Case study: 1-2-3.TV

Innovation in interactive television



After the dot-com bubble burst, many private equity firms vowed to steer clear of technology start-ups and focus instead on buy-outs of established businesses. But there are exceptions – particularly when a technology appears to capitalise on changing demographics and tastes. One example is Munich-based 1-2-3.TV, an interactive television channel that has launched a new home-shopping service.



In September 2004, the principals of this small channel raised Û20m from a consortium of three private equity firms, including 3i, in the largest early-stage investment in the media sector since 2001. The funds have allowed 1-2-3.TV to offer a new service in which customers use online bidding to name their prices for goods offered for sale on TV.

The auction-like service has been described as “eBay power-shopping on TV”. Viewers are presented with a selection of items for sale, such as clothing, sporting goods and home improvement items. They are given a minimum price to start the bidding process. Customers can place online bids for up to 30 items. The service is expected to reach 14.5 million households via the Astra satellite.

The new launch capitalises on the soaring home shopping market in Germany, where revenues have grown by an average of 50% a year since 1997.

“Rarely do we see investments with such a competent and experienced management team. The latter is rounded out – in addition to the founders – by seasoned home shopping experts from the fields of purchasing, planning and production,” says Dr Daniel Meuthen, Director, 3i Germany.

The first round of funding from the three private equity investors is “a remarkable demonstration of confidence” in the new technology and the fledgling firm, says 1-2-3.TV CEO Schnepper. He expects the company to become the market leader for interactive home shopping within a few years.

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