IPTV and VOD in Europe: Growing, Slowly but Surely
We mentioned unclear business models. Europeans don’t really know why they want to watch IPTV and where they want to—or at least the people trying to sell them the stuff don’t seem to. "In the UK, VOD/IPTV is seen as a catch-up strategy, i.e. catching up on programs that have been missed by delivering an online service. If one looks at the different UK players, the BBC have done it and have their strategy in place, whereas none of Channel5, Channel4 and ITV have their strategies fully formed," says John Nolan, head of commercial programming for North One, a British TV production company.
But the question is just where viewers will want to catch up on a cool property like The Office or the upcoming soccer World Cup in Germany—the PC or mobile? Much is regularly made of all the 3G (UMTS) spectra bought so expensively five years back by the European mobile operators: is the platform for on-demand?
Sadly for these players trying to recoup their outlay, probably not. A major November 2005 survey by media-savvy law firm Olswang found that consumers are significantly more likely to use home computers than mobile phones to consume multi-media content.
The poll—of some 1,500 13-55 year-old UK consumers—showed 44% of respondents said they would watch TV and films on their home computer, proving there is a huge consumer demand for the emerging technology. Some 70% say they already use their home computers for entertainment and other leisure uses for at least an hour every day. They also want to watch TV the traditional way in the comfort of their living room, and many heavy computer users also have cable or satellite TV. "Even though the survey results show people are not ready to cancel their pay TV subscriptions, they suggest that people are becoming increasingly frustrated and want even more choice and control over TV content. A majority (57%) want to watch varying digital programmes of their choice, including TV and film, whenever they like. For this reason, the home computer, with its developing technology, is often utilised as a second TV set," says the research.
VOD on the TV or the phone? IPTV on what device? Some observers see the recent £961 million ($1.7 billion) merger between UK cable giant NTL (which recently became the only game in town by buying rival Telewest) and the cellphone arm of media conglomerate Virgin as a defensive move in the face of some of these confusions.
Jerome Buvat, managing consultant at consulting firm Capgemini’s Telecom, Media and Entertainment arm in London, notes NTL is facing growing competition from digital terrestrial TV that now captures more than 70% of net digital TV additions. Competition from the BT launching TV over DSL broadband service later this year and the likely similar moves from local loop unbundlers will also limit NTL's growth in the TV market, he predicts. In the broadband market, DSL represented more than 80% of new broadband connections in 2005 and this proportion is likely to grow as local loop unbundlers increasingly enter the market. "We expect these new entrants to cut prices sharply as they benefit from improving unbundling economics. In France, the arrival of local loop unbundlers led to a price decline of more than 50% in a year. Similar moves could happen in the UK and severely affect NTL's broadband operations."
Moving Forward
None of this is stopping services being trialled, of course. The BBC is making video clips from a range of its parenting shows, including Child of our Time and Little Angels available to download for free online for a six-month period. And in 2005 Channel 4 became the first UK broadcaster to launch standalone commissioned Internet TV through its Channel4.com Web site. It’s offering a series of regular programs covering cars, music, and film, specially commissioned for the site by Channel 4 New Media and unrelated to programming that airs on its TV channels. This is claimed to be the first time that a UK broadcaster has specifically commissioned programmes for the Internet.
The first show to appear on the site is a review of the Frankfurt Motor Show, a 15-minute feature that lets viewers dip in and out of the program. Future shows are being developed within the music and film sections of the Channel 4 Web site.
"Internet TV is clearly going to be an important part of broadcasters' strategies going forward," says Andy Taylor, Channel 4's managing director of new media. "The Internet audience is hungry for quality content that is commissioned for the medium. By providing quality, compelling content that is structured for the way in which people surf the Web, we are acting as a vanguard for the wider industry."
"We have five million unique visitors to the site, which acts as more than just a shop window for existing programs," adds Dom Eames, editor of online at Channel 4 New Media. "So we think we are very well-placed to be a major video content provider as both creator of content and broadcaster of original material." Channel 4 is the UK home of Lost, The Sopranos, and Desperate Housewives, for instance. "We shall be announcing our VOD plans later this year, but we think we will have a compelling offering."