The U.K. VOD market – nascent but growing

Policy wonks, quango officials and broadcast executives met in central London last Thursday to debate the state of the U.K. VOD industry: offering perspectives on incumbent services, those soon to launch, rights management and pending regulatory changes.

Unsurprisingly, the first half dealing with audiences, programming and business models packed them in, while 90 minutes on regulation drove half the audience away, and left the other half in near coma.

Virgin Media’s charismatic Malcolm Wall, CEO of Content, hailed the success of VOD rollout on his platform, proclaiming that “the UK market is coming of age.” The service offers 3,700 of video content, including around 1,000 hours of catch-up TV from broadcasters such as the BBC and Channel 4. Just under half of Virgin customers use the service at least once a month (this compares with around 70% of Comcast subsribers stateside), with around 30% of views to catch-up TV. Some 270 million pieces of content viewed during 2007. His prediction that VOD viewing on the platform would soon outstrip linear viewing of terrestrial channel Five was built on with the further portent that 20% of UK viewing would be non-linear within the next five years. But most striking of all was his disclosure that subscription-based viewing is rapidly replacing pay-per-view.

Both Wall and BBC Future Media Group Controller Erik Huggers used their respective turns to plug the impending launch of a “10 foot” version of BBC iPlayer on the Virgin Media platform, due Q2 2008.

Channel 4’s Sarah Rose, Head of VOD and Channel Development, asserted that partnerships with TV platform partners Virgin, BT Vision and Tiscali TV were “fundamental” and responsible for generating the majority of views to the broadcaster’s 4oD umbrella brand. The biggest mindset change for C4, Rose said was developing approaches for customer relationship management, investing in software functionality and developing new approaches for compliance in an environment where the 9pm watershed is immaterial.

4oD online has an installed base of 1 million users (those who have installed the service software) and unsurprisingly the constituency is 60% male. More striking though was the suggestion that the most active of registered users skews female. Around two-thirds of online users are under 35. No surprises that comedy, drama (about a third of all viewing) and entertainment lead performance, but minority interest programming also does “disproportionately well”. The service is split between around 3,000 hours of (mostly free to view) archive – some of which can “engender loyalty to series” – 60 to 70 hours of new catch-up TV every week and around 300 films.

But there were two star turns at the event: Paddy Barwise, Emeritus Professor of Management and Marketing at the London Business School, and Roger Edmonds, a freelance journalist and one of the key figures behind UKNova, a BitTorrent site which specialises in British TV programmes.

“Calm down dears,” was Paddy Barwise’s opening remark, attempting to balance the boundless enthusiasm of incumbent providers with the reality check that for the overwhelming majority, linear TV rules. Barwise said that while announcements from major players were creating enormous developments on the supply side, but the demand side remained sluggish. Adding: “let’s have a bit of huimility about what will or won’t work, before throwing out too many babies with the bath water.”

John McVay of independent producer trade body Pact chipped in with the challenge that broadcasters may like to consider boosting spend on quality programme-making, before over-investing in technical platforms which were yet to prove themselves with mass audiences.

Roger Edmonds of UKNova threw down the gauntlet to U.K. broadcasters, promising that when they could fully meet the demand for British TV programmes that he sees from his users with a free service, he’d close his site down. With a nod to Project Kangaroo, the soon-to-launch on-demand joint venture between U.K. terrestrial broadcasters, he decried the scarceness of choice from traditional players.

Jeremy Olivier, Head of Convergent Media at regulator Ofcom issued the rallying call which cleared half the room, and devoted his piece to changes ushered in by the European Audiovisual Media Services Directive, which compels member states to move to more robust regulation of the VOD sector, including greater protection from content which may harm or offend vulnerable audiences. Ofcom has pulled together an industry panel to

TV nets face up to growing online competition

Variety reports on the latest online video forecasts produced by market analysts Screen Digest: the U.K. market for online TV will be worth £181 million (US $362 million) by 2011, but growth of the online movies segment is predicted to be slower.

