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Digital Television
31 January 2000

Unless you are a techno-freak, you probably have no interest whatsoever in the difference between analogue and digital television.   Who cares if tonight’s second rate film and commercials are arriving because of wave modulation or a series of ones and noughts?   Well, if you are a travel agent you had better care because, unless you start business planning to take account of digital TV, in ten years’ time you might not have a business to plan.  

Unless you are a techno-freak, you probably have no interest whatsoever in the difference between analogue and digital television.   Who cares if tonight’s second rate film and commercials are arriving because of wave modulation or a series of ones and noughts?   Well, if you are a travel agent you had better care because, unless you start business planning to take account of digital TV, in ten years’ time you might not have a business to plan.   This view sounds rather on the strong side but it is the only conclusion that can be drawn when one looks at the events that have been taking place in the last couple of years and those that will happen in the near future.   I will share the logic of my reasoning with you.

Let’s first review what has been happening with the Internet.   Over the last 18 months or so, there has been a whole raft of new intermediaries entering the travel industry, using the Web as their distribution platform.   To those who use the Internet regularly, they are now household names.   Examples are Expedia, Travelocity, Lastminute and ebookers.com.   These new start-ups have the grand pretensions necessary to drive their high share valuations.   For instance, “We intend to dominate the European market for online travel.”  

Their predictions of growth are founded on statistics such as those from Jupiter Communications, who predict that online travel is expected to be the largest category of e-commerce in Europe.  

In the online world, big is beautiful.   Those that can establish themselves as the largest online players know that they will be able to compete on economies of scale and so offer more competitive prices to the consumer.   If you take a look at the projected turnovers of these online travel vendors, you realise that there is not enough growth in the market to go around.   The only way they will survive is by taking share from existing travel agents.   The only way existing agents will survive is if enough of the new online intermediaries fail.  

So why shouldn’t they fail?   After all, not that many households have access to the Internet and, of those that do, how many are going to trust their travel bookings with a faceless online company?  

So can you relax?   No you can’t because many of these new online intermediaries are also planning to distribute on digital television.   A report by The Henley Centre, commissioned by Open (the new interactive digital TV channel), predicts that more UK households will be connected to digital television than the Internet by the end of next year.   By 2003, they predict that over 50% of households will have digital TV compared with 32% that have access to the Internet.   Furthermore, the government has announced that when 95% of the population are receiving digital TV, it will switch off the analogue channels altogether.   (This is so that they can re-sell all those freed-up frequencies.)   Cultural Secretary, Chris Smith, told delegates at a recent Royal Television Society convention that this could happen as soon as 2006.   However, 2010 is considered by many to be a more likely date.  

In six to ten years’ time, therefore, a large proportion of the population will be able to purchase travel on their tellies, the TVs they trust implicitly to inform them, amuse them and entertain them.   The same TVs that are boringly reliable when compared to PCs.   The TVs that have large enough screens for the whole family to see travel in its full, action packed, noisy, exciting, multi-media self.   I have seen the demonstrations and, believe me, selling travel on digital television makes the Internet look staid and archaic.   The big players are going to be reaching into your customers’ living rooms, selling travel in a more powerful way than was ever thought possible.   If you are a travel agent that does little more than administer the booking process, your customers will slowly dwindle away, enticed by the convenience, immediacy and excitement of buying travel on Interactive Digital Television.

What can you do about this?   Well, travel is not just a commodity and I don’t believe that there is only room for the largest, conglomerated, online travel companies.   I think that the new online technologies of the Internet and digital TV will cause the marketplace to polarise in two directions.   Businesses that thrive will certainly include the large, global players, competing on brand power and economies of scale, but there will also be market space for smaller travel organisations with a clearly focused, specialist product; profiting because they have little competition and understand their particular niche far better than the global players.   There may be few survivors in the middle ground.  

So, if you are large travel organisation, embrace the new online technologies with the utmost urgency.   If you are stuck in the middle, get big or get bought.   If your business is small and selling all types of travel to all-comers, get focused.   You have maybe six to ten years to change your business to one that adds real value through expert knowledge of a specialist product.

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