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Century 21 - New Business Models in Travel

Speaker Transcripts

Christina Convis
The ntl Travel Channel

Today I want to talk about interactive TV, the technology behind it, the consumers who are going to be using it and what all this means for the travel industry. I also want to show you a quick demo of interactive TV, so you get a better understanding of what we are talking about.

Some of you may have heard of NTL already, but, for those of you who haven't, I thought it might be helpful to start with a brief background about who we are and what we are doing. So, who are we? We are a fully integrated communications company and we provide services and platforms to businesses and consumers in the UK. We provide broadcast services to people like ITV, Channels 4 and 5, we provide satellite services to people like the BBC, Flextech and Turner, we provide local phone carriage to people like Orange, Vodafone, AT&T and Global One. We provide the technological backbone for ISP's such as VirginNet and WhichOnline. We are also involved in radio communications and we will soon be part of the digital terrestrial TV wave that will come along in 2000. We also have a lot of cable - we have access to about 5.8 million franchise homes in the UK and in 2000 that figure will more than double. We have a leading fibre optic broadband network in the UK and Ireland, with links towards the States and the Continent. So, you can see that we have our fingers in many pies and we have experience in all these different areas. Because we have carefully built this great infrastructure, we are able to provide our services and platforms to consumers and businesses across these multi platforms and this allows us to bundle our services. So, if you can imagine being able to browse holiday brochures on your PC, book a flight on your TV, check your itinerary on your mobile phone, that's what we are talking about here. We are giving consumers a whole new way for them to manage their lives. With these platforms and services, consumers can really personalise them and make them their own, to suit their own needs. At NTL we are in the fortunate position of having digital cable. You may be wondering why this is. With digital cable you are provided with a high bandwidth and you have big fat pipes to work with, so you can drive a lot of content up and down those pipes. It's quicker than a 56kb modem with a 60 second log-on time or an ISDN line. With broadband cable, services can be delivered as much as 100 times faster and with broadband both ways you have a real advantage over satellite and terrestrial, where you are connecting to a phone line to drive the data back up. With broadbands going both ways, you can pass the data quickly and easily back and forth. It also allows for much more genuine interactivity and, because it is so fast, it allows for an impulse response time from the consumer because it's always on and there is no dial-up time.

So, at NTL, what we are doing is working towards a true interactive experience. Internally it is divided into three areas. We have the area that I work on that is interactive TV services, which is an alternative to traditional TV services. What we are doing here is using the TV environment to provide transactional, educational and entertainment services in a TV-centric manner. We also have other channels, like shopping, finance, entertainment and others and we work with content partners on re-purposing their web pages for the TV, making them more TV-centric. If you look at a web page on a PC, it contains a lot of information and it is a very interactive experience to use it - you are searching for information, gathering information, maybe making a booking. We work with our content partners on taking that content and making it more suitable for TV, which is a different experience - I'll talk about this in a minute. 

We also have an area called enhanced TV, in addition to traditional TV and, in terms of the consumer - the viewer - it is very much a push concept. It's entertaining, it's media rich and the viewer is gently being pushed along through the service. They are not actively searching for something, maybe they are just sitting back watching a programme and something pops up which interests them. I will show you a demo in a minute so you can get a better idea of what I'm talking about. With enhanced TV, the content is more scheduled and continuous and it doesn't require a lot of searching or exploration. 

We also have an area that we are working on called Interactive Advertising and this really is to drive customer traffic. With banner and site sponsorship, this can take the viewer to a commerce site, with interactive TV spots this can take you to a micro site or commerce site. It can really drive viewers through the service. 

We see these three areas eventually converging into one seamless entertainment, information, marketing and sales medium. But when you talk to the consumer, the viewer, all of this is interactive TV to them. When you have the simultaneous broadcast of TV and data to TV, the viewer can see information which is linked to the programme that they are watching and, if you couple this with a broadband return path, this allows the viewer to instantly respond to things on the TV and it gives them more control over the TV and gives them immediate choice over what they are seeing. With this synchronisation of data and broadcaster emissions, this gives us at NTL, the ability to link audio and video content through to e-commerce sites, making it really media rich and engaging for the viewer. All this enhances the advertising sales proposition, while delivering an appealing service to the viewer.