There’s no doubting that across the Pond, the competitive environment is really gaining traction, as observed by the Financial Times: in the two years since that watershed moment when iTunes first started offering download-to-own TV shows from Disney, all of the major networks have scrambled to not only beef up their own sites, but also to broker those all-important third party syndication deals.

In the last week alone, Walt Disney-owned ABC has agreed a deal to syndicate its shows, for free, via AOL. The net joins CBS, which has been aggressively pursuing its own syndication strategy for the past few months, while Hulu.com, the online video aggregator site JV between NBC Universal and NewsCorp. is due to bow next month.

Hopping back over the Pond to the U.K., the BBC, ITV, Channel Four and five all have online catch-up TV services: the BBC offers the broadest range and volume of hours, while ITV and Channel Four are increasingly bolstering their catch-up offers with back catalogue shows. Satellite broadcaster BSkyB is broadening its Anytime service, with different flavours of the catch-up service available both via broadband and Sky+ DVRs; the company’s recent pact with Sony will also see an extension of the service for Playstation PSPs.

The Screen Digest research referenced at the top of this post acknowledges that established players such as TV networks also face competition from non-traditional market entrants, such as Joost and iTunes. Significantly, it may be players such as Apple and Microsoft, which stand to gain the most if they can finesse their strategies to leverage consumer relationships through ownership of devices, such as iPods, or the world’s most uniquitous operating system.

Four predictions of my own:

1. The last year or so has merely been about positioning and trying to establish which online video offers work, and which don’t. Note CBS is moving beyond merely offering full-length TV shows online and gradually ramping up 2.0 functionality: conversational content. 2008 will see the space grow up considerably. 
2. Whether it’s aggregators or TV networks’ own sites, online video offers are principally restricted to ‘walled gardens’ of content, usually from the operating network or a select few content partners. This is wholly alien to the TV viewing experience: consumers don’t watch shows from a single network or producer. The walled garden approach smacks of protectionism and, over the fuller term, it won’t last for all but the smallest handful of players. The creation of Hulu.com is the first acknowledgement by two major players that hybrid partnerships such as thes, which broaden out the available content offer, are the way to go. YouTube is further evidence of a successful broad-brush aggregation model – albeit with some copyright complications.
3. The market is already overcrowded: come further shocks to the world’s stock markets (an inevitability), watch the venture capital evaporate. Incumbent players looking to second or third round financing, against a backdrop of unproven business models (let alone profit) will shutter or consolidate. Viacom had better be hoping that it can pick up the assets of Joost for a song.
4. Apple TV and Microsoft Media Center are the first two examples of mainstream PC/TV convergence: but neither has yet created a compelling enough content offer nor low enough price points to give the products a reasonable run at setting the market alight, beyond early adopters. Next gen games consoles from Sony and Microsoft will up the ante by gradually bolstering their IP-delivered VOD offers, but even these may struggle to break through beyond gaming loyalists. Either some boffin will come up with the cheapest and most elegant plug-and-play convergence-enabler – witness what Freeview set-tops did for the U.K. market – or new product categories, such as networked DVD player / recorders or DVRs will hit that magic tipping point of attractive pricing and mainline retail distribution.

Discovery ramps up online video strategy, but with baby steps

Discovery Networks is to stream full-length episodes of its most popular series available for online catch-up. According to TV Week, only a handful of shows, such as Meerkat Manor, will initially be posted and, in a somewhat luddite move, a day after they have been premiered on cable TV.

Online episodes will feature pre-roll commercials and be delivered through a player provided by Move Networks.

ITV Broadband rollout gathers pace

UK broadcaster ITV has been slowly adding to its online video service, which now offers a selection of treats from the archives, alongside catch-up episodes of popular soaps like Emmerdale and Coronation Street. Vintage classics such as Morse, the first episode of Brideshead Revisited are offered alongside classic documentaries, such as Diana: Story of a Princess and Whicker’s World. Plus my faves, children’s series Joe 90 and Metal Mickey.

