The U.K. VOD market – nascent but growing

2 02 2008

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





iTunes TV downloads launch in the U.K.

29 08 2007

Apple iTunes users in the U.K. are now able to access a range of download-to-own TV shows licensed from ABC/Disney and Viacom at £1.89 a pop (double the equivalent of the U.S.), the first time the service has been extended outside the U.S since it created a watershed moment for online video in late 2005.

The initial content offer is pretty thin at just 28 U.S. series, many of which in the case of ABC-licensed content have already been offered on Channel 4’s 4oD service, albeit at higher rates. The lack of any U.K.-produced titles could be perceived as a tad culturally imperialist – not to mention a lack of riches.

In the U.S. iTunes users have been downloading an average of one million TV episodes each week (50 million have been downloaded to date); meanwhile two million movies have been downloaded via the service so far. But this still pales into insignificance vs. performance of audio titles: 13 million single tracks and just under a million full album downloads every week.

Whether this latest development will play to Apple’s business model of driving hardware sales (eg video iPods, Apple TV) through offering a compelling range of software (TV and music) remains to be seen. In any event, it’s a big move for the U.K. market which can only serve to stimulate overall demand for licensed, downloadable TV and movies.





First green shoots of the U.K. online video long tail

4 08 2007

This morning was my first real opportunity to play around with the BBC’s Open Archive trial, a corucopia of vintage treats — made even more rewarding by the addition of newly-shot contextual pieces wrapped around the original video, as well as extra material from some of the BBC’s best-known faces.

Wildlife presenter David Attenborough, for example, talks about life on both sides of the camera; while comedian Lenny Henry shares his thoughts on [the now very un-PC] 1970s variety format The Black and White Minstrel Show. 

Browse is filtered by decade or category, with the real reward coming through ‘serendipitous’ linking of related content, turning a mere experience into a voyage of discovery.

Lots of predictably worthy ‘public purpose’ stuff there, but I’m afraid it was a 1982 episode of The Keith Harris Show which I gravitated towards. They don’t [thankfully] do song and dance routines like that any more 🙂

The trial service is currently available to just 20,000 people, but it’s hoped that the BBC’s Trust unit will soon grant permission for it to be made available to a broader audience.

The ITV Broadband service, meanwhile, is open to all and features an increasing range of full-length classic drama, comedy and children’s titles. While the availability of the programmes is rewarding in its own right, the BBC service differentiates itself with the additional contextual material mentioned above.

Channel 4’s 4oD service also offers a small back catalogue of titles, but these are accessible only a pay-per-view basis (vs. ad-funded for ITV and free for the BBC) and with the majority being titles which were broadcast within recent months, the service is generally more based on extended catch-up than a true long tail offer.

Anyway, I’m off to catch some more of Keith Harris, Orville and Bournemouth’s answer to Vegas showgirls.





BBC iPlayer: first publicly-released uptake stats; 4oD update

3 08 2007

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BBC iPlayer launched in beta a week ago today. According to this report, 100,000 users are up-and-running on the service.

paidContent says the BBC puts the number of users so far at 120,000; with a forecast of 500,000 registrations to the service during its first six months. Meanwhile, Channel 4’s 40D service will soon reach 500,000 users, according to The Guardian.

40D has so far recorded 2.5m unique users and 20m downloads of shows since the launch in December 2006.

In a possible hint at the forward roadmap for BBC iPlayer, Jeff Richards, vice president of digital content services at Verisign, which provided the peer-to-peer download technology underlying both the BBC and Channel 4’s services, said: “Over time, the iPlayer could be modified to allow users to embed video.”





Analyst: TV downloads ‘use underhand tactics’

30 07 2007

So says Jupiter Media broadband analyst Mike Fogg, quoted in The Guardian today.

Mr Fogg warns that new U.K. download services such as BBC iPlayer, 4oD and Sky Anytime use [the same Kontiki] software which continues to upload downloaded file fragments in the background, even though the requested piece of content may already have finished downloading. “Many will notice that their internet connections may be running slower, but will not necessarily know why,” the sage of Jupiter adds.

Welcome to the wonderful world of peer-to-peer, Mr Fogg, it’s the way the technology works. You get something and act as partial onward distributor for others who may want the same thing. Slower connection speeds could as attributable to ISPs throttling speeds for heavier users, as it is to the Kontiki app. itself.

The analyst may have a point though when it comes to transparency from the content providers themselves: information on how to turn the Kontiki app. off, however, would be counter-productive as it reduces the available pool of onward distributors.

But then again, as he also observes: “Other peer-to-peer programs such as Skype and Joost [coincidentally from the same people] – which do not behave in this way – have come from people who understand how the internet works… These guys [BBC, Channel 4, Sky] are broadcasters and don’t necessarily have the same understanding.”

In a not entirely unrelated development, New Media Markets [sorry, subscription only] last week reported that the U.K.’s Virgin Media is to cap connection speeds for heavier users at time of peak demand (4pm-12 midnight) across its entire network, following successful trials earlier this year. A user on a 20 Mbit/sec contract exceeding a 3GB download threshold, for example, would typically have the tap turned down by 5 Mbit / sec. The restriction remains in place for four hours.