So, I'd now like to show you a quick demo of enhanced TV. This is a tape - about 5 minutes long - produced by NTL and the Discovery Channel and, before we start it, I just want to say that we aim to make this very easy for the viewer. You will see that we use colour buttons and arrow keys for the viewer to work through the service.

Video starts…

The viewer is watching the ultimate guide on the Discovery Channel. As you can see by that red icon in the lower right hand corner, the programme is interactive. She presses red and that activates the navigation bar on the bottom. If she presses red again she gets a full screen of information and then a quarter screen of Discovery. You can see the advertising in the corner there. She can now arrow into a competition, reads a question and then enters her PIN to tell them who has entered the competition. Then she presses blue to go back to the show. Then she continues watching. As she sits there, she gets a prompt from the Channel to buy a related video. She presses red to buy and this takes her straight to the Discovery shop where her item is highlighted and she can press green to put it in her shopping basket and do some more shopping, or she can go directly to buy it. She wants to buy it and it asks how many she wants to buy (it defaults to one). Then she presses her PIN number and presses red to confirm. This brings up details about who she is, where she lives etc and she could even earn Discovery points from this transaction. She confirms this and receives a confirmation on the screen. She presses close to return to the end of the programme. Then, as the programme ends, she is offered enhanced viewing options and she can also see that she has won first prize in the competition! She could use the main navigation to go to other areas, but she notices an after-show chat and she presses that and joins a chat in progress with the expert from the show. She presses red to compose a message to the expert and presses red to send it. Then she presses blue to close the service and while the main navigation bar is visible, she presses blue to get all the different Discovery channels up there. She sees a row of different logos and each one shows what's happening now and what's happening next. Then she arrows across to Animal Planet and to Discovery Home and Leisure and she sees that her favourite show "Rex Hunt" is on. She clicks on that and she's in her favourite show and continues watching Discovery network. …

end of video.

So this looks fantastic, but what does it all mean for the consumer? It means that the consumer gets more channels to watch and gets more content on those channels. Consumers can have a better picture and better sound quality and, as you can see, it really enables them to interact with the TV. As I mentioned before, the TV really is a different experience from the PC, it is a very lean-back experience. You come home from work, you pour yourself a drink, you put your feet up, put on the TV and start looking at holiday brochures. Or you can gather round the TV with your family or your flatmates and start planning your next holiday. Travel products and services are great for the TV because planning a holiday is so relaxing and such fun. Choosing a holiday is an exciting time for consumers, so that process should be made exciting and we are not using a PC. The PC would be a very active, lean-forward experience, but with the TV it is in the living room, in a very central part of the house. A PC is often in a spare bedroom, or your home office or maybe even the basement. But the TV is in the living room, which is a natural gathering place and a good place to be planning your holiday. 

So what type of consumer are we looking at here? Well, with TV penetration in the UK being about 97% and PC penetration about 20%, we are looking at a broad spectrum - a wide demographic - almost anybody might have a TV in their home. So what would the consumer expect out of this service? Well, using Teletext as a benchmark, they expect certain things from a TV-based distribution channel. They expect deals, package holidays, flights, information, entertainment and domestic holidays. The internet and Teletext have shown that consumers want to buy travel services off the TV and, if you provide accessible interactive services, consumers will buy. What is great about digital is that it is more televisual - it provides a better medium for fulfilling the consumer's entertainment expectations - and there is a lot of potential here for media rich televisual content. The viewer can sit and book a trip while watching TV and surfing the internet but because it is coming from the TV, the consumer expects the experience to be entertaining and engaging. Viewers aren't sitting in their home watching Excel spreadsheets on their TV, they are watching East Enders and looking to book their next trip. It is a very different experience and, if we don't all try to make it as entertaining and exciting as possible, we have all failed. It should be a fun experience for the viewer, otherwise it is just comparing deals.