Live streaming of ITV’s four channels is also available, though when I checked in on ITV1 for the tail end of GMTV, all I got was a message saying: “Sorry the current programme is unavailable”.

There are also Celebrity Playlists from the likes of Zoe Ball, This Morning anchors Phillip Schofield and Fern Britton, and Amanda Burton. Not an entirely new concept: iTunes has been doing this for a while and the BBC offered a similar feature during the trial of its iMP service — but ITV do seem to have got the choice of celebs right for the tone of offer which will likely success with its core audience.

At first glance the navigation is woeful: content discovery is anything but intuitive, but there may be method in ITV’s madness. All content is offered as on-demand streams, so it could be the broadcaster’s way of managing capacity.

Mediaset launches online video service

The UK terrestrial broadcasters have generated a fair amount of press with their online video launches, but now comes the first major service from mainland Europe: Italy’s (or should that be Silvio Berlusconi’s) Mediaset.

The video portal will initially offer a selection of ‘best of’ TV series, news and entertainment content from Mediaset’s portfolio of terrestrial channels, with premium VOD to follow.

From September, three Serie A soccer matches will be offered each week, together with downloadable episodes of popular Italian and US TV series. 

There’ll be some web exclusive content as well as user-generated material related to the broadcaster’s programming.

Interestingly, given all of the hullaballoo about the extent of the BBC’s iPlayer offer, Mediaset’s interactive head Yves Confalonieri has ruled out the possibility of offering all its TV content via the portal: “the user doesn’t want all TV content on this medium,” he said.

The site currently attracts 6.5 million unique users per month, a figure Mediaset are banking on increasing with the new offer. The bulk of revenue is expected to be from advertising sales, rather than pay-per-view.

Mediaset is also looking at content syndication deals for third party sites, such as YouTube. Given the former’s recent acquisitions of Endemol and film distributor Medusa, it stands to have a significant edge over competitors.

BBC iPlayer revealed

The BBC finally took the wraps off its iPlayer, which will beta launch on 27 July. It’s a retrospective ‘catch-up’ service allowing users to browse through the last 7 days’ TV shows, as broadcast on the BBC’s linear TV channels, download these and keep them for up to 30 days (after which the DRM’d files ‘auto-destruct’) .

It enters the UK market as a time when other major broadcasters such as Channel 4 (4oD), ITV (ITV.com), Five (Five Download) and Sky (Sky Anytime) have already rolled out similar products — not to mention the online pushes from major US networks and new-breed content aggregators Joost, Babelgum, Jalipo and Veoh.

Judging by the BBC’s launch announcement, the first phase PC-only iPlayer is but a foretaste of things to come: syndication deals are to be put in place YouTube, MSN, Yahoo!, AOL, telegraph.co.uk, Blinkx, Bebo and Tiscali. There’s also a TV version in development, to be available first on the Virgin cable platform in the UK.

Other future developments include ‘series stacking’, whereby users can download multiple episodes from the same series to ‘binge’ on when they please; integration of the currently standalone BBC Radio Player; a/v streaming; versions for Mac and Vista users, plus mobile and portable devices; as well as accessibility toolkits for the vision and hearing-impaired (the latter perhaps a first from a major broadcaster?)

The BBC’s new media head Ashley Highfield predicts it’ll attract 1 million users within a year and will become the default way of accessing the BBC’s programmes on-demand. Jana Bennett, head of the BBC’s TV division, believes its promise will be most powerful of all by introducing users to new programmes, as well as familiar hits.

The service offers a staggering choice of up to 400 hours of TV programmes every week – all, true to the BBC’s public service ethos, without advertising.

Round-up of press comment:

iPlayer let viewers watch when they want, The Times (UK), 28 June 2007

BBC to let you download your favourite shows for free, Daily Mirror (UK), 28 June 2007.

BBC’s iPlayer to launch next month, Daily Telegraph (UK), 28 June 2007.

BBC iPlayer launch accelerated to July, PaidContent.org (US), 27 June 07.

BBC web downloads set to launch, BBC News (UK), 27 June 2007.