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For years, interactive-TV commerce has been a multibillion-dollar opportunity lurking just around the corner.

Now, after all the hype and hope, some in the TV industry say the time is right for turning the living-room HDTV into a virtual checkout counter.

What could help breathe new life into the pipe dream: PayPal is aiming to bring one-click ordering to the TV. The electronic-payment provider is hooking up with Comcast, TiVo and potentially others to develop new interactive- TV services that would enable purchases or donations through a remote control or via second-screen devices like smartphones and tablets.

If “e-wallet” providers like PayPal — which have proven themselves online — can gain traction in enabling TV purchases, it removes what has historically been a huge stumbling block for T-commerce: how to complete a transaction in a simple way.

Viewers don’t want to punch in their billing and shipping information every time they buy something through the TV or set-top box. And cable operators have been loath to simply tack on purchases to subscribers’ monthly statements.

"Nobody wants to see a $2,000 cable bill come in the mail," Rovi senior vice president of worldwide advertising sales Jeff Siegel said.

PayPal’s interest in T-commerce began when it noticed a surge in commerce happening in living rooms on smartphones and tablets over the past two years — presumably by people sitting in front of their TVs, according to vice president of emerging opportunities Scott Dunlap.

The company, a subsidiary of eBay, then surveyed randomly selected pay TV households in October 2011. The results: 49% of respondents said they were interested in buying products they saw on TV, up from the low teens two years earlier, Dunlap said.

“The consumer expectation completely flipped overnight,” he said. “The reaction went from, ‘Why would I want to do that?’ to ‘I don’t understand why I can’t do a transaction on television.’ ”

For PayPal, which claims to process about 20% of all e-commerce and 33% of all mobile-commerce transactions, the signal was clear. “We felt this gravitational pull to the television,” Dunlap said.

People have become interested in buying through the TV largely because of the rise of smartphones and tablets, which have provided new ways to consume video and search for information while watching TV, according to Dunlap.

Indeed, mobile devices are enabling another form of T-commerce, which happens in sync with TV programming. For example, eBay last fall released the “Watch with eBay” iPad app that uses automatic content-recognition technology to “listen” to what’s on TV and pull up related products.

Visa also is looking at entering the TV-payment space later this year, although the company is not providing any details on its strategy yet, according to spokeswoman Emily Horn.

But skeptics abound. Marketers view T-commerce with some interest, but are wary of jumping in because it remains unproven, according to Brian Walker, Forrester Research’s vice president and principal analyst for e-business and channel strategy.


“People are interested in seeing where the PayPal strategy goes, but today it’s just not a significant or relevant opportunity,” Walker said. “Everyone is waiting for the ‘iPhone moment’ — when one of these manufacturers or platform providers enables an experience that takes a lot of the messiness and friction out, to make TV a tangible commerce opportunity.”

To be sure, T-commerce is alive and well in some quarters.

For home-shopping retailer HSN, T-commerce is already a sizable piece of business. The HSN Shop by Remote app is available in 37 million homes through Comcast, Verizon Communications’ FiOS TV, Dish Network, Cablevision Systems, AT&T U-verse, and Yahoo and Samsung connected TVs, allowing customers with accounts to order products with a few clicks of the remote.

“People who use it love it,” Peter Ruben, HSN’s executive vice president of affiliate relations, said. He declined to reveal specific T-commerce sales figures, but said the company has generated “millions of orders” to date. HSN Inc. reported sales of $3.2 billion for 2011.

The HSN T-commerce app is faster than ordering by phone, Ruben said, but the catch is that users must have previously set up an account with a credit card on file. Ruben would like to see T-commerce expand even more, given that only one-third of HSN’s viewer base has access to Shop by Remote today. Companies like PayPal could grease the skids for TV-based purchases, he said.

“As [T-commerce] gets more awareness and more [people] use interactive TV in general … more people will use HSN,” Ruben said.

But rival e-retailer QVC, with $8.3 billion in sales in 2011, has remained on the T-commerce sidelines.

“It’s not something we’ve felt real strong about,” David Apostolico, QVC senior vice president of affiliate sales and marketing, said. “For us to adopt something like that, it has to enhance the shopping experience. We are not looking for just another ordering mechanism.”

Most QVC customers place orders by phone, while 39% of sales occurred online in the first quarter of 2012 and up to 5% of transactions happen via mobile devices.

Still, QVC is monitoring T-commerce developments — and, more broadly, interactive TV — to see what sticks, Apostolico added. The retailer engaged New York-based interactive-TV firm Ensequence to develop an ITV app for shopping, but has not deployed it with any MSOs.


Meanwhile, other programmers have started putting down T-commerce roots. A&E Networks has launched “contextual commerce” apps for Verizon Communications’ 4.2 million FiOS TV subscribers for programming on History. For example, if a FiOS user presses the “C” button on the remote while watching History’s Pawn Stars, the app pulls up products related to the episode (such as a DVD set of the show’s third season).

The A&E app on FiOS uses a T-commerce system developed by San Francisco-based Delivery Agent. “Consumers are engaging in numbers that are far superior to what we’ve seen in online,” Delivery Agent CEO Mike Fitzsimmons said.