If we take a look at Lastminute.com, for example, they are so successful because it is a lifestyle, it is entertaining, it's spontaneous and fun. That's what we need to do with the service - make it exciting for them.

What else does the consumer expect? They expect the TV to be always on and immediately accessible. Viewers are used to flicking through channels. They are not going to sit patiently waiting for content to download onto their screen. And, because it's TV, it is a non-threatening piece of technology - they expect it to be easy to use. They are surfing channels and they are not going to want to have difficulties in navigating the service - they expect it to feel comfortable to them. They also want it to suit their own needs and interests. It's like selecting their favourite TV show, they want to be able to select their own favourite parts of the service intuitively.

What else? Consumers don't want to invest a lot of money in hardware. They are used to spending money on a TV licence but they don't want to invest in a lot of technology they are not quite sure about. And they don't want to be charged by the minute for using this TV service - it's like charging someone to browse through a store. They expect to be able to look at the products on there free of charge. Consumers want live up-to date availability, they want it available now. They want to be able to purchase on-line and, if the consumer is going to purchase on-line, the experience needs to feel safe and secure and simple as well. You saw in the video that we have this thing called the Payment Zone. When she wanted to buy the video, it put together her payment details, her address, personal stuff etc. This is held in a safe area called the Payment Zone and because the service is coming from a broadcaster, the broadcaster becomes a trusted third party. This isn't the 'wild west experience' we are talking about on the internet! At the ABTA conference in Australia, there was a session on tomorrow's consumers and we were reminded that consumers are spending more money on fun these days and they value time as their most precious asset. They are willing to pay a small service charge - £5 or whatever - to avoid standing in the queue. Consumers are also becoming more sophisticated, savvy and demanding and, when they have access to travel distribution channels and they have more options, they feel more confident about booking their own holiday. So we want to encourage that confidence by providing a certain comfort level and really make them feel confident in purchasing on-line. 

So, finally, what else does the viewer expect? They expect to be able to watch TV - we find that consumers put on the TV to watch their favourite shows and research from the US and Web TV has shown that, if the viewer has the ability to continue watching TV while using the service, that is a critical factor in service take-up. They want uninterrupted TV viewing and this is not possible if you have interactive content on a separate broadcast channel.

So, that is the consumer, but what does all this mean for the travel company? One thing, as I'm sure you've all heard already, is that distribution costs can go down. When consumers are booking direct, you can save money on reservation system fees, commissions and also, if you put an interactive brochure on the TV, you probably won't have to print as many brochures; you probably don't need as many shops in the High Street, not as many call centres - maybe eventually you won't need a call centre at all. So, taking the travel agent from the High Street into your home can reduce your costs. Since it is coming from the TV, travel companies can also have access to the consumer 24 hours a day, 7 days a week. What we have to remember is that the consumer is in a no-pressure environment, in the comfort of their own home, so travel companies need to make booking a holiday entertaining and leisurely. 

