May 31st, 2011

Play a Game, Buy a Dress

The Wall Street Journal

HSN Inc. is hoping its shoppers will play along.

This week, the TV-shopping network is adding videogames to its website in hopes of piggybacking on—and better competing with—the attraction of online games. The new feature, called HSN Arcade, will pair 25 games like Sodoku and Mahjongg with a live stream of HSN’s main television channel.

The move highlights how retailers’ aggressive push online is putting them in competition not only with established e-commerce outfits, but also with other demands on Internet users’ time. Retailers have experimented with selling goods via Facebook Inc., for example, an acknowledgment of the draw of social media.

Videogames are tying up an increasing share of Internet users’ online minutes, a phenomenon that hasn’t gone unnoticed by advertisers and has sparked acquisitions like Walt Disney Co.’s purchase of Playdom Inc. last summer.

Both HSN and online games are popular with middle-aged women. “There is a ton of overlap there,” says Jill Braff, HSN’s executive vice president of digital commerce.

HSN, a hybrid of a media company and a retailer, is hoping the games will keep customers on the site longer and expose them to more products. “There is quite a bit of commerce we can drive for this,” Ms. Braff said.

Users of the HSN Arcade will play a game on about two-thirds of the screen, with the remaining space dedicated to a high-definition live stream of the company’s primary television channel, featuring items for sale. The site also prominently features links to the most recent products to appear on air.

The television channel has a sizable online audience already, with 2.4 million unique visitors last month, according to comScore. Last year, HSN sales increased 5% to top $2.1 billion, with one-third of that coming from online customers.

Hanging on to that audience in part means competing with the surge in casual online gaming. More than 93 million people in the U.S. played games online in April, about 43% of the total Internet audience, according to comScore. Roughly half of online gamers are women. Last month, women spent 128 minutes playing games, about 40 minutes longer than men did.

Online activities are competing with HSN’s regular broadcast, too. The company says its research shows many of its customers are already watching TV with their laptops in hand.

“As long as people are playing games, why lose them to another site?” says Jessica Rovello, co-founder of Arkadium, the videogame developer with which HSN partnered.

Only two of the games have direct tie-ins to HSN, but the company says it is looking to do more. It is exploring using some of its on-air celebrities, including tennis player Serena Williams, in future games.

The most direct product correlation is the Today’s Special Puzzle, a jigsaw puzzle that pictures an item HSN will feature repeatedly for 24 hours. A new puzzle will go up online every night at midnight, when that day’s item first appears on air. Users who complete the puzzle fastest will be eligible to receive prizes, including the item itself.

Most of the games award users with virtual tickets or badges that currently offer little more than bragging rights. HSN says it could eventually turn those prizes into promotional tools, for example making them redeemable for discounts or free shipping.

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