standing By
One of the earliest models for T-commerce — that is selling products directly from television came from television shopping channels. Celebrities hawking everything from custom-designed rhinestone jewelry lines to electric hamburger grills assured us that operators were standing by, ready to take telephone orders for the treasures offered on screen. These programs, often relegated to the nether regions of the television dial, nevertheless produced huge profits. In 2017, QVC acquired its rival the Home Shopping Network resulting in an omni-channel home-shopping business with over $11 billion in annual sales — about 0.3 percent of the US annual retail market. Television shopping became big business yet still fell far short of the holy grail of T-commerce — the ability to see something during traditional television content and click a button on the remote to instantly purchase it.
Where’s my Buy It Button?
With all its obvious revenue generating potential, virtually every TV should have a “buy it” button by now. Despite a few early trials such as the now-quaint attempt in 2001 where NBC offered viewers the chance to buy Debra Messing’s T-shirt after an episode of Will and Grace, true on-demand TV purchasing has remained elusive. Thankfully shifts in the way people shop coupled with some key technological developments will make T-commerce not only possible, but also inevitable.
Shoppers are Shifting
Today’s shoppers are very different from those of the soap opera days. For one thing, wage stagnation means that many American homes require two wage earners to bring home the bacon. U.S. soap opera ratings have fallen dramatically since the 2000s, because there aren’t as many housewives home to watch them. Mostly the shopping is done by a member of the household who also has a full-time job and is caring for the kids. Thus, many modern shoppers favor convenience and speed over the old-fashioned desire to wander the aisles of the local grocery store or shopping mall. Online retail is growing nine times faster than the stagnating physical retail sector. Home delivery is so ubiquitous that shipping companies can barely keep up, and concern over porch package theft has spawned a new market in home video surveillance technology. Smart brick and mortar stores are employing an if you can’t beat ’em, join ’em approach — offering free returns on shipped items in their local stores or even in some cases serving as a returns counter for online shipping giants such as Amazon. These savvy companies understand that healthy online presence not only boosts the company bottom line, but also boosts foot traffic at local brick and mortar locations.
Customers are also increasingly interested in buying things on mobile devices such as smart phones and tablets. This desire corresponds nicely to their vastly increased interest in consuming content on these same mobile devices. Recently ad spend from digital sources came in higher than ad spend for television. All these consumer shopping and viewing trends have created a perfect storm of desire for true T-commerce.
The Sexy Tech that Makes It So
Perhaps the biggest challenge facing the T-commerce market to this point however, has been technological. It’s hard to imagine how T-commerce could exist on a massive scale in the era of putting tinfoil on your TV antennae to get better reception. Thankfully in recent years, we’ve seen several important technological advances, such as the move from analog to digital. The conversion of broadcast television to digital began in 2006 and is still being rolled out to some territories in 2018. Digital transmission provides key improvements including increased spectrum (which allows for more television channels to be carried in the same amount of digital space) and the ability to customize television and advertising on a much more granular level. The transition to IP television or IPTV provides further advances. With IPTV, communications between television programmers and viewers can be unique and bidirectional. Despite this capability, walled-garden IPTV services from cable operators did not provide a differentiated advertising experience.
I Want my OTT
The transition to over-the-top (OTT) television represents both an important technology and an important business model on the way to true T-commerce. OTT is an open marketplace of entertainment delivered over the Internet to various devices such as desktop computers, mobile devices (like tablets or smart phones) or set top boxes (like an Apple TV box or Chromecast device) that the viewer owns. Technologies such as RealNetworks RealPlayer allow customers to view content wherever they wish, whenever they wish on virtually any device. While some older consumers are coming to this form of delivery by “cutting the cord” to their traditional cable provider, a significant number of consumers are coming of age who have never owned nor ever plan to own cable. This group of consumers tend to be thrifty and have a low tolerance for the high advertising loads typically seen in traditional television. Ad-supported broadcast television may have as many as 12 minutes of ads per hour. Some freemium OTT channels offer only one ad per hour or are completely ad-free. At times OTT channels hark back to the old soap opera days featuring content sponsored by an individual brand or product. Some innovative OTT channels are engaging in revenue share models with advertisers. And some OTT channels (particularly in China) are already turning to T-commerce as a major revenue stream. In short, OTT represents a bidirectional, customized, on-demand viewing experience for customers in an environment that seems custom designed for true T-commerce. The ability to target individual with dynamically inserted advertising offers a unique way for viewers to interact with brands.
Do Androids Dream of Electric Shopping?
If we are going to recognize our true goal of instant, one-click purchasing of an item within a piece of content however, there are a few remaining roadblocks to discuss. In the past, the process of documenting and cataloging items for purchase during a program was a manual one. Someone would have to watch each scene, and note frame by frame which costume pieces, props or ancillary pieces of content (such as music and artwork) were available for purchase. Next, each content provider would have to create and indefinitely maintain a separate database and sales cart from which to sell those items. And there was no guarantee that one company’s sales system would be compatible with another. This extremely labor-intense and bespoke process made it difficult to turn a profit from T-commerce initiatives. Thankfully new advances in standardization and AI are greatly simplifying the development of T-commerce platforms.
New standards designed to unify the T-commerce landscape are coming on line. For example, the Interactive Advertising Bureau (IAB) has recently released details of recommended industry standards VAST and VPAID for dynamic video ad insertion. And the Entertainment Identifier Registry Organization has developed an industry standard (EIDR) for cataloging all elements within a production on an item by item basis, down to the color, size, and SKU# of the fabulous Bulova watch worn by the jet-setting spy in your latest mystery movie.
And what’s perhaps even more exciting are the advances currently coming on line in Artificial Intelligence (AI) and machine learning. It’s only natural that the technology making the kind of advertising and buying seen in movies like Minority Report would come from smarter machines, able to automatically scan and recognize products, places and famous faces. Rather than sitting a person down to analyze content frame by frame to look for products to sell, new scanning and recognition technologies such as RealNetworks Computer Vision, RealCV, allow machines to find these items automatically and tie them back to information captured and stored during the production process using EIDR. Every time a musician appears on screen, a sales link to that artist’s albums can automatically appear on screen. This link can connect securely to the online payment method, preferred shipping method, and address the viewer has online. Finally the dream of a buy it button is very nearly here.
Wait, Is this for Real?
The skeptics among you may rightfully note that this is all something you’ve heard before. You’ve been there, seen the demo, and even got the t-shirt (no-doubt fired out of a t-shirt canon at some industry event or another). What’s different this time? The difference is that market forces are coming into perfect alignment with key technologies such as RealNetworks RealMedia HD Streaming, RealPlayer and AI-driven Computer Vision recognition technologies. To learn more about how RealNetworks is using these technologies to fuel the T-commerce revolution and help build a new digital world, go HERE.