Startups Target Couch E-Commerce

No exhausting phone calls, flipping through catalogs or surfing the Net. All you need to go shopping is your TV remote. Two companies, Wink Communications (NASDAQ: WINK) of Alameda, California, and RespondTV of San Francisco, California have developed technology that adds a graphic overlay over television programming - enabling users to point-and-click their remotes to get more information about what's on-screen or buy a product in real time. For advertisers, ""It's like they died and went to heaven,"" said Wink CEO Maggie Wilderotter. ""It's finally an opportunity for them to measure the effectiveness and pay for performance and have direct connectivity to customers."" Although there are technical differences in the way Wink and RespondTV deliver and process information, both companies capitalize on the technology already present in set-top boxes. Currently, RespondTV only works on WebTV Plus and EchoStar Dish players, but there are plans to add AOL-TV and other cable set-top boxes in the coming months. A recent test run of the technology, asking WebTV users to place an order over their televisions for a free Dominos pizza, received an overwhelmingly positive response rate. Richard Fisher, Executive Vice President of RespondTV, estimates the technology will be available in between 1 million and 3 million homes by the end of the year. ""The only thing holding us up now is getting the boxes ready,"" Fisher said. Wink, which has a significant head-start on RespondTV, also expects to be in about 3 million homes by the end of the year. In the fourth quarter of 1999, the company said, about 1,000 ""enhanced"" commercials aired featuring its technology. In order to activate the ""enhanced"" television content, viewers use a standard remote control to click on a small icon that appears on-screen indicating there is additional information or a chance to purchase. According to Wilderotter, the dramatic rise of people using the Internet for e-commerce has created a new kind of consumer who is already comfortable with ""pointing and clicking."" Transitioning that behavior to television is a natural fit, and potentially much more profitable. ""The audience is already there,"" Fisher said. ""Unlike the Web, where you built it piece by piece, you've already got 20 million people watching 'ER.' The Web can't match that."" Forrester Research predicts enhanced broadcasts will generate $6.2 billion in advertising revenue and $3.8 billion in commerce by 2004. The majority of that revenue will go to cable and satellite operators and technology vendors like Wink and RespondTV. That kind of money isn't likely to be ignored for long. Wink and RespondTV will likely soon face increased competition, something they are all too aware of. ""You're going to hear about startup after startup coming out of the woodwork,"" Fisher said. ""You're going to see an unbelievable amount of investment in this business in the coming years. It's going to rival the dotcoms.""