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Florsheim-brought in to create stronger content links

In early 2000, executives at Open were calling on the British Government to focus on digital TV sets rather than PCs as the
e-commerce platform of the future. The UK, through Open - the most developed interactive platform in the world when it launched in 1999 - would be the best place for electronic trading by 2002, they said.

Lack of synergy between the interactive platform and Sky's programming output was one of the reasons given for the fact that Open lost £48m in the first nine months of the last financial year. Viewers are unwilling to use their television sets for anything other than television, it seems; the fact that they had to leave the broadcast stream in order to access Open only exacerbated their reluctance.

But has Open and more importantly interactive TV proved to be a failure?

Keith Rattray, director of interactive television at Carat, says describing Open as a failure is a severe way of looking at it and believes integration is the way forward for the platform.

"Bringing Open into the Sky fold will streamline the operation and trim costs," he says.

The absorption will provide a "cohesive consumer offering, making it an attractive and viable option for both advertisers and consumers," he adds.

"Contextual t-commerce" is the key phrase, according to Sky spokesman Andrew Scholl.

"Open will not close," he said.

"Its services will continue to exist but will be further integrated into Sky and into the broadcast stream. Interactivity will be more allied with individual channels and programming."

Thus services which enhance programming content rather than compete with it will be the new style of interactivity at Sky.

Amongst these will be Sky Movies Active, which will launch across the group's movie channels in the next few weeks. Similar to Sky Sports Extra, it will allow viewers to gain further information about the film they are watching, check out what's on at their local cinemas and buy DVD's and videos using their remote control.

Voting services will be a big revenue driver. The recent launch of Sky News Active voting generated 250,000 calls in the first 30 days, with Budget day alone generating 30,000.

Gaming will also be a major part of the platform with the addition of Tetris in March generating over 1.5m paid-for plays.

But it is betting which will be the major source of revenues, according to Rattray. Sky Interactive generates revenues from betting both as the platform operator via, for example, Blue Square and from its ownership of Surrey Sports, which provides interactive television
betting via BetTV, currently registering new customers at the rate of around 1,000 a week.

While interactive revenues at Sky reached £60m in the last quarter, £55m of these related to betting via either the telephone, the PC or interactive tv.

These new developments will be facilitated by the migration of interactive services to a WML browser, which will allow viewers to move between programming and interactive content more easily.

The new technology will enhance the options for advertisers in particular, offering them a link from their TV ad straight to a website rather than the previous costly microsite option. Sky estimates connection charges for all these enhanced services will push interactive revenues to £400 per year from each Sky subscriber by 2005.

It continues to sign deals with retailers and service providers.

Scottish Power is to become the first utility on the platform and the service will allow full bill-paying access by summer.

Online bank Egg is already on board, and Asda will join the platform later in the year.

Karen Mayer, director of interactive television at Quantum Media, believes the absorption of Open into Sky "makes perfect sense", making cost savings and providing a more focused customer-centric service.

Paul Davey, managing director of GoInteract TV, a third-party interactive television provider, agrees that absorbing Open into Sky is a sensible move but believes that its integration plans do not go far enough.

"Sky Interactive is fundamentally flawed, being platform- rather than content-led," he said. "Interactivity will only be driven when the television programmes themselves are designed with interactivity in mind."

T-commerce is still in its infancy but, as one of the first entrants into the market, Sky has had the chance to learn from its mistakes and is now under pressure to focus on what works in the interactive arena.