The U.K.: greenhouse for new media ideas?

3 12 2007

It’s a badly kept industry secret that Rupert Murdoch’s BSkyB satellite TV platform saw the introduction of both interactivity and its Sky+ DVR in the U.K. as a test-bed for rolling the services out in other key territories.

Now it looks as if others are learning from both the Murdoch approach to digital product innovation and the potential of the U.K. as a greenhouse for emerging ideas and propositions which may capture the imagination of customers in other territories.

Last week, Casey Harwood, SVP of Turner Broadcasting System Europe [which operates movie channel franchise TCM, as well as a slew of kids’ channels such as Boomerang] told guests at the Broadcasting Press Guild that the mix of digital platforms in the U.K. makes it the ideal springboard for launching new media initiatives.

So what is it about the U.K. digital market which makes it unique and ripe for such experimentation?

Firstly, the U.K. enjoys an ultra-competitive multichannel market, which sees IPTV newcomers like BT Vision and Tiscali TV jostling for position alongside maturing incumbents such as Freeview and pay TV delivered by Sky and Virgin Media.

It’s fair to say that the new arrivals have yet to establish themselves with any sizeable customer base, facing not only the formidable marketing might of the incumbents, but also the challenge of trying to pithily explain the benefits of what, to many, is an entirely new way of consuming traditional TV services.

But it’s this very competitiveness which makes the U.K. such a lively market in which to pilot new services and ideas, albeit for players with relatively deep pockets.

Turner’s move reflects comparatively lower costs for market entry: trialling a new service via the web carries with it only the developments costs of the content proposition itself and any associated marketing. Contrast this with the cost of agreeing a carriage deal: whether linear or non-linear + marketing and the econmics easily stack up.

Turner aren’t the only ones watching the U.K. either: in a post earlier today, thebeyondnessofthings observed how Disney sees Blighty as a key market in determining its prospects beyond a largely North American customer base.

But a warning from history to the fearless: TiVo, the company which can be credited for attempting to make the DVR product category its own, attempted to use the U.K. as a test-bed for a pan-European rollout back in the late nineties. Through a co-marketing deal with Sky it managed to accumulate a customer base of ~ 50K subscribers, only to humiliatingly retreat from actively selling its product into the market when the very company it chose to get into bed with unashamedly learnt from its mistakes and moved in to pick up the spoils.

TV nets face up to growing online competition

25 09 2007

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, 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 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.

U.K. DBS operator Sky ups the broadband ante

4 09 2007

Like most developed countries, broadband access has been reduced to mere commodity, with price-slashing to the point of £0 making others wonder if there’s any margin left in the business at all (note the proponents of such moves are also the ones bleating loudest about how content providers should reimburse them for the heaviest levels of video-rich traffic).

Now first news has emerged that Murdoch-controlled U.K. satellite platform Sky — which already provides bundled high-speed access to its own customers — is to compete head on in the wider access market.

But the move belies a broader intent on Sky’s part: unattributed sources suggest it is focusing on a major ramp-up of its online TV offer. So on 4 Sep 2007 we see the first moves towards capturing a TV market which may not use the traditional TV set as its focal point. Watch this space.

BT Vision take-up accelerates

25 08 2007

The BT Vision IPTV service has more than doubled its subscriber base, according to unofficial figures published by Brand Republic yesterday.

Subscribers currently stand at 44,000 — slightly ahead of earlier estimates. At current growth rates, the installed base should easily break 100,000 U.K. households by Christmas.

BT has begun a national advertising campaign, with a particular emphasis on its sport package, including Premiership football. While the service remains a relative minnow v. pay TV platforms like Sky and Virgin Media, BT has succeeded in driving customer take-up for IPTV where others, such as Kingston Communications and Tiscali U.K. (nee HomeChoice) have failed.

A tale of two DVR strategies: the pathfinder and the luddite

15 08 2007

Rewind to earlier this decade, when DVRs were but a nascent segment of the entertainment landscape and the debate playing out again and again in broadcast network boardrooms and future media conferences was DVR: friend of foe?

Jump back to the present, 17% of U.S. homes and around 7% of U.K. homes use DVRs. Despite some curious pieces of research from both sides of the pond, including NBC’s finding that viewers fast-forwarding through breaks had higher recall of the ads they’d seen, we all know the reality: the vast majority of DVR households:

  1. Skip through ad breaks.
  2. Are oblivious to the traditional 30-second spots running in these breaks (though it’s arguable that first in / last out spots, as well as sponsorship bumpers are creating impact).

As characterised by the years earlier friend of foe debate, there are still two classic responses from industry: embrace the change and come up with new ways of engaging audiences; or prohibition.

What better example of strategies rolling out on both sides of the debate than this interview with Brian Sullivan, BSkyB’s customer group managing director, and the individual who has been the driving force behind Sky+ being installed in over two million  U.K households.

Meanwhile at the luddite end of the scale, comes news that Time Warner Cable is to disable ad-skipping via its Look Back TV catch-up service. This from the very same company which ran a small-scale trial in the early 1990s of prohibiting ad-skipping on DVRs — unsurprisingly the feature, one of the key USPs of a DVR, got a resounding thumbs down from consumers. Yet history repeats itself…

Storage vs. bandwidth re-visited

6 08 2007

Rewind by three years, courtesy of journalist Kate Bulkley’s painstaking cataloguing of everything she’s ever written, and James Murdoch proudly proclaims “storage trumps bandwidth”, referring to the greater efficiency of content delivered via the broadcast stream to a DVR-type device, rather than using a IP for delivery.

BT Vision chief Andrew Burke cried: “Pah!”

Apart from being slightly curious to remind myself when young Murdoch first proclaimed on this (if memory serves me well, it was possibly a year earlier), it’s worth dredging up the remark, if only to recognise how much things have moved on since and how Sky’s own position has moved to embracing IP delivery of content.

In fairness to James, Sky’s advances with its DVR product are significant (I recall following the story right back to the early rumours in 1999, when Sky first negotiated a co-marketing deal for TiVo’s ill-fated entry into the UK market) — penetration of which now stands at 28% of its U.K. customer base.

But then enter broadband, a utility which has defied expectations from even the savviest media-watchers and broken all records for consumer uptake (oh, yes, there’s Freeview too). Let it iterate and enter YouTube, taking a category which didn’t exist three years ago and making it mainstream. MySpace followed, and was snapped up by young Murdoch’s dad.

As we come full circle to today’s environment, it’s worth a read of this piece in today’s New York Times, which suggests streaming trumps downloads. How far we’ve travelled…

So, to return to the original question: does storage trump bandwidth? Or re-phrased: does streaming trump storage and downloads?

Setanta challenges Sky’s sport offer; bows broadband channel

31 07 2007

There’s been a flurry of multi-platform activity from Irish sport broadcaster Setanta, which yesterday revealed that it is to launch live soccer coverage and a library of archived TV sport via its Setanta By Broadband service.

The new service costs £7.99 per month, compared to the £43.99 per month which satcaster Sky charges for its full complement of premium sport channels.

Setanta has also agreed linear carriage deals with the BT Vision IPTV service and cable platform Virgin Media.

Sky+ rocks

12 07 2007

UK satellite TV platform BSkyB’s latest set of numbers, announced yesterday, reveal that a further 207K Sky+ DVR subscribers were added in the quarter ending 30 June 2007, bringing its cumulative Sky+ subscriber base to 2.374 million (or 28% of its entire customer base). Now that Sky has scrapped its £10 / month subscription charge, expect similar stellar performance in future quarters.