TV commerce has an engagement rate 14 times higher than traditional e-commerce, according to Fitzsimmons. “All the user has to do is press a button on their remote,” he said, whereas it takes eight clicks on the Web to complete an e-commerce transaction.

Delivery Agent has worked with other media companies to enable Web commerce and “shopping-enabled programming,” including CBS, NBC Universal, Discovery Communications, HBO, Showtime Networks and Univision Communications.

By the end of third-quarter 2012, Delivery Agent expects its T-commerce platform to be live in 16 million households, though Verizon FiOS and other pay TV providers, plus on 5 million connected TVs running Rovi’s guide. Fitzsimmons wants to expand his company’s reach even more, and he’s encouraged that PayPal will lend momentum to the whole concept.

Of course, Canoe Ventures, the cable-backed advanced-advertising company, had intended to bring interactive TV — and eventually T-commerce — to a national footprint as well. Then, it shut down its ITV initiatives earlier this year. PayPal earlier this month hired Arthur Orduña, formerly head of product management at Canoe.

Enabling wide-scale T-commerce in a uniform way remains a difficult problem, Fitzsimmons conceded: “For us, there is still a long way to go.”

From TiVo’s perspective, T-commerce on its DVRs will provide a new way for advertisers to close the deal with viewers — although initially, usage will be small, TiVo senior vice president and general manager of content and media sales Tara Maitra acknowledged.

The conditions are ripe for T-commerce, according to Maitra: Consumers are familiar with interactive TV. At the same time, advertisers are eager to let their 30-second ads stand out in an on-demand, DVR world by giving viewers a new reason to connect with their brands. TiVo has to ability to pull up an interactive billboard when a user presses pause or to display a T-commerce offer at the end of a recorded program.

“It does bring a level of convenience for consumers,” Maitra said. With interactive-TV advertising, “I learn more about a product than I would from a 30-second ad, and then from there I can just go off and buy it with a one-click-to-purchase — that’s so much easier.”

Advertisers certainly are interested in exploiting the concept, Rovi’s Siegel said.

“Almost every advertiser we talk to sells products directly to consumers. And within five minutes, they ask about selling directly to consumers on the television,” he said.

Rovi, in partnership with Delivery Agent, recently executed a T-commerce campaign on connected TVs for Showtime Networks’ Dexter that let viewers purchase a handful of Dexter-branded products, including a T-shirt. About 9% of the people who clicked on the app subsequently made a purchase, according to Siegel.

“It’s got to be relevant to what they’re watching or experiencing on the TV,” Siegel said. “T-commerce could be a really big business, if we can figure out how to do it right.”


How big can T-commerce really become, though? That’s still a looming question, and one that will determine how much time and money operators, programmers and advertisers invest in the approach.

“You can have good reach, but the question is, do you have scale?” SeaChange International chief technology officer Steve Davi said. “You may have millions of people that could use [T-commerce]. But how many people will use it?”

Consumers will always take the path of least resistance, Parks Associates director of consumer analytics John Barrett said.

“When it comes to these types of applications, if you’re watching TV, and an ad for Papa John’s comes up and you’re hungry — you’re just going to pick up the phone,” he said. “It’s easy, it works; you’re familiar with that.”

According to a survey conducted by Parks, just 14% of all TV viewers said the idea of T-commerce had high appeal. However, 45% of respondents aged 18 to 24 expressed interest in using a second-screen application to purchase a product featured on TV.

T-commerce “skews toward a younger demographic,” Barrett said, which bodes well for future attempts to capitalize on the concept. But today, he added, “the reason you don’t see this taking off is, it’s not clear how the shopping experience is improved.”

PayPal expects to launch trials in the next six months with TiVo and Comcast. The parties have lined up advertisers, which haven’t given permission to be publicly identified at this point. Dunlap said even more marketers have expressed interest in the T-commerce tests in the last week.

“The interest has been really good,” he said. “I’ve never had more ad-agency people reaching out to me in the last 20 years.”

But it remains uncertain whether buying a sweater through the TV set will ever catch fire with consumers.


Cable operators, programmers and others have been trying to make shopping on TV a reality since the early ’90s:

1994: Time Warner Cable’s Full Service Network in Orlando, Fla., launched with a “video mall” with products from Spiegel, Eddie Bauer, Crate & Barrel and others, as well as the ability to order food from Pizza Hut.

1994: U S West, then one of the Baby Bells, launched a T-commerce channel dubbed “U S Avenue,” with sponsors including Ford, FTD, Hallmark, and Lands’ End.

2000: AT&T Broadband announced a deal with Qpass to provide e-wallet transactions on TV.

2001: ShopNBC teamed with Wink Communications to let viewers buy merchandise via remote control.

2005: Discovery Communications announced plans to sell products from FitTV and Travel Channel through affiliates' interactive-TV platforms.

2008: TiVo inked a deal with Amazon.comto let DVR users buy physical products from the online retailer on their TV sets using their remote control. The feature was subsequently phased out.

2010: Canoe Ventures, owned by the six largest U.S. cable operators, forms T-commerce partnership program with PayPal, Fourth- Wall Media, icueTV, Catalina Marketing and Delivery Agent. In early 2012, Canoe shut down its interactive-TV initiatives.

SOURCES: Multichannel News, The New York Times, Chicago Tribune,, Fortune, USA Today