Despite heavy promotion by broadcasters and cable companies, interactive television (iTV) is yet to have the impact envisaged and will generate no more than €18 billion across Europe by 2007, according to a new report from Forrester Research.
The UK currently leads the way with regard to interactive TV but consumers and advertisers remain unconvinced about the benefits of the medium and it is claimed that just 200 iAds had run on BSkyB’s platform by the end of 2002. European adspend is predicted to increase from €1.1 billion last year to approximately €2 billion in 2003.
At present, betting is the cash cow of interactive digital TV, accounting for 61% of all revenues. However, online gambling is illegal in most of continental Europe and Forrester analyst Hellen Omwando states that growth is more likely to be more pronounced in other areas.
“tRetail will generate the lion’s share with €8 billion in 2007, up from €234 million in 2002,” she said. “iDTV doesn’t suit all retail categories. Products that are audiovisual (like CDs), contextual (like apparel), or entertainment-related (like video games) lend themselves to the TV medium.”
Leisure travel is predicted to raise €4 billion in iDTV revenues in 2007, over half of total tRetail. Tellingly, however, this is equivalent to just 7% of the value of leisure travel booked over the web.
Unfulfilled expectations
The industry has laid great store in the potential of games, voting and competition to drive up iDTV income but the outlook is not exactly rosy. Gaming revenues are expected to total no more than €917 million in the UK by 2007 with a further €1.4 million generated on the continent. Voting and competitions featured on prime time blockbuster shows are predicted to contribute in the region of €183 million.
The IPA recently called upon advertisers to invest more heavily in interactive TV but the appeal seems to have gone largely unheeded. The UK is expected to account for 60% of European iDTV advertising spend this year but this still equates to just €1.2 billion.
“So far, a complex set of variable costs and campaign process have foiled iAds; low iDTV penetration, even in the UK, also leaves brand advertisers like Unilever reluctant to invest,” said Omwando.
Interactive operators offer or plan to introduce communications services such as email and instant messaging but these standalone applications are expected to play second fiddle to SMS and will contribute just €890 million in revenues in 2007.
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