When Michael Grade announced this week that ITV would increase its online revenues fivefold by 2012, the UK broadcaster’s executive chairman provided an aggressive growth target and a reminder that, in revenue terms, programming over the internet will remain a niche business for some time.
The £150m ITV hopes to be making online within five years is equivalent to just 7 per cent of the group’s revenues last year. Of that, much will come from Friends Reunited, ITV’s social network, rather than from the new ITV.com.
However, Mr Grade’s decision to make ITV’s programming available online, either streamed live or as a catch-up service, comes as every other major UK broadcaster is rushing to exploit broadband’s potential.
The BBC launched a public trial of its free iPlayer catch-up service in July; Channel 4 is combining free and paid-for on demand programming on its 4oD site; Five is selling episodes of CSI Miami online; and British Sky Broadcasting’s Sky Anytime download service is providing football highlights and full-length films.
The traditional TV companies are jostling for attention alongside YouTube clips, social networks’ mini-soap operas, Apple’s iTunes store, launched in the UK two months ago, and online-only video aggregators such as Joost and Babelgum. New TV-based video-on-demand or IPTV services such as BT Vision and Tiscali TV are providing further competition.
All are chasing the promise of a fast-growing market. Screen Digest estimates the download-to-own part of the online video market alone will expand from a meagre £277,000 ($555,972) in the UK last year to £14.8m this year and £65m by 2011. Online advertising, which underpins many of the broadband initiatives, is particularly strong in the UK.
Analysts are becoming increasingly convinced, however, that such models will not take off fast enough to replace traditional television in the way that downloads have threatened the music CD. Several also warn that the UK is trailing in making use of such new distribution.
According to Screen Digest, only one in 100 UK households will be taking IPTV by the end of the year, compared with one in 10 in France. Similarly, Enders Analysis argues that PC-based video services “will remain niche in the short to medium term. The TV is the locus of family entertainment and the PC cannot replicate its appeal”.
While free content would serve a brand-building purpose for broadcasters, Enders concluded, “pay services are likely to have narrow appeal” because of the availability of pirated material and free substitutes, such as personal video recorders.
The big broadcasters have agreed that they must put their content online, but they have shown no agreement about how much to make available.
On some sites, the range of content remains extremely limited. Clashing business models are also creating a confusing picture for online viewers. While the BBC is confined to a free model with no advertising, and ITV committed itself to an advertising-funded free online service this week, pay sites are charging a bewildering range of prices.
While iTunes is charging £1.89 for each episode of Grey’s Anatomy, for example, the same programmes are available on five.tv for 99p each. Although Living TV also airs the series in the UK, it does not allow online downloads. Sky Anytime is effectively free for subscribers, depending on which package they take, but also offers pay-per-view programmes from 50p to £1.50, and download-to-own versions of shows like Lost and 24 for £2.50. Channel 4 is offering its past 30 days programming free, plus other shows costing 99p or more.
Andy Duncan, chief executive of Channel 4, said he was “very, very pleased” with the performance of 40D.
He added, however: “We do need to have a standard for the industry, a way that everyone uses TV content on the internet that is common to all providers and platforms.”