Nothing particularly novel about turning the tap up and down, it’s common practice by U.K. ISPs to help manage capacity. What is new is the end of Virgin Media’s truly ‘unlimited’ broadband offer, a U.S.P in the U.K. consumer broadband sector (at least for the price). On balance, p2p traffic figures do bear out that Virgin has a disproportionate number of heavier users vs. other U.K. ISPs. But speaking of transparency, how are Virgin proposing to announce this to customers?





Microsoft brings you… live television

8 07 2007

Interesting post from Erick Schonfeld, Microsoft Research and UK company Skinkers are testing p2p software called LiveStation for streaming live television to PCs (a Mac version is also being developed) using Microsoft Silverlight. The technology was first unveiled at NAB in April and is due for full release in October.  There’s nothing particularly new about streaming live TV over the web: in the UK Channel 4 already simulcasts a proportion of its primary network schedule via the 4oD service; ITV is working on similar plans for ITV Broadband; the BBC began live simulcasting of its News 24 network in May; last week Zattoo announced the launch of a UK localised version of its service (which re-transmits TV channels with a 1-second delay); whilst this is something JumpTV has been doing for a while.  But using p2p as a means for live streaming is a more efficient means of distribution bandwidth-greedy TV. Microsoft, Skinkers and any broadcaster partners they eventually sign up will need to do much to educate ISPs on the benefits of this technology, given that regular access to it by an end user on a fixed cap broadband plan will likely result in additional usage charges.

Here’s an interview with Matteo Berlucchi, CEO and co-founder of Skinkers, plus some coverage on arstechnica.





The cost of online video-on-demand

30 06 2007

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4oD: not explicitly reported, but new media division – spanning other activity too – spent £34.6 million, up £11.5m on 2005. (Source: C4’s 2006 annual report).

60frames: the JV between Hollywood power brokers United Talent Agency and online ad agency Spot Runner. Start-up capital of US $3.5 million. (Source: Globe & Mail, 31 Jul 07)

Babelgum: €220 million [US$288m] (source: C21 Media [by subscription], 19 April 2007). Other sources suggest seed capital of €10 million [£6.78 million] from founder Silvio Scaglia, with a further €70 million pledged during the next three years.

BBC iPlayer: £4.5 million (source: The Sunday Herald [UK], 2 December 2007). Funded by licence fee.

BitTorrent: backed by US $20 million from  Accel Parners and DCM.

Break.com: Lionsgate has invested US $21million for a 42% stake.

Brightcove: US $81 million so far… Launched 2005 with $5.5 million funding from General Catalyst Partners and Accel Partners (source: company press release, 1 March 2005). Raised a further $16 million the same year, attracting investment from AOL, IAC/InterActiveCorp, The Hearst Corporation, and Allen & Company LLC (source: company press release, 22 November 2005). A further $59.5 million was sunk by a syndicate led by AllianceBernstein L.P., Brookside Capital LLC, Maverick Capital, Ltd.; the funding round also included investments from The New York Times Company, Transcosmos Investments & Business Development, Inc., as well as all of the company’s existing strategic and financial investors: Accel Partners, Allen & Company LLC, AOL, General Catalyst Partners, The Hearst Corporation, and IAC/InterActiveCorp. (Source: company press release, 17 January 2007).

Bud.tv: backed by parent company Anheuser-Busch to the tune of US $30 to 40 million.

Dave.tv: Provider of video distribution and social networking platforms to content providers, founded in 2003. The company is currently backed by angel investors, including Applied Semantics co-founder Rex Wong, who is believed to have sunk at least half of the company’s initial $7 million funding (source: MarketWatch, 1 Aug 2006). Potential investors take note: the company’s site says “We are in the midst of seeking strategic or venture capital to facilitate our growth.”

ITV Broadband: £20 million (source: Digital Spy, 8 June 2007).

Hulu.com: NBC Universal / NewsCorp.’s JV, originally dubbed ‘Newco’: US $131 million (source: LA Times, 29 June 2007).

Joost: seed capital of US $45 million (source: Wikipedia, 29 June 2007). Backers include Sequioa Capital, Index Ventures – an early investor in Skype – CBS, the US media group, and Li Ka-Shing, the Hong Kong tycoon. Viacom, the US media giant, also has a minority stake.

Vmix: seed capital of US $5 million in 2005 (source: Marketwatch, 1 Aug 2006), plus further funding of $16.5 million in October 2007 (source: Vmix press release, 31 Oct 2007). Founded by former execs from Universal Music Group, Fox Studios, Apple and mp3.com. JK&B Capital and ATA Ventures joined existing investors Mission Ventures and Enterprise Partners in the latest funding round.

Vudu: founded 2004, launching summer 2007. Backed by US $21 million from Benchmark Capital and Greylock Partners.

Vuze: backed by US $13.5 million raised from Redpoint Ventures, BV Capital, Greycroft Partners.

Update 17 Dec 07

Recommended reading: Media and entertainment freelance writer Daisy Whitney has produced this excellent summary of going rates for online video advertising rates on some of the best-known sites.