While interactive television is fairly common in the European television markets, it hasn’t yet caught on in a significant way in the United States, but EchoStar Communications Corp. is hoping to change all of that.

The company which already offers a variety of interactive services, EchoStar will be the first television company in either the cable or satellite side of the market to offer the ability to shop through the interactive functions on its Dish Network direct-to-home satellite television service.

The service, to be launched later this month, was developed in partnership with high-tech gadget retailer Sharper Image and offers Dish subscribers the ability to purchase selected items from their catalog from the comfort of the living room.

According to Scott Higgins, director of interactive programming for EchoStar, the service works like this: viewers enter the interactive portal and select the Sharper Image channel. After browsing the catalog and making a selection, the view, through the remote control, is prompted to enter credit card information. That information is shipped directly to Sharper Image for order processing.

“Having The Sharper Image as a new content provider is a compliment to shopping alternatives that viewers have right now,” Higgins told Satellite News.

When queried about whether EchoStar receives a percentage of every transaction processed over the television or whether it has a more flat-fee oriented arrangement with Sharper Image, Higgins declined to comment. “Whether we get a piece of the transaction or a flat fee, they kind of work out to be about the same at the end,” he said.

Higgins also offered a vague response to how EchoStar will be gauging the success of this interactive shopping offering. He noted that success will be judged based on two criteria: how it benefits the viewers and how the service is perceived to benefit other content providers.

“When we look at our viewers, how we define success will be in the volume of transactions that go through,” Higgins said, though he declined to say what the target volumes EchoStar was aiming at to call declare the service a winner.

“As far as our content providers are concerned, the ability for us to demonstrate shopping technology through the remote control adds a lot of value when we talk to content providers that would like to open up stores,” Higgins said. “Now that Sharper Image has been the pioneer on Dish in leading the way to demonstrate the technology, more content providers will be interested in coming on board.”

Higgins noted that a karaoke channel is already prepared to launch and two other shopping channels are in development.

It’s Built, But Will They Shop?

The $64,000 question facing EchoStar right now is whether people will want to look at the television viewing experience as a more active experience than the passive role that it currently plays.

If the European experience is telling, interactive TV is poised to be successful in the U.S. In fact, Higgins acknowledged that EchoStar carefully studied the European interactive TV market. “BSkyB has done a phenomenal job,” Higgins said, adding that EchoStar uses a “best practices” approach and brought the best of what it saw in Europe when it was developing its interactive services.

But there could be certain cultural differences that could hinder the adoption of certain interactive services like shopping in the United States.

“In general, interactive services have taken off faster in Europe that in the Americas…because the broadband Internet connections are more prevalent,” Jack Mayo, market analyst with IMS Research told Satellite News. “Viewers can access those [interactive] services easily over the Internet.”

However, The Carmel Group‘s CEO and senior analyst Jimmy Schaffler challenged the notion that Americans will look to specific items for specific uses, such as the television for video viewing and the PC for interactive content.

“There’s been that long running debate as to whether in living room people will push forward or lean back,” Schaeffler told Satellite News. “My way of thinking, [perceptions will turn with] future generations. Future generations don’t care about a concept that says I am in my living room so I have to do [passive] types of activities. They are going to do it all and all the time wherever they are. I see the TV becoming a [passive and active device]. It will double as a PC screen and a movie screen. The TV [like cell phones and other forms of communication] is just something to get data to you in any form, a means to an end depending on where you are.”

One aspect that Schaeffler considered to be significant about this announcement was that EchoStar is first to market with the interactive shopping service.

EchoStar “is the one multi-channel [service provider] that really doesn’t have an in-house content package, something they produce and sell themselves,” Schaeffler said. “Every one of [EchoStar’s] competitors do. So this, I think, is a positive step forward. Eventually in order to compete on the same level with Comcast, Time Warner, Cox and DirecTV, [EchoStar] needs to have a strong content stable.

–Gregory Twachtman

(Jimmy Schaeffler, The Carmel Group, 831/634-2222; Kelly Baca, EchoStar, 303/723-2012; Jack Mayo, IMF Research, 512/302-1977)