QVC UK Sees Major Impact from Digital TV Rollout

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LONDON - QVC UK Ltd., the British subsidiary of QVC Inc., expects the growing consumer acceptance of digital television technology to impact its business in several ways.


While QVC is enthusiastic about the possibility that digital television will allow consumers to conduct transactions directly through television, the technology boosted carriage for a new competitor, Shop! Ltd., based in Liverpool.


Digital television also allows terrestrial broadcasters to send up to six digital signals in place of a single analog signal, which means a potential explosion in the number of channels available without need for a cable or satellite connection.


The rollout of digital set-top boxes in England not only allows viewers to select from a bigger menu of programming, but also to interact through a remote control. While QVC UK does not conduct transactions directly through TV now, its chief engineer expects the technology to come available within the next year.


"Our shopping format lends itself to interactivity," said Richard Burrell, director of engineering and operations. "The technology should be available within the next 12 months." He said the system would have to undergo more extensive testing to ensure that customers feel satisfied with the results.


British viewers are accustomed to interacting with the television because of the widespread use of teletext services. Teletext, a technology never widely adopted in the United States, allows viewers to obtain more information about programming and conduct transactions, such as travel booking.


QVC UK has a teletext service that earns 3.5 million pounds ($5.6 million) a year. Teletext sales are highly profitable for the company because its teletext department consists of two employees who manage the service. The company's sales were 146 million pounds ($234 million) last year, the first time the company was profitable since its launch in 1993. QVC UK also launched a transactional Web site, www.qvcuk.com, in October.


QVC UK faces competition from newcomer Shop! Ltd., a shopping service carried on a rival digital system. For viewers, the choice of shopping channel depends on their digital TV system.


Because QVC UK is partly owned by News Corp.'s BSkyB subsidiary, it is carried on the Sky Digital service. Sky Digital competes with ONDigital, a joint venture between British station groups Grenada Group PLC and Carlton Communications.


Shop, a joint venture between Grenada and British retailer Littlewoods, is carried on ONDigital's service while QVC UK is not. In the race for more subscribers, ONDigital recently began offering digital set-top boxes to consumers for free.


While QVC's U.S. operation is accustomed to competition from such rivals as Home Shopping Network, ValueVision and Shop at Home, its QVC UK operation wants to win the battle with other newcomers by maintaining relationships with pre-existing customers.


"Home shopping is a return business," Burrell said. "We want to build a relationship with our customers that is ongoing." n
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