So how can travel companies increase their look-to-book ratio? One obvious requirement is to offer top quality content on the service. If we just put web pages on the TV, we have all failed, because that is not the look the consumer wants or expects. It has to be visually appealing to the consumer, enticing, engaging and, with all this technology out there today, travel companies can do a lot of great stuff with their content. They can really take advantage of the multi-media potential, they can put in audio clips, video clips and really make it engaging. We are fortunate at NTL in that we can use internet-based standards in re-purposing web pages. We can use travel companies current web pages written in HTML, Java script, Flash, SSL and can maximise current databases and also tie in to travel companies' call centres. So, again, it is a TV-based service - very different from a PC. Why can't you just slap a web page on the TV? Well, the screen display characteristics are different. With the TV you do have a larger screen, but things on the screen have to be bigger because the viewer is further away from the TV. You also want to avoid a lot of white backgrounds on web pages, because that doesn't work on a TV - a white background on a TV blinds the viewer. If you look at a lot of web pages, they can be cluttered, they can bombard the user with a lot of information and that just won't work on the TV. Travel companies also need to keep in mind that navigation needs to be easy and intuitive. We don't want the viewer to get frustrated, turn off the TV and pick up the phone. We want to encourage them to use the service as much as possible and we want to encourage on-line bookings as well. The service also needs to allow for personalisation. When the viewer books a holiday, you want to give them a reason to come back to the service. It is a real advantage, if perhaps the viewer books a skiing holiday, the service can trap customer activity in that the service can remember that that customer likes to ski. You don't get this on the internet because on the internet they can visit your website, but you don't know where they were before they clicked on your site and you don't know where they're going to go after they leave your site. If the service can remember that the viewer prefers snow to sunshine, you can really develop a one-to-one relationship with that consumer. Travel companies can also increase look-to-book ratios through marketing member and loyalty programmes and, when you saw the demo, you saw direct marketing through the competition as a way of holding the viewer within the ssrvice. In terms of one-to-one marketing relationships, this is great for that because, with standard terrestrial TV, you know where the consumers TV is because that is the way TV ads are sold, you have a good idea of who is watching what and when, based on statistics and surveys that you get from the networks; but with digital TV this all changes. This is because the consumer now has a set-top box and, if that box is interactive, it has a back channel on it and that back channel gives a connection to the broadcaster, from the consumer's home to the broadcaster and, through this, you can find out a lot more about your consumer. You can see where they live, how many people are in the house, what channels they are watching and, in terms of interactive, we know exactly what they are doing. When the consumer buys products, we can know the profile of the people - this is really true one-to-one marketing. 

So, let's return to the consumer for a minute - what does this mean for them? Are we talking about big brother in their home, following their every move, knowing exactly what they are doing? No, that is not what we're talking about. What we are creating at NTL is a service where the viewer feels completely in control of what they are doing. They are not experiencing in-your-face hard sells, junk e-mails, nothing too high pressure. On the video you just saw a little reminder in the corner of the screen "hey, how about another video" - it was not in-your-face and she can just get rid of it if she wants, or she can ignore it and move on. All this tracking that we are talking about in terms of the consumer, who they are and what they are doing, is all done behind the scenes, so the consumer feels very much at ease and very comfortable. 

So, you may be thinking, this sounds fantastic - but there have to be some downsides to this. Well, there are some things to consider. As I said before, if travel companies want to get involved in this, one thing they need to really work on is providing top quality content. When you do that, your costs can go up. You may have to produce more information than what is currently available in your brochures now. You may want to provide video brochures of holiday destinations, you may want to provide scrolling 3-D pictures. You might want to add virtual tours of hotels, cruise ships, there are all kinds of possibilities here, but they cost. Also, because the TV screen is bigger, but the viewer is sitting further back from the screen, you have to create things bigger and that may result in an increase in production costs as well. We have to remember that, those that produce the best content, will use that content to drive the viewers through that content and lead to purchases. 

So, you may be thinking, now what? Is this the right time for me to get involved? Well, only you can decide, because you know your company strategy better than anyone else. However, there are some things to keep in mind. If your strategy involves multi-distribution channels, you will want to be in this interactive space. Interactive TV is an important market for the travel industry and it is not going away. You can reach a large active marketplace through it. And, as we have seen, travel is already one of the most successful areas of trading on the internet and thousands of travel products have been successfully retailed over the TV as well, through Teletext. So, the marriage of TV and internet and on-line services to deliver interactive services, seems to be the logical next step. There is an advantage to getting in early. There is a lot to learn, a steep learning curve (trust me, I know) but, if you get in early, you can learn with the rest of us and get in on the process and you can share the opportunities, the risks and the rewards with your distribution channel. One thing you should definitely remember is that the travel industry is in the ideal place to reap unique opportunities offered by this new media.

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