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

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Philips developing 3D VOD

1 11 2007

Philips has demonstrated a 3D VOD system, according to this report, with no special glasses required! Clearly it’s only a matter of time before we have sensory VOD…





Targeted TV ads ‘three years away’

30 10 2007

When Abe Peled, the brains behind News Corp.-owned set-top box software and conditional access specialist NDS, speaks some of us sit up and take note.

In an interview with the Financial Time, Peled claims that technology which allows advertisers to target viewers according to their viewing habits is about three to five years off deployment on pay TV platforms. As he’s in the business of selling such solutions, it’s no surprise that he’s beginning to talk up their potential. From a man who’s driven much of the technical innovation underlying some of the world’s most successful pay TV platforms, he probably knows what he’s talking about.

For anyone interested in how this is playing out so far, head over to Israel, the report states, which Jerusalem-based NDS is using as a test bed for next gen STBs, just as it did with the Sky platform in the U.K. for 1st gen interactive TV and DVR rollout.

On a related note, could it be mere coincidence that on the same day this interview appeared, Virgin Media, the cable platform arch-rivals of Sky, chose to release the news that it is to offer targeted advertising from next year. But wait for it, the killer quote, by self admission from the company’s content division CEO Malcolm Wall: “There is an issue of measurement. TV is very measured, but for VoD it isn’t there right now.” The technology isn’t there, or Virgin Media hasn’t yet committed to implementing it? Go figure…





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 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.




Sony / Sky JV brings go-anywhere TV to the PSP

23 08 2007

Following news added yesterday that the European version of the PlayStation 3 is to get inbuilt TV receiver and DVR functions… 

Sony Computer Entertainment Europe (SCEE) and BSkyB have revealed further details of their joint-venture entertainment service for Playstation PSPs, first announced late last month.

Launching early next year, the Go! video download service will allow 2.3 million PSP owners in the U.K. and Ireland to watch Sky content on the move, reports the Financial Times. A collaboration with telco BT will also allow PSP users to make voice and video calls via their devices, as well as the ability to send and receive instant messages.

For the entertainment service, customers will be able to pick and choose from individual programmess offered by Sky, or subscribe to content packages like sports, entertainment, or animation, adds Wired.





Microsoft and BT to offer IPTV via Xbox in U.K.

10 08 2007

BT Vision customers who also own a Xbox will be able to access the subscription IPTV service before the end of the year, report 360gamer.

Microsoft already provides the software powering the BT Vision service: a DVR-enabled Freeview set-top box with VOD delivered via IP.

The service launched at the end of 2006 and, despite a broadening content offer , has struggled to significantly grow its customer base, which stood at 20,000 households last month. The company hopes that last month’s launch of BT Vision Sport, a near-live catch service offering Premiership football, will accelerate take-up. In its coverage, The Independent states that BT is connecting new customers to the Vision service at the rate of 2,500 per week, a trend which, if maintained, will see the customer base grow to 80,000 households by the end of 2007.

The pairing of BT Vision with Microsoft Xbox is a filip for both companies: BT is able to extend the appeal of its service to game players, while Microsoft gets an off-the-shelf solution for video content on its consoles in the U.K., an area with which it has encountered difficulties, resulting in delays to the European VOD offer for Xbox Live Marketplace.





Sony, Matsushita launch VOD service; bridges computer/TV divide

8 08 2007

Variety reports on yesterday’s announcement by Sony Corp and Matsushita Electric Industrial Co. Ltd. that they are to begin offering 2,000 VOD titles via their joint venture TV Portal Service, which can be accessed by internet-connected flat-screen TVs.

While the expansion of the service, initially launched in 2006 by a consortium of six Japanese consumer electronics manufacturers, consumers will be able to access a range of on-demand content, costing from Y200 (US $1.69) to Y300 ($2.54).

At first glance, the move promises to usher in true convergence and offer TV-type content, which just happens to be delivered via the internet, rather than broadcast. Yet, like Apple TV and, to a lesser extent, Windows Media Center, the enabling companies are applying 20th Century business models to a 21st Century distribution channel by limiting consumers to walled gardens of content.

Back to the drawing board… 

Aside from delivering what consumers want by making internet-delivered content available on a screen more conducive to the viewing experience unlocking the potential of the internet on TVs, it

Yet again we a move which promises to usher in true convergence, and yet again, the enabler clumsily insists on giving consumers choice only from a walled garden of content.